In this guide to Litecoin (LTC), we’ll teach you the basics about this altcoin, provide live price data, discuss what drives the price of this cryptocurrency, and compare Litecoin to Bitcoin.
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What is Litecoin?
Litecoin (LTC) is a decentralized, open-source payment network, or cryptocurrency. It allows you to receive, store, and send money to other people.
It’s one of the three largest cryptocurrencies, together with Bitcoin (BTC) and Ethereum (ETC). Litecoin was designed to improve on many of the perceived failings of Bitcoin and to be the silver to Bitcoin’s gold.
To this end Litecoin has a cap of 84 million tokens, this is in comparison to the 21 million capitalization used by Bitcoin. It also has a block generation time of 2.5 minutes compared to Bitcoin’s 10. The aim was to make Litecoin easier to obtain and trade than Bitcoin.
Why Was Litecoin Created?
Litecoin was also created with an aim to reduce the centralization of mining. The cryptocurrency was designed to use a code called Scrypt.
This was designed to be more CPU-friendly to encourage more users to mine and prevent ASIC miners from dominating the network. The hope is that Scrypt can make mining more dynamic and prevent wealthy miners from controlling the direction of the currency.
How is Litecoin Mined?
The way that Litecoin is made is not all that different from Bitcoin. Whereas banks and governments are centralized governments that can physically print currency, Litecoin is a decentralized currency that is created digitally by its community.
The technology behind Litecoin is called a blockchain. This acts as a general ledger, recording every transaction ever made. These transactions are processed by “miners” who create new blocks to add to the chain. These miners are then rewarded with some Litecoin.
This reward incentivizes users to process new blocks and regulates the creation of new tokens. This process is called proof of work where users are rewarded for using their own computing power to create new blocks.
Litecoin’s Proof-of-Work Consensus
Where Litecoin differs is in how it calculates the proof-of-work function. Bitcoin uses SHA-256. The problem is that miners can take advantage of ASICs.
An ASIC is a specialized piece of hardware designed for a specific task, in this case, mining cryptocurrency. The creators of Litecoin were concerned that this could lead to ASIC using miner’s dominating the network.
Their solution was to use Scrypt. This rendered existing ASIC mining rigs useless and theoretically allowed the blockchain to be more democratic. Although there are currently ASIC rigs available for scrypt and AMD graphics cards are capable of mining the scrypt algorithm.
What’s the Price of Litecoin?
What Drives the Price of Litecoin?
Like many other cryptocurrencies, Litecoin’s value is largely linked to that of Bitcoin. If Bitcoin begins to rise or fall in value then you should expect Litecoin to follow suit shortly afterward.
Cryptocurrency is a volatile commodity so you should expect to see these dramatic fluctuations in value on a regular basis.
Litecoin is very similar to Bitcoin and it will generally be able to ride on Bitcoin’s coattails. The main thing traders should look out for is market adoption.
Will Litecoin Follow As A Payment Method?
If merchants decide that they want to accept Bitcoin as a payment method then Litecoin’s similarities mean that it will find it easier to become accepted.
While Litecoin does tend to follow Bitcoin there is also the possibility of hedging taking place. Traders are looking to shift some of their assets as Bitcoin crests in order to limit any losses from a potential crash.
This sort of behavior was observed just prior to the Bitcoin fork in 2017. When traders do this it has the potential to increase the value of Litecoin.
How Do Miners Impact Litecoin Prices?
Miners’ sentiments may also have some impact. The Litecoin mining algorithm is less dependant on electricity than that of Bitcoin and this can lead to lower costs for miners.
If miners decide that Litecoin is giving them more stable returns then they may switch to Litecoin. This increases the supply and encourages traders to buy Litecoin.
What is the Price Outlook for Litecoin?
Like Bitcoin, the short-term price outlook for Litecoin is fairly volatile. In the medium, to long term, it is likely that Litecoin, Bitcoin, and other currencies will generally continue on an upward trajectory, even if it is a rocky road.
If Litecoin becomes adopted as a common payment method then you should expect to see speculation decline as the cryptocurrency begins to stabilize.
Litecoin vs Bitcoin
How does the silver to Bitcoin’s gold compare? What are the key differences to Bitcoin? See below for our head-to-head comparison:
|Litecoin (LTC)||Bitcoin (BTC)|
|Purpose||Created as an "upgrade" to Bitcoin||Decentralized digital currency|
|Founder||Charlie Lee||Satoshi Nakamoto (alias)|
|Market Cap||Over $15 billion||Over $250 billion|
|How long did it take to hit $100?||74 months||51 months|
|Notable Supporters||Jeff Currie (Goldman Sachs)
Peter Theil (Venture capitalist)
Christine Lagarde (IMF)
Marc Andreessen (Early internet Pioneer)
|Consensus Method||Proof of work||Proof of work|
|Network Hash Rate*||Over 295 Litecoins per hour||Over 40 BTC per hour|
|Difficulty increase||Every 2016 blocks||Every 2,016 Blocks|
What Do Experts Say About Litecoin?
It is difficult to fully predict the future of Litecoin and any trader should brace themselves for plenty of ups and downs and keep a well-hedged portfolio.
Experts are generally quite positive upon the future of LTC, although not all believe that it is through Litecoin’s own merit.
Charlie Lee, Litecoin’s creator
Litecoin’s creator Charlie Lee told CNBC:
“I don’t like to speculate on prices because I’m always wrong.”Charlie Lee
Experts from Tim Enneking to Charles Hayter have stated some variation of the opinion that when Litecoin rises in value it is largely due to the success of Bitcoin.
Tim Enneking, Managing Director of Crypto Asset Management
“Litecoin is just cruising in Bitcoin’s wake.”Tim Enneking
There is some backing to their view, Coindesk has found a strong correlation between BTC and LTC prices although they did note that they did not always rise in tandem.
Thomas Glucksmann, CMO of Gatecoin
Litecoin is one of the currencies at the forefront of the crypto-charge. Thomas Glucksmann, head of marketing at cryptocurrency exchange Gatecoin, told CNBC by email:
“Litecoin is one of the major alternative cryptocurrencies, or altcoins, that competes with bitcoin on transaction efficiency so naturally, it is a strong choice for diversification. Litecoin has always been one of the most underrated cryptocurrencies given its advantages over bitcoin.”Thomas Glucksmann
Geoffrey Caveney, Seeking Alpha Analyst
“Litecoin is a worthy option to consider as a third currency after Bitcoin and Ethereum. A small slice of Litecoin, say half of 1% of your portfolio, is worth considering with the slice of profits you may be taking on your bitcoin right now.”Geoffrey Caveney
More Litecoin Facts
- Litecoin was the brainchild of a former Google employee Charlie Lee
- The cryptocurrency went live on October 13, 2013, and incorporated some of Bitcoin’s code
- There was no pre-mine and the launch was intended to be as fair to the community as possible
- In 2013 Litecoin experienced fairly explosive growth and achieved a market cap of $1 billion
- In 2017 Litecoin adopted SegWit and was the first cryptocurrency to make a transfer using the Lightning Network
Where Can I Trade Litecoin?
See our full guide to trading Litecoin, or start your research with reviews of these regulated crypto brokers available in .
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. <b>Between 53.00%-83.00% of retail investor accounts lose money when trading CFDs.</b> You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Please Note: Availability subject to regulations. Cryptocurrency CFDs are not available to UK retail traders.
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