Litecoin is possibly a cryptocurrency you may not have heard of before. Considering Bitcoin and Ethereum are more popular and well-known, many people don’t know that Litecoin has been around for almost as long.
But what is Litecoin? What does it do, and why are so many people heavily invested and interested in it? Whether you have no idea what it is or you want to buy Litecoin, here is everything you need to know about it.
What is Litecoin?
Litecoin is one of the oldest cryptos on the market and has therefore become one of the biggest and most popular amongst beginner and seasoned traders alike. It is very similar to Bitcoin but has a larger market cap and is mined differently.
It is a coin that is decentralized and can be used to purchase goods and services on certain websites across the globe. Much like ETH and Bitcoin, many people want Litecoin to be accepted worldwide and eventually replace fiat currency.
Bitcoin has become so valuable in part due to its limited supply of 21 million coins. Litecoin also has a supply cap, but it sits at just over 80 million. This means that Litecoin hasn’t had the same massive value jumps but, instead, is steadily rising as more coins are mined.
How to Sell Litecoin
Selling Litecoin is slightly different from selling Bitcoin and ETH. While you can buy Litecoin on almost any platform, selling it varies depending on the platform you use. Some platforms, like Kraken, require you to send your coins there first, and then the sale is facilitated.
Other platforms will allow you to connect your Litecoin wallet directly to it, and then you can have a more direct route for selling.
Trading with Litecoin
Trading Litecoin is still a good investment due to some of the reasons stated already. Since the market cap is very high, it is still relatively cheap to buy and remains less volatile than some of its counterparts.
The higher market cap allows for more long-term investment, as many traders know it will still be a while before it becomes “scarce.” This means that prices remain affordable unexpected losses remain unlikely.
Differences Between Litecoin and Bitcoin
As mentioned already, one of the biggest differences between Bitcoin and Litecoin is the number of coins available. Another significant difference is the protocol used to mine the coins, which then changes transaction speeds and security.
Since Litecoin uses a modified version of the Scrypt protocol, as opposed to Bitcoin, which uses SHA-256, transaction speeds for Litecoin are quicker but less secure. Don’t be fooled, though; Litecoin security is still very tight; there is just less of it compared to Bitcoin.
Volatility and cryptocurrencies tend to go hand-in-hand, and Litecoin is no exception. While the coin is still volatile, it trends in a more stable way compared to Bitcoin. Litecoin holders don’t get the huge jumps Bitcoin does, but they also tend not to be hit as hard as BTC holders.
The Rise of Stable and Govcoins
One major issue for Litecoin is the rise of stablecoins and Govcoins. Stablecoins are cryptos that are tied to a fiat currency and rise and fall with that currency. Govcoins are tokens being introduced by governments to use as currency; an example is the Bahamas creating their own token, as opposed to integrating an existing one like Bitcoin or Litecoin.
The issue Litecoin is facing is that there is a good chance it won’t be used by vendors and businesses, as businesses may potentially opt for the more stable Govcoins. The outcome of this problem is still unknown, but it is something to stay aware of.
In cryptocurrencies, the scalability of a coin refers to how many transactions the block a coin is built on can handle and how quickly the transaction can be done. At the moment, Bitcoin can handle seven transactions a second, while Ethereum 2.0 will be able to handle 100,000.
Litecoin can do 56 transactions a second, meaning it is still quicker than Bitcoin, but Ethereum 2.0 is set to be infinitely more scalable than both Bitcoin and Litecoin.