What is Litecoin?
Litecoin (LTC) is a peer-to-peer digital encryption currency founded by Charlie Lee (a former Google employee) in 2011. This currency has many similarities with Bitcoin and is based on the original source code of Bitcoin.
Lite coin is mainly for small transactions and is more efficient to use in daily life. In contrast, Bitcoin is more used as a store of value for long-term investment purposes. Compared with Bitcoin, the market value limit of Lite coin is much higher, and the mining process is faster. This means that although the transaction size of Lite coin is generally smaller, the transaction speed is faster and the price is lower.
Like Bitcoin, Lite coin is a form of digital currency. Litecoin uses blockchain technology and can be used to directly transfer funds.
This can ensure a public ledger that records all transactions, and realize the currency operation model of a distributed payment system, without being restricted by government control or censorship.
How does Litecoin work?
Litecoin involves the process of creating and transferring digital currencies through open-source encryption protocols.
It uses blockchain technology to record a distributed public ledger of all transactions.
What is blockchain?
Blockchain is a shared digital ledger that contains records of all Litecoin transactions.
Miners group recent cryptocurrency transactions into “blocks.” After being securely encrypted and linked to the existing blockchain, these blocks are added to the blockchain. Blockchain technology is also used by many other digital currencies, including Litecoin and Bitcoin.
What is mining?
Mining is the process of using mining software to safely add each block to the existing blockchain. After the block is safely added, a new digital cryptocurrency unit will be released. Miners can inject these units directly back into the market.
What is the difference between Litecoin and Bitcoin?
There are many similarities between Litecoin and Bitcoin, but there are also some subtle differences, including:
Transaction speed
Compared with Bitcoin, Litecoin requires more complex mining technology, and the speed of generating blocks is actually four times higher. Litecoin is also much faster in processing financial transactions, and can process a larger number of transactions in the same time period.
Number of currencies
Bitcoin and Litecoin have a limited amount of currency in circulation. Bitcoin has 21 million available currencies, while Litecoin has 84 million available currencies, which is more than four times the former.
Market value
The market value of Litecoin is much lower than that of Bitcoin, but it is still one of the most traded digital cryptocurrencies.
Algorithm
Miners must successfully solve the hash function to add a new digital cryptocurrency block to the block chain. Lite coin and Bitcoin use different mining algorithms. Lite coin uses the Script hash function, while Bitcoin uses the SHA-256 hash function. The Lite coin development team originally chose the Script function to avoid ASIC-based miners from leading the mining work. This provides opportunities for CPU and GPU-based miners to participate in competition. The Script mining algorithm requires more memory resources and is not suitable for ASIC miners at the beginning, thus providing more opportunities for other miners. However, as time goes by, more and more ASIC miners have gradually begun to use the Script algorithm. In this way, due to low computing power, CPU and GPU-based miners no longer have effective mining tools, and the number of hashes generated by ASICs per second far exceeds a lot.
How does Litecoin trade
When you buy Litecoin in a transaction, its unit price is usually based on U.S. dollars. In other words, you need to exchange U.S. dollars for Litecoin. If the price of Litecoin rises, you can sell profitably because it can be exchanged for more dollars than when you bought it. If you are ready to sell when the price drops, then you will suffer a loss.
On the CMC Markets foreign exchange trading platform, you can trade Litecoin through a CFD account. This way you can predict price trends without actually buying encrypted digital currencies. You don’t need to have ownership of Litecoin. Instead, the price of your open position will increase or decrease based on the price movement of Litecoin against the U.S. dollar.
CFD accounts are leveraged products. This means that you need to pay a percentage of the total transaction volume as a deposit for opening a position. You don’t need to directly purchase Litecoin with all your assets at once. On the contrary, you can access a larger amount through the initial deposit. Leveraged trading expands the return or loss because they are based on the total amount of the position.
Why use CMC Markets foreign exchange trading platform for Litecoin trading?
Establish long-term or short positions*
A CFD account allows you to trade both when the price rises and when the price falls. You do not need to hold Litecoin to sell (short position), which is impossible in other encrypted digital currency transactions
Efficient use of assets
Leveraged trading means that you only need to pay a deposit that is a percentage of the total transaction amount to open a position. In mainstream encrypted digital currency transactions, you need to submit the total contract amount as a deposit. Remember, both profit and loss will be expanded, and you may face more losses than the deposit paid for opening a position.
No trading account or Bitcoin wallet
Unlike the transaction-based Litecoin, you don’t need to open a trading account or wallet to hold the Litecoin you bought. This means that you don’t need to wait for transaction permission, you don’t need to worry about the security of your wallet, and you don’t need to pay for withdrawing funds.
Trade with established providers
CMC Markets is a regulated provider. We have nearly 30 years of industry experience and can support customers at any time of market opening.
Trustworthy transaction
Digital cryptocurrency is new to most people, and it is extremely unstable. We hope to provide customers with in-depth training materials that are helpful for trading.
What are the factors that affect the price of Litecoin?
The possible volatility factors of Litecoin are similar to those of Bitcoin, such as:
Regulations: Digital cryptocurrency is not currently regulated by the government or central bank. But how this will change in the next few years, and the impact on value is still unknown.
Supply: The number of Litecoins that can be mined is limited (84 million). The amount available will also fluctuate with the speed at which the currency enters the market.
Other cryptocurrencies and perceptions of Litecoin can also impact its price.
Adoption: Currently, companies or consumers have not yet used Litecoin as a payment method.
Some groups, however, see the potential for development in the technology, and it may be adopted widely in the future.
*Please be aware: We may restrict you from short positions based on unilateral judgment.
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