Litecoin Investment: Should You Buy?

Litecoin is a decentralised cryptocurrency, created by former Google employee Charles Lee, and launched in 2011 as an alternative to Bitcoin. It is one of the most traded cryptocurrencies, ranking 25th by market cap. Litecoin is a good investment option for those who do not want to invest in Bitcoin but are interested in other altcoins. It is also a good option for those who want to save on external fees, as it offers very low transaction fees. However, it is important to remember that investing in cryptocurrencies is a risky business, and the market can be highly volatile.

How to buy Litecoin

There are several ways to buy Litecoin (LTC). You can use a crypto exchange, a crypto ATM, or buy it directly from another individual in person or over the web.

Crypto Exchange

If you plan on using Litecoin as an investment, you’ll probably want to open an account at a crypto exchange. Some of the most popular exchanges that support Litecoin include Coinbase, Binance, Changelly, and Kraken.

The process for buying Litecoin on an exchange is generally as follows:

• Create an account and verify your identification.
• Add a payment method, such as a bank account, debit card, or wire transfer.
• Select Litecoin from the list of assets and choose the fiat currency you want to use (e.g. USD, EUR).
• Enter the amount you want to buy, either in fiat currency or Litecoin.
• Finalize your purchase.

Crypto ATM

You can also try to locate a crypto ATM near you that offers LTC. However, ATM rates can be exorbitant, and there is no guarantee that you will be able to find a seller.

Direct Purchase

You can purchase Litecoin directly from another individual in person or over the web.

Litecoin investment risks

While investing in Litecoin, it is important to be aware of the associated risks. Here are some key points to consider:

Volatility and Market Risk

Litecoin, like other cryptocurrencies, is subject to high volatility. The value of Litecoin can fluctuate significantly over short periods, and investors could experience substantial losses if the market moves against them. It is crucial to remember that investing in Litecoin should only be done with money you can afford to lose.

Regulatory Risk

The regulatory landscape for cryptocurrencies is still evolving and varies across different countries. There is a risk that new regulations or changes in government policies could negatively impact the price of Litecoin. For example, restrictions on cryptocurrency trading or adverse tax implications could affect market sentiment and demand for Litecoin.

Competition from Other Cryptocurrencies

Litecoin faces competition from numerous other cryptocurrencies, including well-established ones like Bitcoin and Ethereum, as well as newer coins with improved features. This competition could potentially erode Litecoin's market share and impact its price.

Security and Cyber-attacks

The cryptocurrency market has been a frequent target of cyber-attacks and security breaches. Investing in Litecoin carries the risk of losing funds due to hacking incidents, phishing scams, or other malicious activities. It is essential for investors to prioritise the security of their digital wallets and choose reputable exchanges to minimise these risks.

Limited Adoption and Usage

Despite its longevity and popularity, Litecoin's adoption and usage may not meet expectations. The value of Litecoin depends on its widespread acceptance and utilisation. If Litecoin fails to gain traction among businesses and consumers, or if it loses its appeal to investors, its price may suffer.

Founder's Influence and Leadership

Litecoin has faced questions about its leadership and the influence of its founder, Charles Lee. Lee previously sold his stake in the project, citing a conflict of interest. This has raised concerns about the faith in Litecoin's leadership team and their ability to steer the project's future successfully.

Litecoin investment trusts

A Litecoin investment trust is a vehicle for investing in Litecoin, a decentralised cryptocurrency. The trust is similar to a regular trust, except that it holds Litecoin as its only asset. By investing in a trust, investors do not acquire the Litecoins themselves but rather a share in the trust.

One of the benefits of investing in a Litecoin trust is that it enables investors to benefit from the price movement of Litecoin without the challenges of buying and storing it. However, it is important to note that the investor does not own the Litecoins themselves, only their derivatives, and there are fees associated with the intermediary service.

One example of a Litecoin investment trust is the Grayscale Litecoin Trust, which is one of the first securities solely invested in and deriving value from the price of Litecoin. The investment objective of the trust is for the shares to reflect the value of Litecoin, less the trust's expenses and other liabilities. Grayscale Investments, LLC, a trusted authority on digital currency investing, manages the trust.

Litecoin vs Bitcoin

Investing in cryptocurrencies is a risky business, and it's important to remember that you should never invest more than you can afford to lose. With that in mind, let's take a look at Litecoin vs. Bitcoin.

History

Bitcoin was the first cryptocurrency, introduced in 2009. Litecoin, a fork of Bitcoin, was launched in 2011 by former Google engineer Charlie Lee. It was designed as an alternative to Bitcoin for everyday use, with faster transaction confirmation times and lower fees.

Market Capitalisation

Bitcoin's market cap is much higher than Litecoin's. This is because demand for Bitcoin is high, and there is a smaller supply. Litecoin has a much smaller market capacity, and a larger supply of tokens.

Transaction Speed

Litecoin was founded with a focus on speed and efficiency. It can reportedly handle more than 50 transactions per second, while Bitcoin can only process about seven. However, Litecoin rarely reaches these speeds as it is used much less than Bitcoin.

Hashing Function

The most significant difference between the two cryptocurrencies is their hashing function. Bitcoin uses SHA-256, which is processed very quickly. Litecoin uses Scrypt, which has much higher memory requirements.

Investment

As a long-term investment, Litecoin is less risky than newer cryptocurrencies because it is well-established and has been around for over a decade. It also has an active developer working on it, and it is widely adopted and traded on all crypto exchanges. However, critics argue that Litecoin has no real advantages over its competitors and lacks potential.

Bitcoin, on the other hand, is seen as a more conservative investment. It is the most popular cryptocurrency and is likely to be less volatile than Litecoin. However, it is also more expensive to buy and has slower transaction speeds.

Both Litecoin and Bitcoin have their pros and cons as investments. Litecoin is faster and cheaper, but Bitcoin is more established and has a higher market cap. It's important to do your research and understand the risks before investing in any cryptocurrency.

Where to buy Litecoin

If you're looking to buy Litecoin, there are several options available to you. You can buy Litecoin (LTC) directly through other payment apps such as Venmo and PayPal or Litecoin-specific wallets, like Litewallet, a mobile app available on Google Play.

If you're considering using Litecoin for payments, a payment or Litecoin-specific app will likely be your best option. However, if you plan on using Litecoin as an investment, you may be better off opening an account with a crypto exchange. When choosing an exchange, it's important to compare qualities such as fees, security, and simplicity. Here are some of the most popular options:

Crypto Exchanges

• Kraken: One of the most secure and trusted crypto exchanges in the world, Kraken allows you to pair LTC with several fiat currencies, including the US dollar, euro, British pound, Australian dollar, and Japanese yen.
• Binance: A centralized exchange offering a wide range of cryptocurrencies, including Litecoin. Binance provides multiple payment options, such as debit/credit cards, Google Pay, and Apple Pay.
• Changelly: This platform offers instant Litecoin purchases using credit or debit cards, with investments starting as low as $5 and going up to $20,000. Changelly also boasts 24/7 top-tech support and high transaction approval rates.
• Bitcoin.com: With Bitcoin.com's Wallet app, you can buy LTC in just a few taps using a credit card, bank transfer, or payment app. The app also allows you to monitor the status of your LTC order until it lands in your wallet.

Payment and Litecoin-Specific Apps

• Venmo
• PayPal
• Litewallet: A mobile app available on Google Play.

Remember to always do your own research and understand the risks involved before investing in cryptocurrencies.

Frequently asked questions