Litecoin (LTC) is bidding as silver to Bitcoins (BTC) gold. The digital currency was introduced in 2011 as a faster, cheaper alternative to the crypto giant.
If you are thinking about buying Litecoin, here are some things you should know.
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1. Litecoin is lighter and faster than Bitcoin
Litecoin is a digital currency that followed in Bitcoin’s footsteps. Bitcoin was the world’s first decentralized digital currency, enabling people to make payments without a bank or government acting as a middleman. However, this forefather of crypto isn’t perfect: Bitcoin transactions can be slow and energy-intensive.
Litecoin aims to solve these problems. It uses the same blockchain technology but processes transactions four times faster, which can make it more attractive to retailers. In addition, at some point there will be four times as many Litecoins as Bitcoins. There will only ever be 21 million bitcoins compared to 84 million litecoins. Some argue that this is better for small transactions.
2. The founder of Litecoin sold his coins to avoid a conflict of interest
After former Google software engineer Charlie Lee founded Litecoin, he became an influencer in the crypto space. This was in line with his mission to promote the adoption of digital currencies, particularly Litecoin. However, this also led to allegations of a conflict of interest.
When Lee promoted Litecoin on social media, people said he was just trying to raise the price of the coin. He reached a point where he had to decide whether to promote Litecoin and own it. So in 2017 he sold all of his coins and donated the proceeds to the Litecoin Foundation.
It’s worth noting that Lee was also criticized for selling it. However, after the Musk Effect roller coaster ride this year, cryptocurrency investors should be grateful for thoughtful, responsible influencers.
3. Govcoins could be in sight
Anyone considering buying cryptocurrencies that are active in the digital payment space must be aware of the development of so-called “govcoins”. Over 60 countries are considering introducing their own state digital currencies. The Bahamas, Cambodia and China have already made great strides.
Authorities fear the surge in cryptocurrencies could make it harder for them to control their economy, so they are looking for ways to turn the tables. These coins would benefit from some of the advantages of the blockchain – fast, cheap, and secure transactions. But they would be centralized, so they would still be supported by governments and central banks.
One of the challenges that both Bitcoin and Litecoin have faced in getting companies to use them as currencies is that their value can fluctuate widely. This makes it difficult for companies to manage their payroll and supply chain. Govcoins and stablecoins (cryptocurrencies tied to something like the dollar or the price of gold) solve this problem.
The growth of both govcoins and stablecoins could have a huge impact on digital currencies like Litecoin. Govcoins could attract more merchants and buyers to adopt digital payments. But they could also force decentralized coins out of the market, especially if governments introduce stricter crypto regulation at the same time.
4. Litecoin is widely used
Litecoin has been around for 10 years and is considered one of the more established cryptocurrencies. As such, you can get it from most of the major cryptocurrency exchanges.
However, it has not seen the dramatic price jumps of Bitcoin or Ethereum (ETH). If you had bought $ 1,000 worth of Litecoin three years ago, you would have about $ 1,540 today – a 54% increase. That’s a solid return, especially when you consider that some currencies are completely gone. However, Bitcoin jumped over 500% over the same period.
If you are considering buying Litecoin, be prepared for volatility. All cryptocurrencies have the potential for huge gains as well as huge losses, so investing money that you cannot afford to lose is not a good idea.
As we mentioned above, there are many players in the digital payments space, so you need to consider both cryptocurrencies and other non-crypto competitors. The Litecoin team has done a lot to promote and grow the cryptocurrency industry, but that is no guarantee of success. In fact, there is a chance that Litecoin will be overtaken by newer coins – or even govcoins.