What is Litecoin?
Litecoin(LTC) is a peer-to-peer cryptocurrency founded in 2011 by Charlie Lee(a former Google employee). It has many similarities to Bitcoin and is based on the original source code of Bitcoin.
Litecoin is designed to be used for cheaper transactions and to be more efficient in everyday use. Bitcoin, by contrast, is used more as a store of value for long-term purposes. Litecoin has a much higher coin-cap market value than bitcoin, and the mining process is much faster. That means trading is faster and cheaper, though usually on a smaller scale.
Like bitcoin, Litecoin is a digital currency. Using blockchain technology, litecoin can be used to transfer money directly between individuals or businesses. This ensures a public ledger for all transactions and allows money to operate a decentralized payment system that is not subject to government control or inspection.
How does Litecoin work?
Litecoin involves creating and transferring digital coins through an open source encryption protocol. It uses blockchain technology to record a decentralized public ledger of all transactions.
What is blockchain?
The blockchain is a shared digital ledger in which a record of all litecoin transactions is kept. Miners group recent cryptocurrency transactions into “blocks.” These blocks are then protected by encryption before being linked to the existing blockchain. Similar blockchain technology is used in a number of different cryptocurrencies, including Litecoin and Bitcoin.
What is mining?
Mining is the process of using mining software to pin each block to an existing blockchain. Once a block is secured, new cryptocurrency units are issued. Miners can inject the equipment directly into the market.
What’s the difference between Litecoin and Bitcoin?
While there are many similarities between bitcoin and Litecoin, some of the subtle differences include:
Speed of transaction
Although Litecoin requires more sophisticated technology to mine than bitcoin, it actually generates blocks four times faster. Litecoin can also process financial transactions more quickly and can also process a larger number of financial transactions in the same time period.
Number of coins
Both bitcoin and Litecoin have a limited number of coins in circulation. Bitcoin has 21 million coins available, while Litecoin has 84 million coins available, four times more than Bitcoin.
Market value
Litecoin’s market cap is much smaller than bitcoin’s, but it is still one of the most traded cryptocurrencies.
Algorithm of calculation
Miners must successfully solve the hash function in order to add a new block of the cryptocurrency to the blockchain. Litecoin and Bitcoin use different mining algorithms, with Scrypt being the hash function for litecoin and SHA-256 being the hash function for bitcoin. Scrypt was originally chosen by the litecoin development team to avoid mining being dominated by ASIC-based miners. This will allow CPU – and GPU-based miners to compete. Scrypt mining algorithms took up more memory and were initially less suitable for ASIC miners, thus opening up more opportunities for other miners. However, ASIC-based mining machines with Scrypt capabilities have been developed over time. This means that CPU – and GPU-based miners no longer have effective mining tools due to lower computing power, and ASIC can generate more hashes per second.
How to trade litecoin
When you buy litecoin on an exchange, the price of one litecoin is usually quoted relative to the US dollar (USD). In other words, you sell dollars to buy litecoin. If the price of litecoin rises, you will be able to sell it at a profit because it is now worth more than it was when you bought it. If the price falls and you decide to sell, you will suffer a loss.
Using CMC Markets, you can trade litecoin through a spread betting or Contract for Difference (CFD) account. This allows you to speculate on price movements without having to own the actual cryptocurrency. You do not acquire ownership of litecoin. Instead, your position increases or decreases in value depending on the price of litecoin versus the U.S. dollar.
Spread betting and contracts for difference are leveraged products. This means that you only need to deposit a percentage of the total value of the trade to open a position. Instead of buying litecoin directly to spend it all at once, you can use your initial deposit to gain more exposure. Although leveraged trading can magnify your gains, losses will also be magnified based on the full value of the position.
Why trade Litecoin with CMC Markets?
Open a long or short position *
Spread betting and contracts for difference allow you to trade on rising and falling prices. You don’t have to own litecoin to sell (short sell), which is not possible on cryptocurrency exchanges.
Efficient use of funds
Leveraged trading means that you only need to deposit a percentage of the total value of the trade to open a position. With a major cryptocurrency exchange, you need to deposit the full value of the contract. Keep in mind that gains and losses are magnified and you may lose more money than you put into the position.
No exchange accounts or wallets
Unlike the underlying litecoin, there is no need to open an exchange account or wallet to hold the litecoin you buy. That means no waiting for exchange approval, no worries about securing your wallet, and no charges if you have to withdraw funds later.
Trade with well-known suppliers
CMC Markets is a regulated provider. We have 29 years of experience in the industry and support all our customers when the market opens up.
Trade responsibly
For most people, cryptocurrencies are still relatively new and can be highly volatile. We want our customers to have access to in-depth educational materials to support their transactions.
What factors affect the price of litecoin?
Litecoin’s volatility may be driven by similar factors as bitcoin, such as:
Regulation: Cryptocurrencies are not currently regulated by governments and central banks. There are doubts about how this will change in the next few years and what impact this will have on values.
Supply: There is a certain amount of litecoin available to mine (84 million). Availability may also fluctuate depending on how quickly a coin enters the market.
News: Litecoin’s price can be influenced by public awareness, security, longevity and the price of other cryptocurrencies like bitcoin.
Adoption: litecoin has not yet been adopted as a payment method by businesses or consumers. However, some see potential in blockchain technology and believe it could be adopted more widely in the future.
