What Is It, History and How to Buy

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Litecoin

Litecoin is a peer-to-peer cryptocurrency and open-source software project. A cryptocurrency is a digital “coin” that acts similarly to a traditional fiat currency. You can use cryptocurrencies to buy goods and services at retailers, though not nearly as many retailers accept cryptos as they do traditional money. The difference, though, is that while fiat currencies like the U.S. dollar, the euro and the pound sterling are backed by the full faith and credit of a country or countries, cryptocurrencies’ values are guaranteed only by the market created by users. You can buy litecoins online or “mine” them by helping perform transactions.

Before you make any decisions about investing in potentially volatile securities like Litecoin, consider working with a financial advisor to ensure your portfolio isn’t excessively volatile.

What Is Litecoin?

Litecoin is a decentralized peer-to-peet cryptocurrency. Like other cryptocurrencies, users can buy the coin online for use at retailers or as an investment currency. The crypto is run on technology called blockchain — essentially a public ledger that lists every transaction ever processed involving litecoins.

Each individual litecoin is known as a token — though there is no physical asset like you get with fiat currency (think paper money and coins). Instead, the token is purely digital, and you own it, because you are listed on the blockchain as the owner.

The person who owns the token also has access to the key that allows its use — either through sale to another investor or for use as a form of payment at a retailer. If the key is stolen, the token has essentially been stolen as well, and there is no real way to stop the thief from spending it — much like if your wallet was stolen and someone took out the cash that was inside it.

How to Buy Litecoin

Litecoin

Litecoin

The simplest way to get Litecoin is buy buying it on a exchange, much like you would a stock, bond or other exchange-traded investment. There are a number of exchanges you can use, but some of the most common are CoinBase, Coinmama and Bitpanda. Litecoin is also available on Robinhood. Before you actually buy litecoins, make sure you have a secure “wallet” to store them in.

You can also buy litecoins at a physical Litecoin ATM. At these locations, you can use cash or a debit card to buy litecoins — or you can exchange your litecoins for another currency. There are thousands of these ATMs, making it the cryptocurrency with the second-most ATMs, after Bitcoin. You’ll be given the “key” to any litecoin you purchase either in your wallet, via email or possibly on a printed hard copy.

Litecoin History

Litecoin was created in 2011 by Charlie Lee, who at the time was a Google employee. Lee would end up serving as the engineering director at Coinbase. The network went live on Oct. 13, 2011.

Litecoin Price History

As of early March 2021, one litecoin token was worth $198.15 and the market capitalization for all litecoin tokens is $13.31 billion. The highest price in Litecoin history was $366.66, hit in early 2021. Prior to 2021, Litecoin had never gone over a token value of $150, but has seen large jumps since that calendar year changed over.

Various factors, from economic conditions to political developments to simple supply and demand shifts, can impact the price of Litecoin

How to Mine Litecoin

Mining Litecoin is a process through which new Litecoin tokens are created. Essentially, the miner uses a powerful computer to perform complicated mathematical calculations as part of the process through which the blockchain is maintained. This is an advanced technique and requires a fair bit of know-how and a powerful computer.

If you are the first person to complete the transaction, you are rewarded with 12.5 litecoin. As mentioned above, this is a fairly advanced procedure that requires both significant know-how and a powerful, energy intensive computer setup. For the more novice investor, simply buying litecoins on an exchange is likely a better option.

Should I Trade or Sell Litecoin?

Litecoin

Litecoin

There is no reason Litecoin can’t be part of an amateur investor’s portfolio. That said, there are a few things to keep in mind — namely, that Litecoin, like all other cryptocurrencies, has high potential for volatility. Don’t invest in cryptos if your financial situation would be crippled by a bad loss — or, at the very least, keep your crypto investing as one of your satellite investments rather than having it be part of your core portfolio. Finally, keep in mind that, unlike fiat currencies, cryptos require special tax treatment.

The Bottom Line

Litecoin is a cryptocurrency. It can be used as an investment instrument or be used to pay for goods and services at retailers who accept it. Like other cryptocurrencies, it can be a useful investment, but potential crypto investors should be aware of its inherent volatility. The coin can be purchased on an exchange or at an ATM, or it can be mined if you have the technical knowledge and computing power to do so.

Investing Tips

  • Cryptocurrencies can be confusing, but a financial advisor can help you make sense of them and any other financial issues. If you don’t have a financial advisor, finding one doesn’t have to be hard. SmartAsset’s matching tool can help you find a financial professional in your area within minutes to make smarter decisions with your money. If you’re ready, get started now.

  • Don’t put all your investment eggs in one basket. Use SmartAsset’s free asset allocation calculator to figure out how to put together a balanced portfolio.

Photo credit: ©iStock.com/Viktoriia Hnatiuk, ©iStock.com/Kameleon007, ©iStock.com/sdecoret

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