What is Litecoin?

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What is Litecoin?

Since it was created in 2011, just two years after Bitcoin, Litecoin has often been thought of as a reaction to that cryptocurrency. It includes many of the same features as Bitcoin but is considered to be “lighter” or more dynamic.

How does Litecoin work?

Litecoin was designed to be a virtual currency that functions in a peer-to-peer format. It is not maintained or governed by any central authority. 

The Litecoin network provides users with the ability to make instant payments across the globe. They charge near-zero fees for these transactions.

Below, we’ve compiled several FAQs about Litecoin. This information can help you to determine whether it might be a fit with your financial goals.

What can Litecoin be used for?

Litecoin gives you the freedom to pay people without having to go through an intermediary, like a bank or exchange commission. You can also accept Litecoin yourself as payment for goods or services. The transaction process is described as virtually seamless and extremely secure.

Does Litecoin have a supply cap?

Yes, the coin limit for Litecoin is 84 million. Like any other good or service, having an excess supply of Litecoin could diminish the value. The creators wanted there to be enough Litecoin to easily distribute without throwing off the ratio of supply to demand.

Why is Litecoin so cheap?

Litecoin is so much cheaper than top-performing cryptocurrencies like Bitcoin because so far there is a limited number of buyers. Bitcoin has a much larger influx of capital, which drives growth and increases its value. 

Litecoin could potentially experience the same increase in value in the right market conditions. Until that occurs, the low price makes it a potentially high-risk, and potentially high-reward opportunity.

Is Litecoin secure?

Litecoin is secure. It relies on a technology known as Scrypt. This is a proof-of-work algorithm that is extremely durable, even when subjected to many types of malicious cyberattacks. Scrypt is claimed to be a more secure alternative to the algorithm currently used by Bitcoin.

Who created Litecoin?

Litecoin was created in October 2011 by Charles Lee. He is a graduate of the  Massachusetts Institute of Technology and a former engineer for Google. He was interested in cryptocurrency from the outset and invented Litecoin to be an improvement upon the systems used for Bitcoin.  

Can I mine Litecoin?

In addition to buying Litecoin, many people are interested in “mining” it. Mining cryptocurrency involves allowing the Litecoin network to use your computer’s processing power to create digital coins.

While mining Litecoin was once possible with basic computer hardware like GPUs or CPUs, this is no longer the case. Due to the complexity of the Scrypt algorithm, Litecoin has to be mined with application-specific integrated (ASIC) mining equipment.

Important features involved with Litecoin

Litecoin offers several features that may help you decide whether buying or mining Litecoin is worth your time. 

Some of the key components of Litecoin include:

Coin limit

Bitcoin has a maximum coin limit of 21 million, compared to Litecoin’s limit of 84 million. The lower coin limit of Bitcoin means that the value of each individual unit could remain substantially higher than Litecoin.

Mining opportunities

Bitcoin can still be mined using traditional computer hardware, whereas Litecoin cannot. 

Mining gives you an additional means of building up your portfolio of cryptocurrency. However, Litecoin requires specific hardware and software to mine.

Advantages of Litecoin

Litecoin does offer a few advantages, such as:

  • Rapid transaction speed
  • Low price compared to some other cryptos
  • Advanced, secure algorithm

These benefits must be weighed against a few significant drawbacks, however, which we have highlighted below.

Disadvantages of Litecoin

Litecoin’s price remains low compared to other coins due to several major concerns. The disadvantages of Litecoin include:

  • Not widely accepted as a form of payment
  • Price may not increase
  • Cannot be mined without highly specialized equipment
  • Higher supply cap, which acts to diminish value

Litecoin vs. Bitcoin

Like Bitcoin, Litecoin is one of the “older” forms of cryptocurrency.  A major difference between the two is price. 

A single Bitcoin may be valued at tens of thousands of dollars, whereas a Litecoin might be valued under $200.

However, the price does not tell the whole story. Bitcoin is considered the stronger coin because it is widely accepted. In addition, it has demonstrated significant growth in value over its 12-year existence. 

Is it smart to buy Litecoin?

Is Litecoin worth buying? The short answer is that it depends on the level of risk you’re willing to accept. Litecoin, like other cryptocurrencies, can be volatile. It has the potential to provide a return but also might never be as widely accepted as other cryptocurrencies.

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