This article will look into the working of the Litecoin crypto and the particular risks that you will have to take when you invest in this crypto instead of any other digital crypto in the crypto sphere. Now keep reading to learn more!
Litecoin Working
Litecoin is an innovative digital currency that happens to be decentralized. What that means is that it operates without relying on any central financial establishment. Litecoin makes use of blockchain technology to record and process transactions, with transaction batches continually including more information blocks to the Litecoin blockchain.
Miners of Litecoin make use of a lot of computing power to deal with complex mathematical issues and earn the right to verify all the transactions, which includes new blocks to the chain. Miners of Litecoin get compensated in Litecoin.
As a digital cryptocurrency, Litecoin can be sold, bought and used for buying with some merchants. Most of the holders of Litecoin around the world make use of one of these crypto exchanges or apps which are quite popular to sell or buy the cryptocurrency:
- Coinbase: Publicly traded crypto exchange that started to offer Litecoin couple of years back in 2017.
- Gemini: A famous Crypto exchange that began to offer Litecoin in 2018.
- PayPal Holdings: Global payments application that started to enable users to sell and buy cryptocurrency, that includes Litecoin, in 2020.
With this out of the way, let us look at some of the considerable risks you will have to take if you choose to invest your money in the Litecoin crypto.
Litecoin Investment Risks
Few of the businesses around the world accept Litecoin or any crypto, which limits the utility of Litecoin as conventional money. For investors, having Litecoin is rather risky since it can ultimately become worthless.
While each crypto has the risk being rendered worthless, Litecoin right now lacks a clear usage case. While brought to the world in 2011 as a Bitcoin alternative with cheaper and quicker transaction fees, many other cryptos have since launched that are quicker or not as expensive to process than the crypto Litecoin.
More recently, Litecoin has developed rather a reputation as a less sophisticated version of Bitcoin. Charlie Lee, who is the founder, during a crypto bull market in 2017, sold all of the Litecoin that he owned. While Charlie Lee claimed the Litecoin sale was to prevent any apparent conflict of interest, a lot of cryptocurrency investors worldwide viewed this particular move as a strong signal that Charlie Lee was no longer confident in the long-term success of Litecoin – this perception has unfortunately remained even till this day in 2021!
Now let us proceed to whether you should buy Litecoin in 2021 and beyond.
Should you purchase Litecoin?
This is a very common and important question that investors ask today!
Whether Litecoin fails or succeeds as crypto depends on a couple of integral factors. The user adoption rate matters, and, if more folks purchase Litecoin either for fund transfer or as a particular store of value, then its certain value will probably go up. The availability of Litecoin on many major exchanges is a huge plus for the crypto-coin and this is an important point to keep in mind!
However, Litecoin does not receive a lot of media attention, and the popularity of certain crypto actually plays a crucial role in its particular ability to gather value over time. In addition, governments are still in the procedure of deciding how to carry out regulation of cryptocurrencies, and newer regulations can result in big shifts in price for each cryptocurrency, that includes Litecoin.
With only little in the manner of true advantage, Litecoin might not be the ideal choice for crypto investors. If you are keen to own crypto as a particular store of value, then other digital cryptocurrencies might be more efficient options for you!
