Litecoin is a digital currency that was intended to be a ‘lighter’ alternative to Bitcoin.
Litecoin uses peer-to-peer technology to facilitate near-instant payments. The cryptocurrency is open source and its design is public, nobody owns or controls Litecoin and everyone can take part in its development. It is one of the larger and most well-known cryptocurrencies, and is often referred to as "silver to Bitcoin's gold".
In this guide, we cover everything you need to know about Litecoin and how you can trade the cryptocurrency through crypto CFDs.
Litecoin is a decentralised, peer-to-peer digital currency that provides fast, secure, and low-cost payments. The cryptocurrency is essentially a copy of Bitcoin, albeit with some minor modifications to its code.
Like Bitcoin, Litecoin operates on the same principle of trustless digital payments using cryptographic proofs. All transactions are authenticated by a distributed network of nodes and recorded on the Litecoin blockchain.
Similarly, Litecoin relies on a proof-of-work (PoW) consensus protocol to verify transactions but with a minor variation from Bitcoin. Litecoin uses a different mining algorithm, called Scrypt, to enable faster transactions and lower fees than Bitcoin.
The primary use case of Litecoin is digital payments. You can access the Litecoin network by downloading a cryptocurrency wallet and purchasing the digital asset on a crypto exchange, where Litecoin goes by the ticker LTC. Therein you can store, send and receive your crypto.
You can also trade Litecoin through brokers like Axi, where traders can speculate on LTC without having to take ownership of the underlying assets. Learn exactly how cryptocurrency CFD trading works.
Litecoin (LTC) was created in 2011 by a former Google engineer, Charlie Lee, who coined the term ‘silver to Bitcoin’s gold.’ It was one of the first altcoins, i.e. alternatives to Bitcoin.
The cryptocurrency was released through an open-source client on GitHub on Oct 7, 2011, and the network went live on Oct 13, 2011.
Litecoin is a fork of the Bitcoin core client, differing mainly by having a decreased block generation time of 2.5 minutes, an increased maximum overall coin supply of 84 million, a different hashing algorithm (Scrypt instead of SHA-256), and a slightly modified GUI.
Charlie Lee’s vision was for LTC to become a lighter version of BTC while still maintaining its unique features.
Litecoin mining works similar to other proof of work (PoW) cryptocurrencies. Each Litecoin transaction is confirmed and processed by miners who contribute their computing power to mine blocks that form the Litecoin blockchain.
Once a block is verified it’s added and linked to the previous block in the chain. Miners who successfully mine a new block are rewarded with 12.5 LTC. This reward is halved after every four years. The last halving occurred in 2019 with the next one in 2023 set to reduce block rewards to 6.25 LTC.
Since its launch in 2011, Litecoin has experienced significant price volatility in the crypto markets. At its highest point in May 2021, the cryptocurrency was trading at over $380, its most historic peak to date. At its lowest point, Litecoin was trading between $2 to $4.
Below we have highlighted the key Litecoin price milestones over the last decade.
2011: The cryptocurrency was listed on several trading platforms in 2011, trading below $1.
2013: The price rallied to above $36.29 in October 2014. The Mt. Gox hack and a crypto bear market, however, drove the LTC price down to consolidate at the $2 - $5 range until 2017.
2017: The price of Litecoin rallied from its previous low of $4 in March to rise to over $350 in December, mirroring the bullish sentiment of the overall crypto market.
2021: The 2021 crypto bull market saw the price of Litecoin rise to an all-time high of $386.45 in May.
At the time of writing, the total market capitalisation of Litecoin is $9,620,390,905.
The cryptocurrency ranks 24 in terms of market cap, with a circulating supply of 69,453,556.99 LTC, against an 84 million total supply hard cap.
You can view Litecoin transactions using the Litecoin blockchain explorer.
Block explorers allow anyone to review all Litecoin transaction details, such as transaction times, volumes of transactions, and the addresses involved.
This way you can view the status of a Litecoin transaction on the blockchain, before and after confirmation. Remember, you can only view a wallet address on the Litecoin blockchain, and not the identity of transacting parties.
In this guide, let’s examine how you can trade, buy and invest in LTC.
Litecoin is one of the more popular cryptocurrencies among crypto traders. The digital currency has plenty of volatility and enough liquidity to trade in and out in size.
You can buy and sell Litecoin on a dedicated crypto exchange or using cryptocurrency CFDs on an online brokerage platform like Axi. A crypto CFD allows you to speculate on the price of a cryptocurrency going up or down while using leverage to boost the size of your position. In other words, a trader doesn’t own the underlying cryptocurrency but instead owns a contract for difference (CFD) that tracks the volatility of the digital asset.
You can start trading Litecoin CFDs on Axi by following these steps:
You can purchase Litecoin on a cryptocurrency exchange. However, to purchase LTC on an exchange, you will also need a Litecoin wallet. To purchase Litecoin on a crypto exchange you must:
Litecoin is viewed as an established alternative to Bitcoin. Investing in Litecoin can be a way to diversify your portfolio by owning a digital asset that shares some of Bitcoin’s basic properties, and a few superior features to make it a ‘lighter’ digital currency.
To invest in LTC, you have to purchase coins on a crypto exchange and then transfer them to a secure wallet that you have the private keys to.
You can store litecoin using a crypto wallet that is compatible with LTC. You can choose to store your LTC in a hot or cold wallet. The former are online wallets, while the latter is a physical device that allows you to store your coins offline.
For a hot wallet, you can use Trust Wallet or Edge Wallet to store your Litecoin. You can access the wallets by downloading them on your Android or iOS device. Conversely, you could buy a physical hardware wallet, like Trezor and Ledger, and store your coins therein.
Remember to back up your wallet accordingly before you transfer your coins to the wallet.
Related article: Trading cryptocurrency vs crypto CFDs
Discover the advantages and disadvantages of Litecoin below:
Many crypto experts think that the best days of Litecoin are behind us. However, the recent 2021 all-time high has shown us that the “silver” to Bitcoin’s “digital gold” status can still surprise on the upside.
At the same time, developer activity has been limited in the Litecoin ecosystem and no major apps built specifically for Litecoin have been released in recent years. While the digital currency has potential as an online payment method, Litecoin remains in the shadow of Bitcoin’s global brand.
For traders, Litecoin provides an excellent opportunity to capitalise on market volatility. While investors can add it to their crypto portfolios for diversification, there are arguably numerous cryptocurrencies with more potential in the market.
Looking to learn more about other cryptocurrencies:
We hope that this guide will help you on your journey to buying, owning, and trading Litecoin. To start trading LTC CFDs with Axi today, click here.
Cryptocurrency CFDs can only be traded by Professional Clients due to FCA regulations.
The information is not to be construed as a recommendation; or an offer to buy or sell; or the solicitation of an offer to buy or sell any security, financial product, or instrument; or to participate in any trading strategy. Readers should seek their own advice. Reproduction or redistribution of this information is not permitted.
Cryptocurrency mining is a process by which new blocks of coins are created, a function used by the most well-known crypto, Bitcoin.