Litecoin (LTC) is one of the oldest and most trusted cryptocurrency coins out there. It would be hard to stay in the crypto space for long without coming across it. Litecoin is a digital payment system that operates similarly to Bitcoin.
In addition, Litecoin was designed to address Bitcoin’s shortcomings, which was the first cryptocurrency to succeed. Many in the industry compare Bitcoin to ‘gold’ and refer to Litecoin as the ‘silver’ equivalent.
Investing In Litecoin
Litecoin is a great investment opportunity thanks to its interesting technology and low transaction fees. However, you should keep in mind that the crypto industry as a whole is still highly unregulated. If you want to invest in LTC, you should make sure that your holdings of this asset represent a relatively small fraction of your overall portfolio.
During its long existence, the value of Litecoin has gone through some volatility, much like the value of every other cryptocurrency. Price drops have occurred almost immediately after price spikes.
What does this imply for people who have invested in Litecoin? Is investing in Litecoin a wise financial move? To answer that, you can navigate here and see the pros and cons below:
One of the main benefits of Litecoin is that it belongs to an open-source ecosystem. This means that the network is transparent—everyone can see how the system works and everyone can make changes to the system.
The ability to make speedy and convenient technical upgrades to the system is facilitated by its open-source nature. Hence, changes are usually made to meet market needs.
- High Liquidity
When it comes to market capitalization, Litecoin is currently in the top 10 largest cryptocurrencies. Because of its large user base, Litecoin holds a unique degree of public attention and market liquidity. Every day, about 2 million coins are exchanged at one location alone.
Given the high volatility of the crypto market, liquidity is crucial. It just takes one seller to drive down the price of a cryptocurrency if there isn’t enough supply and demand for the market. The good news is that LTC investors will never have to sell their holdings.
- Widespread Use
Adoption is a challenge for many cryptocurrencies, which has hindered their chances of gaining widespread adoption. To operate independently of governmental authorities like central banks, cryptocurrencies typically employ a technology called the blockchain. Interestingly, Litecoin is presenting itself as a frontrunner in crypto payments, which are still uncommon.
According to the creators of LTC, cryptocurrency has been used in millions of transactions. Meanwhile, increased demand for Litecoin as a medium of exchange might drive its price higher and benefit early adopters.
- Low Inflation Risk
Due to Litecoin’s decentralized nature, there’s no room for it to experience inflation. And because the blockchain technology, which supports Litecoin (LTC), has no upper limit, concerns regarding the currency’s long-term devaluation have been reduced.
- Mining Algorithm
Litecoin’s mining algorithms are far less complex than Bitcoin’s. LTC is easier to mine on computers with lower energy consumption because of its higher transaction speed.
For LTC mining, all you need is an application-specific integrated circuit (ASIC) device running on scrypt algorithm that can be connected to mining farms. A miner with less hash power can quickly join forces with a miner with enough power to ensure a consistent stream of block rewards.
- Declining Interest
Investors are increasingly tempted by the trendier features of decentralized finance (DeFi) currencies that make use of smart contracts. Smart contracts are used in decentralized apps (dApps). These dApps use smart contracts to allow platform-supported deals.
Ethereum was developed with this feature, while LTC wasn’t. Because of this, investors are shifting their focus away from more basic transactional cryptocurrencies like LTC.
- Branding Issues
There are issues with Litecoin’s branding because it’s often mistaken for Bitcoin, although Litecoin is much more efficient. Though it greatly transformed Bitcoin, its special qualities have not been recognized. In light of Bitcoin’s adoption of the Segregated Witness (SegWit) algorithm, Litecoin’s distinctiveness has been weakened.
- Slow Growth
It’s consistent, but it doesn’t have the kind of growth that would interest investors. Compared to other cryptocurrencies, Litecoin’s market value is lower and its market share is decreasing. Since alternative blockchains like Stellar Lumens are more scalable, Litecoin may struggle to keep up with them.
Litecoin is just one cryptocurrency that continues to develop alongside its competitors. In summary, Litecoin keeps evolving to become a stronger player in the cryptocurrency market. Consider the pros and cons of both short-term and long-term investments when deciding whether or not to put money into Litecoin.