Litecoin was developed by former Google engineer, Charlie Lee, in 2011 and is one of the oldest altcoins. It was created as a direct fork of Bitcoin’s blockchain, promising lower fees and faster transactions. It has been described as digital silver, with Bitcoin described as digital gold. It was also hailed as a potential Bitcoin killer, although its fall in prominence compared to other, more recent altcoins, means this moniker is rarely attached to Litecoin anymore.
However, Litecoin has stood the test of time, remaining one of the top 20 cryptocurrencies by market capitalization, and it still holds good on the promises of faster, lower-cost transactions. This combination of benefits has seen it gain utility for payments and also for use in e-commerce, while developers can use the cryptocurrency to develop their own tokens on the Litecoin network.
Below, we look at the features, benefits, and common use cases for the Litecoin currency.
Uses For Litecoin
Litecoin was developed in 2011, two years after Bitcoin. It was released in response to claims that Bitcoin’s transaction times of 10 minutes or more were too long to attract new users. Litecoin roughly quartered these transaction times so payments were completed in two to three minutes. It was also easier to mine and attracted lower transaction fees than Bitcoin. Litecoin may not be as popular as it once was, but it still retains many use cases.
1. Digital Payments
Litecoin’s longevity means that it is commonly accepted by sites and businesses that take cryptocurrency payments. Because it has been around so long, Litecoin is more widely accepted than some other cryptocurrencies that rank above it in terms of market capitalization.
Users can spend Litecoin at e-commerce stores, and Litecoin casino games have become a popular alternative to fiat casinos because of their anonymity, security, and the withdrawal speeds they offer. Privacy and security are important with any financial transaction, while anonymous payments can be beneficial to those living in jurisdictions with unregulated online gambling markets.
2. Peer-To-Peer Transactions
As well as spending Litecoin at casinos and e-commerce stores, users can send payments from one wallet to another. This makes it viable for peer-to-peer transactions and because transactions process at the same fast speed and for the same low cost, regardless of the location of users, it is especially beneficial for overseas and cross-border payments.
Fiat alternatives cost more and can take several days to complete, while Litecoin transactions take a couple of minutes to finalize.
Transactions are relatively easy to make, with the sender only needing the recipient’s wallet address. A wallet address can be copied and shared, while many wallets provide direct links and even scannable QR codes to help avoid using incorrect details.
3. Microtransactions
Some fiat payment methods, and even some cryptocurrencies, have set transaction fees. For those sending large payments, set fees aren’t a problem, but for smaller and microtransactions, these fees mean micropayments aren’t viable.
Litecoin, like a lot of cryptocurrencies, effectively charges a percentage of the total transaction, which means microtransactions attract micro fees. Even if a user is sending just a few dollars to another wallet address, the fees are tiny and the payment is viable.
4. Buy NFTs
Non Fungible Tokens (NFTs) are unique digital files, ranging from audio tracks to memes and digital art. They are unique, which means they can’t be replicated, and they are recorded on blockchain. The NFT market can attract substantial investment with some well-known memes and digital files created by well-known artists attracting substantial sums.
As a form of investment, NFTs have a lot of upside potential, and Litecoin has its own NFT market. As with any form of investment, buyers should do thorough research, but with the right NFT, profits can be substantial.
5. Ecommerce Payment Integration
It is more challenging for retailers and businesses to accept cryptocurrency payments than traditional payments. This is because credit cards, bank payments, and even digital wallets like PayPal have been established for a long time and the infrastructure is well-developed.
Recent innovations have seen similar infrastructure for crypto payments. Some payment gateways enable buyers to pay with crypto without ever exposing the seller to the volatility of cryptocurrency payments.
6. Investment
Cryptocurrency prices are much more volatile than fiat currencies. Swings of 10% or more in a single day are commonplace. This does carry risk for the investor, but it also means there is considerable upside potential in the market.
Traditional analytical tools and techniques are still viable, although greatly magnified, with Elliot Wave Theory being especially popular with crypto investors. For fundamental analysts, trading social sentiment can be an effective path to Litecoin profits.
Benefits Of Litecoin
Although it has lost some popularity in the past few years, with its market capitalization being overtaken by the likes of Doge, Tether, and others, it is still one of the 20 largest cryptocurrencies in the world. And there are good reasons for its continued popularity.
1. Secure Payment Option
Litecoin offers a secure payment alternative to traditional methods. It uses advanced cryptographic techniques, utilizing public and private crypto keys, which make payments virtually impossible to hack.
There are still risks with crypto payments, however, and users need to follow best practices to ensure their holdings remain secure. Litecoin isn’t alone in offering this security, as other cryptocurrencies use similar encryption techniques.
2. Anonymous Payments
Strictly speaking, most cryptocurrencies are not fully anonymous, but they are pseudonymous. Every blockchain transaction is publicly viewable on the blockchain network, and records include both wallet addresses as well as the value of the transaction.
However, wallet addresses are not directly linked to individual users so unless the user shares their wallet address, nobody will know that they were involved in the sending or receipt of a particular transaction.
3. Shorter Transaction Confirmation Times
For a cryptocurrency payment to be completed, the transaction needs to be verified on the blockchain network. These verifications are completed by miners, and the Litecoin network requires 6 verifications for a payment to be considered verified and complete. Typically, this takes between two and three minutes, beating Bitcoin’s 10 minutes by some way.
Compared to cross-border fiat payments, which can take several business days to complete, it is an extremely fast solution. Transactions can take longer during busy network periods, but this is true with Bitcoin and other cryptocurrencies, too.
4. Lower Transaction Fees
Transaction fees vary according to mining fees and availability, but Litecoin typically has much lower fees ($0.0045) than Bitcoin ($0.908) when sending payments.
In fact, in some cases, Litecoin costs can be orders of magnitude lower than Bitcoin transaction fees, which makes it a beneficial choice for all transactions, especially for smaller peer-to-peer payments. And, when compared to credit cards and even some bank transfer payments, the cost is a fraction of traditional payment methods.
5. Easier To Mine
Mining is a critical part of the blockchain and cryptocurrency process. Miners use computers and processing power to verify transactions on the network. Without these verifications, payments would not be completed. As the first cryptocurrency, Bitcoin’s mining process is long-winded and processor-intensive. It is difficult.
One of the main aims of Litecoin, when it was introduced, was to reduce the difficulty of mining, and it was successful in this regard. Litecoin uses a mining process called Scrypt which is four times faster and uses a lot less power than Bitcoin’s SHA-256 mining process. Easier mining means more miners, which is what helps reduce costs and processing times.
Will Litecoin Ever Replace Bitcoin?
When Litecoin was first introduced, it was billed as the Bitcoin killer. It was faster, cheaper, and more efficient than its predecessor. However, Bitcoin’s popularity has never really waned and, while Litecoin has remained as an alternative, other cryptocurrencies have launched and overtaken what was once called digital silver. It is unlikely that Litecoin will ever be the crypto to replace Bitcoin.
How Do I Buy Litecoin?
To buy Litecoin, users need to have a wallet that works on the Litecoin network. Typically, they will then use a centralized exchange like Binance or Coinbase to exchange fiat currency for Litecoin and other cryptocurrencies. Although it is often seen as being convoluted and difficult, the process is a lot quicker and smoother than it was in the early days of crypto.
Is Litecoin A Good Investment?
Litecoin, like all cryptocurrencies, has a lot of price volatility. This means it is a risky form of investment, but it also gives Litecoin a lot of potential for making a profit. Investors need to know the market and have a good understanding of how cryptocurrency works, while also checking local laws and legislation regarding this type of currency, but there is potential for profit.
Final Thoughts
Litecoin was once the second largest cryptocurrency, behind just Bitcoin. It has fallen back in the crypto pecking order, but it still has a lot of benefits to offer users, as well as a lot of viable and proven use cases. Know the market, research the technology, and only invest money you can reasonably afford to lose if you’re considering Litecoin as a form of investment. And, ensure you use a secure wallet and exchange if you want to benefit from lower transaction fees and processing times.
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