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Litecoin Trading in 2019-2020: What to Consider
Litecoin is the fork of Bitcoin, i.e., a cryptocurrency created on the basis of Bitcoin’s source code. It is the second fork after Namecoin, and both of them do not have many differences. Litecoin can be used to exchange for Bitcoin or fiat in exchange offices, as well as to pay for goods or services from sellers who are ready to accept this cryptocurrency.
What Is Litecoin (LTC)?
It is a peer-to-peer electronic payment system that uses the cryptocurrency of the same name, which was built in 2011 by Charlie Lee. As of July 10, 2019, 1 LTC is equivalent to $119.32 according to CoinMarketCap and has the fourth largest total value of cryptocurrency.
Bitcoin vs Litecoin
In Bitcoin and Litecoin networks, the data is recorded identically – in the form of an interconnected chain of blocks, each of which contains the hash of the previous block. The differences are only in the functions of finding the hash in the chains (script in Litecoin and SHA-256 in Bitcoin), the average time the network needs to find the unit, and the proof of work methods.
In the Litecoin (LTC) network, as in other cryptocurrencies, transactions indicate the transfer of a certain amount of cryptocurrency from one address to another. The address is generated based on the public key by using the SHA-256 hashing. Litecoin addresses consist of 33 characters and begin with the letter L or the number 3.
The transaction processing speed in Litecoin is 4 times faster than Bitcoin. LTC transaction is usually considered complete after 6 blocks, or 15 minutes.
In September 2017, the first atomic transactions were carried out within the network. During 4 days,transactions were made between Litecoin and Decred, Vertcoin, and Bitcoin. It proved that it was possible to exchange between different blockchains by using p2p technology. Such transactions are also called cross-chain. To carry out transactions, the network uses contracts with the Hash-Time Lock (HTLC) standard and wallets with a multi-signature.
Litecoin Trading: Pros and Cons
LTC trading will bring you the following benefits:
- Security. You do not need to worry that your Litecoin can be stolen. Your possible profit is based on the change in the price of Litecoin. You do not need to buy or sell the currency.
- Lower price. Litecoin has a wider supply than Bitcoin and thus its price is lower. Besides, high-speed transactions ensure that the supply remains fluid.
- High market cap. According to data by CoinMarketCap, Litecoin belongs to the top 5 currencies with the highest market capitalization. This ensures liquidity and profit potential for investors and traders.
- Supported by many cryptocurrency exchanges.
- Atomic transactions – the ability to exchange coins between blockchains without the involvement of any third parties.
However, traders should be aware of the following possible risks:
- Significant fluctuations in the rate during a short time because of the unstable position in the market (within a week, the price can vary between 10-20 dollars with an average cost of 60-70 dollars).
- Irreversible transactions (it is impossible to cancel or change the entered data).
- No guarantees of a refund when a wallet or account is hacked on a cryptocurrency exchange.
- Risk of double costs (the reason is the high speed of new blocks formation).
Nevertheless, most experts agree that Litecoin is definitely a worthy project.
Investing
According to Litecoin developers, in 2020, miners will extract only two-thirds of the total number of coins, which allows investing in LTC and expecting a future increase in the value of this cryptocurrency. Sharp changes in the exchange rate have almost no effect on the popularity of Litecoin. If we look at the current schedule of the market price, we can see that a sharp decrease in the LTC cost is not planned yet. Therefore, the asset holders are not in a hurry to sell their coins.
In 2018 - 2019, Litecoin showed rapid growth. For example, on April 1, 2019, the price was $60.56 per coin. On April 3, 2019, it jumped to $92.56. Since that time, the currency started falling in price, ending up almost at the same level as it was at the beginning of April - $67.84 on April 29. After that, LTC started growing again, having reached a peak of $144.07 on June 22, 2019. As of July 10, 2019, the price is $118.45. Despite the upward trend, such jumps push away investors who fear strong market volatility. However, the overall trend looks positive.
Still, many experts point out that investing in LTC is dangerous. They see a bubble factor in the rising cost of the cryptocurrency, which also affected Bitcoin in 2011–2013. At that time, the cryptocurrency also soared in price, and then dropped sharply to a minimum level.
Besides, the cost of the cryptocurrency is not controlled by anyone, and the level of demand and supply is affected by many external and internal factors. There’s a risk that Litecoin will lose in price due to a decrease in miners' interest in the production of cryptocurrency or in the case of a software error. In addition, possible failure in the Bitcoin code can affect the price of its forks.
Quotes About Litecoin
Here’s what famous people say about Litecoin:
“Buying LTC is extremely risky. I expect us to have a multi-year bear market like the one we just had where LTC dropped 90% in value ($48 to $4). So if you can’t handle LTC dropping to $20, don’t buy!”
- Charlie Lee, founder of Litecoin
“LTC has the same scalability problem as BTC, and if bitcoin wants to evolve into a global currency, it will have to increase its block size to 100 MB or even 1 GB. At present, only BCH is able to move toward an adaptive block size limit.”
- Yang Haipo, founder and CEO of ViaBTC and CoinEx
Forecasts
Litecoin cryptocurrency has high prospects for further growth, based on the following factors:
- The developers are actively introducing innovations such as SegWit and Lighting Network.
- Company marketers enter into partnership agreements that expand the scope of the coin and contribute to the popularization of cryptocurrency.
- Relatively low total capitalization - to double the value of the coin, $8 billion of investments is enough.
Technical analysis of the LTC chart and the forecasts of many experts suggest a steady increase in the cost of this cryptocurrency in the coming years. However, it is important to remember that any investment in crypto assets carries the risk of losing money.
Source: Research and Analytics Department Monfex.Com
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