With this, investors and speculators have been drawn to the coin. Many aim to gain from this rising cryptocurrency. Below, we’ll explore what Litecoin is, what makes it unique, and how you can invest in it.
What Is Litecoin
As a peer-to-peer currency, it allows instantaneous, nearly zero-cost payment to any person in the world. Litecoin is an open-source and decentralized global payment network. At a certain point in time, Litecoin became the third most popular cryptocurrency just behind Bitcoin and Ethereum. However, that position has now been taken by Tether (USDT). Dash, a competition cryptocurrency, was taken off the Litecoin blockchain in 2014.
Investing in Litecoin
Every investor intending to invest in Litecoin must first understand the nature of cryptocurrency. What this means is that cryptocurrencies are not like bonds or stocks, so you don’t buy shares of Litecoin. Instead, you swap your local currency for Litecoin currency. For instance, the price of Litecoin currently stands at $61.93.
Most investors aim to buy it in hopes that the value will rise. When this rise occurs, you could exchange your Litecoin back to your dollar on an exchange. There are marketplaces where this occurs and it is at the stockbroker. You would need a digital wallet, and one such wallet is Coinbase.
With Coinbase, you can not only buy Bitcoin and other cryptocurrencies but also sell them in the app. Other places are Uphold, Coinmama, or CEX.io. Digital wallets like Coinbase allow investors to use their wallets for buying, selling, and receiving Litecoin.
Litecoin can be sold in the same exchange where they are bought. However, selling your coins on decentralized exchanges is different from selling them on a centralized exchange. For instance, using decentralized exchanges like crypto.com, or Kucoin requires that you connect your wallet to the exchange. Then perform the Know Your Customer (KYC) registration process. When approved, you can deposit your coins and begin to sell them.
On the other hand, if you sell on exchanges like Kraken, you must send the Litecoin to your Kraken address. There, the exchange would facilitate the sales of Litecoin. Some exchanges allow the withdrawal of fiat currencies. If you intend to exchange your Litecoin for a fiat currency, then you should find such exchanges.
What Makes Litecoin Unique?
Though Litecoin uses blockchain technology, it differs from many cryptocurrencies in several ways. For instance, unlike Ethereum and Bitcoin, Litecoin makes use of a “scrypt” (software algorithm) for mining units. This method prevents people from using rigs (powerful custom computers) to specifically mine it.
Secondly, Litecoin ranks among the fastest transaction times for cryptocurrencies. It clocks in 2.5 minutes whereas bitcoin is 10 minutes. The third and most crucial for investors is that it is the cheapest of all three major cryptocurrencies.
Like other cryptocurrencies, investing in Litecoin carries a certain risk. Individuals must ascertain their risk tolerance before investing in Litecoin. With its features like secured transactions, low price points, fast transactions, and tools for investment, investors might be tempted to invest in large amounts. However, like every investment, you must first consider important risk factors, study the market, and start small. Remember, cryptocurrency is volatile, therefore you must be cautious.