Among the oldest cryptocurrencies on the market, Litecoin is also one of the most popular altcoins. It’s currently the 14th largest coin by market capitalization, with a total value of more than $12.3 billion.
One Litecoin, or 1 LTC, is worth just less than $200 as of June 1, 2021, following a recent drop from its all-time high of $412.96 on May 10.
As with all cryptocurrencies, Litecoin’s value has experienced wild swings during its 10-year lifespan. Spikes in its price have been quickly followed by sell-offs. What does this mean for Litecoin investors? Is Litecoin a good investment in 2021? To answer that, you first need to know what you’d be investing in. Here are a few important points to understand:
- What is Litecoin?
- Is Litecoin a good investment right now?
- How do you invest in Litecoin?
What Is Litecoin?
“Litecoin is a digital currency that uses peer-to-peer technology to send payments anywhere in the world quickly,” says Ben Weiss, CEO and co-founder of CoinFlip, the largest crypto ATM provider. “Due to Litecoin’s complementary nature to Bitcoin and the fact it has established a market for itself, it is often considered the first successful alternative cryptocurrency, or altcoin.”
Created in October 2011 by computer scientist Charlie Lee, Litecoin is one of the earliest and longest-standing altcoins. “It was designed to be a lighter version of Bitcoin with transactions four times faster at a very low fee of 5 cents,” Weiss says.
Litecoin can be mined every 2.5 minutes compared to the 10 minutes it takes to mine a block of Bitcoin, making it possible to handle more transactions in the altcoin, says Tyrone Ross Jr., CEO at Onramp Invest, a technology company that provides access to cryptoassets for registered investment advisors.
The transaction speed is important for both customers and merchants if cryptocurrency is to become a widely accepted form of currency, says Daniel Rodriguez, director of operations at Hill Wealth Strategies, a wealth management firm in Richmond, Virginia.
Like Bitcoin, Litecoin uses an open-source payment network that’s not controlled by any single authority. Unlike Bitcoin, however, Litecoin has a far larger supply limit of 84 million LTC compared with Bitcoin’s 21 million. “Because of the differences in supply limit, Litecoin is often referred to as the silver to Bitcoin’s gold,” Weiss says.
Is Litecoin a Good Investment Right Now?
Consistently ranking in the top 15 cryptocurrencies by market cap makes Litecoin relatively stable compared with other altcoins that were created around the same time, Weiss says.
“Major proponents of Litecoin are hopeful that an increase in usage and adoption on a grander scale will inevitably raise its value, which we have begun to see recently,” he says, noting that Litecoin’s value has risen more than Bitcoin’s on a percentage basis since last May.
“If you are interested in investing in a technology that enables fast and inexpensive borderless transactions, Litecoin is a great investment opportunity,” Weiss says. “Plus, Litecoin’s affordability and stability make it an excellent option for those looking to get their feet wet with alternative cryptocurrencies.” For comparison, while Litecoin currently trades for less than $200, the price of a single Bitcoin is more than $36,000.
That said, others are less bullish on the altcoin. Ross says that while Litecoin could be a good speculative trade, it is not a good investment.
“If you look at the developers and engineers of Litecoin, they are not robust,” he says. Nor are there good cases of investors using it in a meaningful way. Then there’s also the issue that Litecoin’s creator has sold all of his coins minus a few to keep as collectibles, a questionable sign, Ross says.
“While there is no credible investment foundation for Litecoin, it may be a good trade for someone who doesn’t care about these things and are looking at price action only,” he says. “For investors that are very particular about Litecoin being a good investment, it is far and away a horrible investment.”
How to Invest in Litecoin
There are many different ways to invest in Litecoin.
“You can buy them directly from PayPal or exchanges such as Coinbase or Coinmama,” Rodriguez says. “Those exchanges also allow you to purchase other types of cryptocurrency like Ethereum and Bitcoin.” There’s also Binance, Gemini and other cryptocurrency exchanges.
“Retail investors can invest in Litecoin through cryptocurrency exchanges, with cash at a Bitcoin ATM, or by bank transfer via our trade desk for those looking to make larger purchases,” Weiss says.
If you do choose to invest in Litecoin, make sure to educate yourself on the technology of cryptoassets first, rather than just chasing the price, Ross says. “Reading more about the origins of Bitcoin and what it is trying to create can help investors to decide if they should buy Bitcoin or Litecoin.”
Finally, Ross recommends that investors read “The Bitcoin Standard” or “The Bitcoin Whitepaper” before investing in any cryptocurrency.