Litecoin is an interesting option for Australian investors that want to bolster their cryptocurrency portfolios.
It was created as an early spinoff from Bitcoin in 2011 with the intention of speeding up transaction times and assuaging scalability concerns. Litecoin is established as a top 10 cryptocurrency by market cap, but it still trades at a significant discount to Bitcoin.
Litecoin was one of the first cryptocurrencies to capture the imagination of investors around the world. It is the brainchild of computer scientist Charlie Lee, who graduated from MIT in 2000. He spent a decade at Google, helping write the code for Chrome OS, and he became fascinated by Bitcoin after it launched in 2009.
That inspired him to work on Litecoin (LTC), which he dubbed “the silver to Bitcoin’s gold”. It is not exactly designed to compete with Bitcoin. He aimed for it to peacefully coexist with BTC, used for smaller transactions at quicker speeds. Litecoin is a source fork code of the Bitcoin Core client.
Litecoin has gained a reputation for innovation over the years. For example, in 2017 it became the first of the top five cryptocurrencies to adopt Segregated Witness (SegWit) consensus in order to address scalability concerns and address signature malleability.
Later in 2017, Lee – who was working at Coinbase, one of the leading sites to buy crypto currency online, by that point – announced on Reddit that he had sold almost all of his LTC. He cited a conflict of interest arising from working for Coinbase, but his announcement and subsequent comments damaged the reputation of his creation.
It became less common for crypto enthusiasts to buy Litecoin, many dumped their holdings and the price nosedived. It dropped from an all-time high of US$356.84 on December 18, 2017, to below US$120 by the end of March 2018. The value of LTC had gone all the way down to just US$23.43 by December 2018, and the price remained depressed for a couple of years. However, in January 2021, following a long crypto bull run, LTC reached its highest price since 2018 as increasing numbers of investors started to buy Litecoin once more.
Litecoin has an active development community that continually finetunes the offering in a bid to make it more efficient, secure and effective. The network is regularly updated, with the 0.18.1 version released in June 2020.
Some members of the crypto community had expressed frustration at a lack of development and transparency around Litecoin. After Litecoin Core 0.18.1 was released, Lee, who now serves as the managing director of the Litecoin Foundation, responded by writing on Twitter: “Who says Litecoin has no development? We are already hard at work on the next release, Litecoin Core 0.20, which will bring us in line with the latest Bitcoin Core.”
The development team set to work on including MimbleWimble as extension blocks with a soft fork. Lee is now a passionate champion of Litecoin, and he is spearheading efforts to boost adoption of it. In October 2020, he was pleased to note that PayPal introduced support for Litecoin alongside Bitcoin, Ethereum and Bitcoin Cash. The best Litecoin trading sites allow you to buy Bitcoin, buy Ethereum and buy Bitcoin Cash alongside LTC, and many investors have those four coins in their portfolios.
The Litecoin network is set up to process a block every 2.5 minutes, making it roughly four times quicker than Bitcoin for transactions. It uses a Scrypt different hashing algorithm, whereas Bitcoin and Bitcoin Cash use SHA-256. Litecoin must also be mined, and there is a reward of 12.5 LTC up for grabs for each block mined. That will remain the case until around 2023, when the next halving takes place.
The supply of Litecoin is capped at 84 million, which is four times larger than Bitcoin. This is designed to address scalability issues that Lee saw in Bitcoin. The current circulating supply is north of 66 million, and around 2% of the Litecoin in existence is locked up in the Grayscale Litecoin Trust. There is an increasing institutional appetite to buy Litecoin and take part in Litecoin trading, which could be good news for its chances of future growth.
Litecoin has been running nonstop ever since Lee released it in 2011. It is one of the few coins that has never had any downtime, and it has ranked among the top 10 cryptocurrencies by market cap for almost its entire existence.
Lee designed it to have a practical use. Many see Bitcoin as a store of value, somewhat akin to gold. Litecoin could potentially enjoy a similar status in future, as there is a finite supply, but it is primarily designed to fuel online transactions. The features Lee put in place make it more suitable for quicker, smaller transactions than Bitcoin, which is why he called it silver to Bitcoin’s gold and named it a lite version of BTC.
More than 9,000 ATMs now support Litecoin, which is more than any other cryptocurrency apart from Bitcoin. Litecoin is also the second best supported cryptocurrency, and you can use it to buy a broad range of goods and services. You can buy Litecoin and then use it to purchase cars, holidays, property, pet supplies, tea, coffee, hotel stays, mining hardware and much more. Many online casinos accept it too.
Litecoin’s dominance of Scrypt stands at around 99%, so there is no viable incentive for Litecoin miners to attack Litecoin. By contrast, Bitcoin Cash has just 2% dominance of the SHA-256 algorithm that it shares with Bitcoin, making it potentially more vulnerable to attacks from miners, who would arguably be less concerned about Bitcoin Cash dying out.
On the security front, you should always beware Litecoin trading scams. If something sounds too good to be true, it probably is. Stick to the reputable exchanges recommended on this Litecoin trading guide page. You might also consider investing in an external, hard wallet if you plan to buy crypto online and store it for a considerable amount of time, as that keeps it away from hackers.
Litecoin has high liquidity. You can buy Litecoin and enjoy Litecoin trading on every major cryptocurrency exchange. Many people buy Litecoin and use it for transactions, rather than simply HODLing. The trading volume of Litecoin actually exceeds the market cap, highlighting just how liquid it is.
Read the Litecoin trading reviews and find the best Litecoin trading site for your particular needs. The leading sites to buy Litecoin include eToro, Coinbase, Binance, Coinmama, Kraken and Gemini. eToro allows you to start trading quickly and provides high limits. Coinbase is more of a crypto specialist, with high liquidity and an accessible user interface.
Some slightly more advanced traders prefer Binance, to benefit from the lower fees – particularly if they buy Binance Coin – and the charting capabilities. Coinmama is a reliable and trusted broker.
If you do not want to directly buy or sell Litecoin, but still want to trade it, you can open buy and sell positions on Litecoin CFDs with CFD providers like Plus500. Remember, CFDs do not give you rights to the underlying asset and are complex instruments that come with a high risk of losing money rapidly due to leverage.
Once you have identified a Litecoin trading site that appeals, you must register for an account. You will have to enter your name and email address, agree to terms and conditions and prove that you are not a robot. New customers also have to click a link from their email addresses to verify them. Some sites, such as Coinbase, will require you to upload photo ID and proof of physical address.
After registering, you can buy Litecoin. Click “Buy / Sell” or “Get Started” to trigger the trading box, which is normally set to Bitcoin as a default measure. Scroll down to Litecoin, and choose AUD as the currency you would like to pay in.
Enter the amount you wish to buy, and link a payment method such as Visa or MasterCard. You can then click on “Preview Buy” or “Buy LTC” and a new box will tell you the Litecoin trading fee and the LTC amount you stand to receive. If you are happy, click to confirm the transaction. You may need to enter a verification code sent to your phone and/or email address.
The LTC should arrive in your account within a minute or two. You can then hold it in your account if you plan on taking part in Litecoin trading, or send it to an external wallet for safe keeping.
You can switch from “Buy” to “Sell” in the trading box and follow similar steps if you wish to offload LTC. Just enter the amount that you want to send to your AUD wallet, accept the fees and confirm. You can then withdraw to your chosen method. You should also be able to exchange Litecoin for other cryptocurrencies or set up recurring Litecoin transactions if you so desire.
Litecoin price prediction articles have been commonplace ever since Lee unveiled the network in 2011. Some of the Litecoin prediction articles have proved remarkably astute, whereas others have sailed well wide of the mark.
The Litecoin price increased to its highest value in years at the start of 2021, providing encouragement for LTC enthusiasts. There are a few reasons to be bullish: its high liquidity, its long-term position in the top 10 cryptocurrencies by market cap, its unique mining algorithm, the broad retail and ATM support it enjoys, the link-up with PayPal, the interest from Grayscale and imminent privacy measures due to be adopted.
You could also find positives in the fact that Litecoin survived Lee’s major cash out in 2017. Many people still criticise him for selling out, but it did not wither and die, and Lee is now back, playing a leading role in trying to bolster his legacy by ensuring that Litecoin has a positive future outlook. It is arguably superior to Bitcoin as a method of transaction, so it has decent potential for further adoption in future, but a single Litecoin is also a lot cheaper than 1 BTC, and many people than missed out on buying Bitcoin a few years ago now want to buy Litecoin in the hope it will enjoy a similar trajectory. It is naturally a risky and volatile investment, but it is reasonably well placed to flourish in future.
Lee’s decision to sell most of his LTC holding in 2017 damaged Litecoin’s reputation and potentially damaged his legacy. However, he is now working full-time on improving Litecoin and its reputation, and it has earned pretty positive customer feedback in recent years.
When you compare it to the situation with Ripple – many exchanges halted XRP trading after a Securities and Exchanges Commission lawsuit in the U.S. – Litecoin has had no notable scandals. There have not been any major security breaches, and it is renowned for innovation.
Those that champion Litecoin point to its quick processing speeds, low transaction costs and strong security record. It structurally improves upon Bitcoin in several ways, but it is certainly a risky investment.
If you want to buy Litecoin, you should conduct thorough research on the best trading sites. Stick to the exchanges that have received overwhelmingly positive customer reviews, and that can demonstrate a long-term record of facilitating quick, safe and effective transactions. Many people buy Litecoin alongside a range of other cryptocurrencies and assets, so you might want to seek out a site with a broad range of trading options, plus reasonably low transaction and withdrawal fees, and an accessible user interface. Litecoin is a risky investment, but that is true of most cryptocurrencies, and it is easy to see why demand is starting to increase for this popular altcoin.
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