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Litecoin: What is LTC and How Does it Work?

Litecoin is an alternative cryptocurrency based on the model of Bitcoin. Learn what is Litecoin used for and the main advantages of Litecoin.

Litecoin is one of the oldest cryptocurrencies in existence – and as of October 2021, it’s 10 years old.

The main thing to know about the Litecoin cryptocurrency is that it’s very similar to Bitcoin from a technical perspective. However, there have been a few gentle modifications that are designed to make LTC a more practical payment method.

Here, we’ll give you top tips on how to buy Litecoin, and examine how Litecoin’s future is shaping up as it battles for market share with thousands of other digital assets.

What is Litecoin?

Litecoin bills itself as a “peer-to-peer internet currency that enables instant, near-zero cost payments to anyone in the world”. Although this may sound eerily similar to the likes of Bitcoin and Ethereum, it’s worth remembering that both of these blockchains often struggle with high transaction fees due to congestion. As a result, such cryptocurrencies may not be practical for making everyday purchases.

A key difference separating BTC and LTC is the maximum supply of coins that will ever exist. While Bitcoin has a hard cap of 21 million, the total quantity of Litecoin is four times larger – with an upper limit of 84 million. Both cryptocurrencies rely on miners to validate transactions and discover new coins, and another similarity lies in how they halve block rewards every four years.

A new Litecoin block is created every two-and-a-half minutes – and as of 2021, the block reward stands at 12.5 BTC. Halvings take place every 840,000 blocks, and the next is due to occur in September 2023.

What is Litecoin used for?

Litecoin’s main selling point is that it’s a faster alternative to Bitcoin. Not only can it process 56 transactions per second, but transactions are also finalized in a quarter of the time.

For many years, LTC was one of the biggest cryptocurrencies in terms of market capitalisation – and was comfortably in the top five until 2018.

Although Litecoin’s price has risen substantially over the years (it was worth just $3.58 in May 2013), LTC has fallen down the rankings as more modern digital assets have been launched. Although prices did hit an all-time high of $412.96 eight years later, its value tumbled later in the year.

One notable incident in 2021 saw a press release declare that Walmart was going to accept Litecoin as a payment method. The news was reported by major publications and was even retweeted by the Litecoin Foundation, but the major American retailer later denied the story and said it was false. Litecoin’s value surged and then crashed.

How does Litecoin work?

While Bitcoin relies on the SHA-256 algorithm, Litecoin was built to run on newer technology known as Scrypt. For several years, this meant anyone with a desktop computer was able to mine LTC on their computer with ease. Unfortunately, standards have changed over the years, making it much harder for CPUs to compete.

Main advantages of Litecoin

As cryptocurrencies continue to gain mainstream adoption, it’s possible that LTC could be embraced by a growing number of merchants and retailers. Indeed, it is one of the four digital assets that PayPal has added to its crypto service, along with the likes of Bitcoin, Ether and Bitcoin Cash. This now means that LTC can be used with millions of merchants around the world – a crucial milestone.

Other advantages include how LTC offers a compelling alternative to fiat-focused money transfer services that charge high fees when funds are being sent across borders. Not only can this eliminate punishing commissions that are levied when one currency is changed for another, but it can also speed things up because of how middlemen are removed from the equation.

Unlike many cryptocurrencies, LTC also enjoys widespread acceptance across a number of mainstream exchanges – meaning that it is easy to buy and sell.

Buy Litecoin

How to buy Litecoin

If you want to buy Litecoin, you have a number of options. A number of trading platforms offer an effective on-ramp for people who are using fiat currencies to buy crypto for the very first time. This means you can use a number of conventional payment methods – including credit cards and bank transfers – to get your hands on LTC.

Alternatively, if you’re looking to switch some of your existing cryptocurrency holdings to LTC, most major exchanges will offer trading pairs that unite Litecoin with the likes of Bitcoin, Ether and Tether.

When considering where to buy Litecoin, you should also reflect on whether you plan to use it to make everyday purchases.

If you’re aiming to speculate on future price movements, contracts for difference can be a viable alternative. This gives you exposure to fluctuations in Litecoin’s value without having to own the underlying asset. CfDs also enable investors to enter into short positions if they believe an asset’s value is going to fall in the future.

Looking ahead

Litecoin is as active as it was 10 years ago – and a foundation has the sole objective of ensuring the cryptocurrency enjoys wider use. Crucially, 2021 saw Litecoin add support for smart contracts, decentralised autonomous organisations, tokenised assets and non-fungible tokens, all of which are regarded as crucial for being competitive with the likes of Ethereum.


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