Investing in Litecoin – The Complete Guide to LTC

Litecoin (LTC) is a digital currency that remains fully decentralized. It is open to anybody in the world who wishes to buy and trade in it.

Often considered the ‘lighter‘ version of Bitcoin, Litecoin is based on the same principle. However, it remains a bit  overshadowed by Bitcoin in generally in the crypto world.

In this guide we’ll look at the background of it and how it functions. Then we’ll cover the price history of the crypto and examine whether it’s worth investing in.

If you decide to invest, we’ll explain how you can also invest or trade Litecoin as a CFD. It’s all here in this guide.

Let’s get started.

What is Litecoin

Litecoin, also known as LTC, was invented in 2011 by Charles Lee. His aim was to base its operation mode on Bitcoin, but with a ‘lighter’ and faster transaction time.

Like Bitcoin, all the transactions made with this coin use blockchain technology to ensure security. This has caused it to gain a large following, even if its rivals like Ripple and Ethereum may be more popular.

Importantly, the currency is entirely decentralized. This means that transactions remain anonymous and that the company isn’t controlled by any financial authority. For example a traditional currency like £/GBP will be controlled by the Bank of England and the Royal Mint.

Besides anonymity, the virtual coin also offers its users very low transaction costs. It’s possible to transfer money internationally at very affordable prices at a very fast rate.

In fact, it has one of the fastest transaction speeds compared to the other digital currencies. Litecoin only takes 2.5 minutes to complete a transaction, this is much faster than the 10 minutes it takes Bitcoin.

How Does Litecoin Work

The distribution of this coin is done through wallet encryption. This ensures the security of the coins and you can view your transactions via the wallet.

All cryptos rely on complex algorithms and blockchain technology in order to create a secure transaction system. For Litecoin, this allows its users to store, pay and send its digital coins safely.

For instance, all transactions with this technology are recorded in the platform’s blockchain. This is done by adding codes, (or blocks), that can block the transaction at anytime. This system is based on the operation setup of Bitcoin.

However, this virtual coin does have a feature which completely differs from Bitcoin. Firstly it uses Scrypt as its proof of work algorithm. This prevents individuals from customizing computers with the aim of illegally mining the currency.

Bitcoin uses the SHA-256 algorithm, which is considered more complex and aimed at professional miners rather than normal users.

Another difference is that this technology has a different coin limit amount compared to Bitcoin. Currently there is a 21 million coin limit for the Bitcoin network, however the value of 1 whole Bitcoin can be divided into very small amounts.

Whereas for Litecoin there is a higher limit of 84 million digital coins. It’s also possible to buy them in whole units instead of small fractions. This is good option if you’d rather buy a ‘whole’ and complete coin rather than in fractions.

Litecoin Price

Based on figures from CoinMarketCap, Litecoin remains the 7th most popular digital currency worldwide. Ahead of it remains Bitcoin Cash, Ripple, Ethereum and still in 1st position remains Bitcoin.

Regarding the price though, in June 2019 it went past $137 for the first time since its peak December 2017 price of $237,57. This is good news for investors as it confirms that its price has been steadily growing this year.

2018 was generally a poor year for crypto prices, with many digital currencies feeling the affects of a bear market. It also experienced price volatility when it reached a yearly low of $29,86 per coin in December 2018.

In 2019, the Litecoin price gradually stabilized, however there was a big increase in the coin’s value in June 2019. This was mainly due to market interest and investors being aware of the scheduled August halving event, so there was a lot of price movement in the weeks leading up to the occasion.

On August 5th, the planned Litecoin halving took place, so the price spiked in the months leading up to the event. Then the price dropped but remained stable for the last half of 2019.

2020 has been the first year of the Covid pandemic around the world, in this period the price of Litecoin has been stable at around $ 45. The real growth has happened at the end of the year and the beginning of 2021. In this moment, since big banks and companies like Tesla announced to believe in cryptocurrencies and are willing to invest in them, the price of Litecoin touched of $ 300.
At the beginning of 2022 the price is at $ 100, but the trend and forecasts are promising for the future.

The Senior Analyst at eToro, Mati Greenspan, also stated that Litecoin is “one of the most established cryptos in the market and the fundamentals are quite strong”. This is generally very encouraging news for any investor to hear. 

Litecoin Price 2022

As for the Litecoin price performance in 2021, this year has seen a lot of volatility in the cryptocurrency markets.

The economic impact of the coronavirus has been felt in the financial market across the world. In turn this has impacted the cryptocurrency market, with the price of coins growing after companies and individuals decided to invest in them.

As for Litecoin though the first 2 months of 2021 saw the LTC price reach $300 in May. But this sharply fell to $120 in July.

Since then the price has hovered around $100, but many analysts believe that it’s likely to remain between the $130 and $170 mark for the rest of the year. 

Some key events for Litecoin investors to follow are any economic decisions made by Governments as a result of the Covid-19 which could cause the crypto market to react.

For the year 2022 the market should follow the trend it started at the end of 2021. This is because even more investors have decided to switch from traditional trading to cryptocurrency trading. The cause of this decision has probably been the instability that the traditional stocks and indexes have seen during the pandemic.

Is it Worth Investing in Litecoin?

As well as the value growth, another attractive reason to invest is that the company offers very low transaction fees. This is appealing if you’re looking to save on external fees, especially as Litecoin has a near zero fee policy in place.

Consequently, Litecoin is the most popular currency for many investors because it’s a cheaper coin to buy outright compared to Ethereum and Bitcoin.

If you’re a trader though and you want trade on the Litecoin price with a CFDs trading platform, there are also good reasons to invest. However, trading is also different to buying a crypto outright.

CFDs replicate the performance of other financial assets. For example Litecoin CFDs copy the behaviour of the actual prices. So you must remember that when trading Litecoin using CFDs, you don’t actually own/buy a it.

Instead you open a trading position based on whether you think the value of Litecoin will go up or down.

For instance, you can set your trade to ‘sell‘ if you think that the Litecoin price will decrease. Or if you believe that the price will go up you set your trade to ‘buy‘.

If your trading action matches the market change, you make a profit.

That’s why it’s a good idea to invest in Litecoin via trading, as you can make a profit even if the Litecoin price drops. Whereas if you only own Litecoin and the coin price decreases, you lose the value of that coin.

With the crypto market being reasonably volatile and good for short term trading, it may be worth investing in Litecoin as a trader. Especially as the coins value has grown and changed a lot over the past year.

How To Buy Litecoin

How you buy Litecoin is entirely up to you. You must decide whether you want to invest by trading or by purchasing directly it.

If you decide you want to only buy and own Litecoin, you’ll need to go to an official coin exchange. Some examples include such Coinbase or BitPanda. It’s possible to buy Litecoin using a credit card or by bank transfer.

Recently the broker eToro has made it possible to buy cryptocurrency directly from their eToro wallet for everybody except for US and FCA traders. This includes Litecoin as well as many others. So if you want to purchase AND trade Litecoin, then with eToro you can do both. However you will need to have an eToro trading account ready before you can access the eToro wallet.

Before you start buying any coins, having a digital wallet is crucial to storing any cryptocurrency.

Just like any other financial business there are sometimes risks. Therefore it’s vital that you have a secure Litecoin wallet where you can store your coins.

NEVER store any purchased LTC on the cryptocurrency exchange where you bought them from. This is because there is always the risk that the cryptocurrency exchange might be hacked and your digital coins will be stolen.

If  you wish to invest in Litecoin by trading, then you will need an online broker platform instead.

There are many regulated brokers to choose from such as IQ Option, eToro and Plus500. You can see more details about some of these brokers below.

To start trading you’ll need to sign up for an account with your selected broker. Or if you are already a customer just login with your existing details. You can then search for Litecoin among the CFD cryptocurrency options.

Where To Buy Litecoin

As mentioned previously, if you’re looking to trade Litecoin, you can do so via regulated online CFD trading platforms.

It’s important to use only regulated brokers as this means that they are monitored by official regulation authorities. They also have to follow financial rules put in place to protect traders against fraud and scams.

We only discuss regulated brokers, so you can be reassured that the ones listed below are fully regulated. For each broker, it’s free to open a trading account with them. All the brokers offer a free demo account option too. This is good if you are looking to test the platform before committing to a paid trading account.

eToro is the leading social trading broker. They are well-known for their social news feed and CopyTrader features.

It’s possible to trade Litecoin with them as a CFD instrument although US and FCA customers do not have access to crypto CFDs. Once you are logged in to your account, search for Litecoin or LTC in the market search bar at the top of the platform page.

The Litecoin page will appear and you can see the latest newsfeed comments from other eToro traders. You can also view the Litecoin price stats and charts. If you wish to open a trade just click on the blue ‘Trade‘ button.

From here you can set up the investment amount as well as the stop loss and stop limit. Then select either ‘sell‘ or ‘buy‘ based on what you think will happen to the Litecoin performance. This will open the trade for you.

Investing in Litecoin

Before investing in Litecoin, either through trading or ownership, it’s important you understand Litecoin and the cryptocurrency market. Hopefully this guide has helped and you can feel more confident in your investment.

There are key things to consider before investing in Litecoin. This includes deciding on the number of coins to invest, the type of investment plus recent Litecoin market statistics.

Deciding on the amount of Litecoins to invest in is a key decision to make, especially if you are buying coins on a cryptocurrency exchange.

If you are trading, you should consider whether to hold the coins for a short or for the long term period. This will affect your trading strategy so it needs to be thought about.

Investing in Litecoin for the short-term means that you hold the coins for 1 to 12 months. Investing long-term refers to holding the Litecoins for a very long time, this is usually for a period beyond a year.

Of course with either time length the value of the Litecoin may greatly increase or even go down beyond your original investment price.

Types of Investment

An investment plan is worth having when investing in Litecoin. A plan will help you decide the amount to invest into Litecoin.

If your plan is to trade regularly, having a good understanding of the current Litecoin market will help. This will also help you to maintain an investors’ mentality, which is a good thing to have when trading. Impulsive trades made without much planning often don’t perform well.

Studying Litecoin market indicators along with technical analyses can help you to decide which type of investment you should engage with for Litecoin.

For instance, you can check Litecoin’s cryptocurrencies market statistics, these analyse the behaviour of the market based on different yearly time periods. It’s worth understanding this before investing.

Although this exercise might be demanding, especially if you’re a beginner, it’s crucial to follow closely the market dynamics of Litecoin. We would highly recommend doing this if you plan on short term trading.

This is significant as it allows traders to identify the best time for investing in order to receive the most benefits from the market.

Investing in Litecoin can be immensely rewarding, especially as it remains established in the top 10 of digital coins. Litecoin also has more than 7 years of market experience since its launch in 2011.

It remains a popular choice for many investors worldwide. Because it has a high trading volume, finding buyers to sell to is not an issue at all.

As well as the high trading volume, Litecoin has been listed on Coinbase to be one of the top cryptocurrencies that can be processed. This means that with Litecoin you can easily buy or sell your coins from your wallet, which makes it possible to deposit and withdraw into real-world/fiat money.

Mining Litecoin

If you are interested in mining Litecoin, the coin has been noted for its less complex Scrypt mining algorithm. Compared to Bitcoin, it’s also slightly better efficiency in terms of energy consumption during the mining process.

Litecoin mining is done by using specialist computers and hardware. Miners are rewarded with brand new Litecoins when they create a new block for Litecoin’s blockchain.

By creating new blocks for the existing blockchain, the miners are helping to verify and secure transactions across the network.

One important update to note is that since August 2019, Litecoin halved its block reward for miners. Due to this ‘halving‘, the mining reward has decreased from 25 LTC for each block to 12.5 LTC.

This halving has been scheduled by Litecoin to take place every 4 years, so each time it happens the amount of mining rewards that miners receive gets reduced by half. This is also a practice that Bitcoin follows.

So if you plan on mining LTC, it’s worth being aware of when the next halving event will take place.

To see further information about how to trade cryptocurrencies and investing in them, please visit our Cryptocurrency Trading page here.