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6 Things to Know About Litecoin

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By , Updated On April 26, 2021

Litecoin, often referred to by its exchange abbreviation of LTC, is one of the oldest coins on the market and came about as a direct result of and as a highly similar alternative to Bitcoin many years ago. Since then the coin has grown in both market cap and popularity, with tens of millions of coins in circulation and tens more to mine and complete. Litecoin is consistently ranked among the top ten biggest and most influential cryptocurrencies on the market, for a variety of reasons. Below are 6 things to know about Litecoin and why it is one of the most sought after and highly mined coins around. 

 

Many Storage Options 

A nice thing about Litecoin is the number of storage options available to holders. If you are planning on just engaging in small day trades, you can always leave your Litecoin in your exchange wallet. This is, however, not considered a safe way to store crypto these days, as there have been many high-profile hacks and breaches over the last few years with no recourse for investors. Luckily there is no shortage of Litecoin wallets available for owners and traders, which allow you to hold Litecoin alongside a wide range of other cryptocurrencies. 

If you are planning on making major trades or transactions with your Litecoin, however, your best bet is to invest in a hardware wallet, which will keep your crypto assets stored offline until you actually need them. This means that it is impossible for online cybersecurity threats to access your wallet, although keep in mind that if you lose these hard wallets, you lose your crypto assets along with them. 

 

One of the Earliest Coins on the Market

Litecoin might not get the coverage of Bitcoin, but it is still one of the earliest cryptocurrencies on the market, and it is still one of the largest coins based on its market cap (more than 17.5 billion dollars). Litecoin is a massively popular coin that can be found trading on almost every crypto exchange, in addition to being one of the most widely accepted coins in the world. Litecoin is used for buying goods and services and also for investing in other up-and-coming cryptocurrencies. 

 

How it Works

Litecoin works very similar to its bigger brother Bitcoin and is directly inspired by Satoshi’s original Bitcoin protocol. It was actually one of the earliest Bitcoin forks available, which means it is almost indistinguishable technologically from Bitcoin, with some salient differences, however. The coin’s developer, Charlie Lee, started Litecoin by first borrowing the foundational code from Bitcoin and then upgraded it so that it radically cut down on Bitcoin’s 10-minute block approval time. 

 

It has a Finite Supply

One of the most important features of Litecoin is its supply. Technically, for something to have value, there cannot be an infinite supply of it. Scarcity, among other things, drives price. Unlike a fiat currency, which central banks around the world can, essentially, print as much of as they like (devaluing the currency in the process), Litecoins are only created at set intervals and only when a block has been completed. 

 

Because these coins can only be created at set intervals, this means that there will only ever be a total of 84 million Litecoins produced. This is the amount that was arrived at by the developers based on simple calculations involving time and the number of Bitcoin tokens. The devs concluded that because Litecoin is processed four times faster than Bitcoin, it would make sense to ensure the network had four times as many coins. The fixed number of coins also means, critically, that inflation won’t have an impact on the value of the currency over time. In theory, the more time that passes, the more value that each Litecoin should have. There are now more than 65 million Litecoins available. 

 

Transaction Speed

Because Litecoin managed to lower the block transaction speed from 10 to just 2.5 minutes, it is a much quicker solution for sending coins to and from wallets. This has made it one of the preferred methods for sending coins back and forth between exchanges, as delays in transaction time can have adverse effects on your investments, especially if you are buying and selling a large amount. Bitcoin, on the other hand, still takes much longer but is a preferred store of value. 

Transaction speed is important with any asset because buyers and sellers want to be confident that the price at which they buy or sell something is as close to the price at the time the deal is closed. If you purchase something right now at 5 dollars, but by the time the asset reaches your account it is now worth $4.95, this is not an efficient transaction system. The seller, in this case, benefits, but the same lag could also be disadvantageous to this person in the future. 

 

The Competition

There is a lot of competition in the top ten cryptocurrencies table, with Bitcoin almost uncatchable at this point, but with other coins jockeying for position throughout the pack. Filecoin, for instance, saw an increase of 42 per cent at the beginning of April 2021, pushing past Litecoin into the number 9 spot. This was thanks largely to institutional demand for the coin, and as both retail and institutional interest in these coins grows, different coins will continue to surge and retreat in the top rankings. 

 

Conclusion

Cryptocurrencies have rebounded in a major way over the past year, thanks to the enormous success of Bitcoin and others, as well as a tremendous amount of mainstream media coverage and a steady supply of institutional investment and interest, which in turn has put the top currencies on the minds of retail investors, many first time crypto investors. Litecoin is one of the most highly respected coins for many reasons, including all of the ones mentioned above. While no longer a “cheap” alternative to Bitcoin, Litecoin is here to stay and will likely continue to move up in the top coin rankings over the coming months and years.