The Beginner’s Guide to Litecoin
Litecoin was founded as an alternative to Bitcoin and was developed to fix some of Bitcoin’s perceived shortcomings. Litecoin is created to be ‘lightweight,’ making it more plentiful and numerous than Bitcoin. Also, scrypt is its proof-of-work algorithm, guarding it against ASIC mining (even though a few companies have said they are going to shortly launch scrypt ASIC miners).
The Litecoin network processes its blocks faster than Bitcoin. The network can produce the total amount of 84 million Lite coins, as opposed to 21 million BTC on the Bitcoin network. If you want to learn more about Cryptocurrency, you can read this introduction about how to start buying digital currencies.
How to Buy Litecoin
Things to note before you start to buy Litecoin:
- Following price growth of Bitcoin in November 2013, Litecoin became a lightning rod for speculators. But, since then, prices have fallen in parallel. The two cryptocurrencies’ prices will likely move largely in the same direction, even though the value of Litecoin is by far the lesser of the two.
- Bitcoin investors who are seasoned should not have any issues with getting used to Litecoin. However, new investors may struggle because the altcoins’ infrastructure is not as grounded than that of Bitcoin.
- You can also gain Litecoins by mining it with regular computing equipment.
- Make sure you do careful research prior to investing your money and don’t risk amounts of money that you can’t afford to lose.
Even if you think you know the risks, have done lots of investigation, and are still interested in entering the Litecoin market, there are still some potential problems you may have missed.
Bitcoins for Litecoins? Or Cash for Litecoins?
Purchasing Litecoins isn’t quite as simple as it is with Bitcoins. This is hardly a shock given the infrastructure of Litecoin, which is lesser-developed. One of the simplest ways to buy Litecoins is by purchasing them alongside Bitcoins – this also is the quickest and cheapest option for most users.
You might think the easiest way for buying Litecoin would be using a fiat wire transfer, in which you would use an exchange, yet this is an arduous process because some main Bitcoin exchanges, such as Coinbase and BTC China, do not currently handle any Litecoin transactions.
One of the most apparent advantages of using Bitcoin to buy Litecoin is expediency. Theoretically, this exchange should take only a few minutes. However, international wire transfers can take a number of days to process and clear, meaning you will potentially incur some additional expenses. The limited amount of Litecoin exchanges ensures that a large segment of possible investors has to depend on international transfers to do business.
An alternative to this process is to locally buy Litecoin and therefore, forego the inconvenience of having to wire money internationally and to convert it into Litecoin. A positive side is that you’ll receive your Litecoin sooner. It’s possible that you will get a great price when converting it, provided that the Litecoin price continues to increase. The downside to this process is that it’s likely that you’ll spend more on Litecoin if you’re limited to a local market.
Litecoin trading can be extremely profitable for all level of traders. Because the Cryptocurrency market is fairly new, highly fragmented as well as having huge spreads. Arbitrage and margin trading are generally available.
When you buy Litecoins online as CFDs with a regulated broker, you can trade long or short and buy or sell instantly. This gives you the added advantage of being able to act on your analysis of the future of digital currencies.
If you are looking to trade Litecoin CFDs take a look above for our top recommendations.
How to Choose an Online Broker to Trade or Buy Litecoin
Because there’s so much competition in the Litecoin exchange market as well as having countless Brokers and Exchanges to choose from. It can be difficult to know which option will work best for you. Here are a few things to keep in mind before deciding on the right Broker for your Litecoin trading:
Use a regulated CFD Broker or Exchange. The regulatory body develops rules and services protect the integrity of the market, as well as traders, and investors. Due to possible safety concerns, you should exclusively open accounts with regulated brokers.
Cryptocurrency trading happens 24 hrs a day, so customer support should be available at all times. You’ll want to be able to speak with a live support person. The representative’s ability to answer your questions regarding spreads and leverage, as well as company details is very telling. The details of a good broker should be out in the open for everyone to see, either online or otherwise.
An ideal broker for Litecoin trading should be able to offer clients multiple account options or provide an element of customizability. Look for a broker that offers competitive spreads and easy deposits/withdrawals.
If you want to buy Litecoins it will, of course, cost money. However, unlike buying stocks or bonds, CFD brokers generally charge a percentage to buy Litecoin. You may consider looking for a broker that charges a flat rate fee instead of the percentage model.
Because Litecoin is traded in a market where people are both looking to buy or sell the currency, it’s crucial to consider the amount of liquidity that an exchange can have. Liquidity is the ability to sell without the price being significantly affected, causing the price to drop.
For more information on cryptocurrencies, please see our tutorial: The Basics of Cryptocurrency