Explaining cryptocurrencies: What is Litecoin?
Litecoin is, in terms of market capitalisation, the third-largest cryptocurrency in the world, behind only Bitcoin and XRP.
Like its rivals, it is a digital currency, mined and generated using blockchain technology, that can be used to facilitate online payments. Unlike some of its rivals, however, Litecoin can boast a much faster transaction rate – 2.2 seconds per transaction – and has a higher level of supply.
Only 21 million Bitcoins will ever exist, for example, whereas 82 million Litecoins will be mined.
A good comparison is if Bitcoin is digital gold, then Litecoin is a digital silver: still precious, but much more abundant.
However, the rate at which Litecoin can be successfully mined is slowing. It will half until the total number has been mined, thus keeping supply limited.
Despite this, Litecoins can be mined with off-the-shelf computer parts. Bitcoin, on the other hand, requires huge computing power to successfully mine a coin.
Over 200 vendors accept Litecoin as payment on their platform or offer the ability to buy, sell and hold Litecoin, including Apple Pay and PayPal. It has also begun to gain traction as a legitimate payment method in online stores. For example, Litecoin is the official cryptocurrency of US NFL team the Miami Dolphins and fans can buy merchandise from the team shop using Litecoin.
Like many cryptos coming in Bitcoin’s wake, Litecoin has enjoyed stronger positive price movements in 2020.
From November 2020 to January 2021, the LTC/USD pair had accumulated 108% gains.
At the time of writing, Litecoin was trading at $126.87. But, like all cryptos, LTC is also subject to high volatility. Its record high was registered in December 2017, at $336.72. Despite this, this fluctuation is not as dramatic as some other cryptos. Dash for example had an all-time high of $1,441 in December 2017 but is now trading at around $122.82.
How is Litecoin traded?
Litecoin is available on crypto exchanges for investors looking to buy the tokens and hold onto them. Binance is currently the world’s largest cryptocurrency exchange.
Traders, who speculate on Litecoin price movements instead of holding onto the asset itself, prefer derivatives like CFDs and futures. Litecoin futures are available to trade via the Marketsx platform.
Please be aware trading any financial product contains risk of capital loss. Only trade if you can afford any potential losses.