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Litecoin is an investment that has experienced as large a sell-off in the past as any cryptocurrency over the last decade or so. It has shown his resilience in the past and there is no reason to think it won’t in the future.
After ten years of existence, Litecoin’s valuation still remains in the top twenty cryptocurrencies on the market. In fact, thanks to the recent jump in price, it managed to break into the top fifteen.
When answering the question of whether Litecoin is a good investment, it is reasonable to mention that there is still room for growth given its technical potential and the leadership of Charlie Lee, who has extensive technical experience.
What is Litecoin?
Litecoin is a cryptocurrency token that trades under the ticker LTC. It has been the best performing altcoin since its inception in 2011 by Charlie “Satoshi Lite” Lee. Charlie Lee was an engineer at both Google and Coinbase and had extensive experience in technology.
The Litecoin Foundation works on Litecoin development and adoption, partnerships, funding opportunities, and more. One example is the agreement with the Ultimate Fighting Championship to become the official cryptocurrency of the UFC.
Litecoin is often the leading indicator of the rest of the cryptocurrency world. According to the community, “Litecoin lights the way that leads to the alternative season.”
Traders will watch the price of LTC even if they choose not to trade it. As Litecoin starts to rise, risk appetite spreads and many smaller markets are about to experience explosive growth.
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How Does Litecoin Work?
Litecoin aims to be a more efficient version of what Bitcoin was originally designed to be, digital peer-to-peer money. To best explain what Litecoin is trying to improve, we first need to explain that Bitcoin has several scalability issues, especially as it has become more popular.
Transaction fees became more expensive and took longer. Then there is the issue of energy efficiency – Bitcoin consumes a lot of energy to function.
It’s quite common in the technology industry to try to simplify existing technologies to improve productivity. To make it faster, easier to use and easier to solve if there is a problem.
Litecoin appeared long before the buzz around smart contracts, dApps and DeFi. Because of this, it’s probably a better investment for old-school cryptocurrency traders who want to stick with the old crypto goals.
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Is Litecoin a Good Investment?
Many investors argue that Litecoin is a good investment and is worth watching in 2023, insisting that its price can continue to rise in the long term. Litecoin has plummeted by more than 80% in the past 12 months, sending the asset along with many other coins into a “crypto winter.”
Interestingly, we’ve seen this happen several times, but it’s worth noting that Litecoin has always recovered. That doesn’t mean you should start doing it right away, but it also doesn’t mean investing in Litecoin is bad.
Litecoin can have a significant risk-reward ratio compared to other financial assets. Crypto markets are extremely volatile. To begin with, you need to be careful not to invest too much in one shot.
Much of this will depend on your investment strategy in terms of how much you put into the market at a time. Fortunately, PrimeXBT offers a CFD or Contracts for Difference market for Litecoin.
This means you can trade both long and short the market and with leverage. In other words, you don’t have to risk huge amounts of money to take advantage of volatility.
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Is Litecoin Safe?
Like any investment, Litecoin is not without the risk of losing money, especially in a volatile market like the cryptocurrency market. The price may rise or fall depending on developments in the cryptocurrency market and/or other markets around the world.
This has become evident recently as the value of Litecoin and many other cryptocurrencies has fallen by more than 80% from its all-time high in 2022.
Unlike a company’s shares, the value of digital currencies is not determined based on any fundamental calculations (such as cash flows and profit margins), but through supply and demand.
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How To Make Profit Investing In Litecoin
You can buy Litecoin and keep it as an investment in your wallet. If the price changes are significant, owning this virtual currency will give you a chance to gain capital.
Holding Litecoin for the long term can also pay off handsomely, as its price hits new highs every time Bitcoin surges. Otherwise, you can trade Litecoin using spot trading or derivatives trading, each of which can involve long and short positions.
Where You Can Trade Litecoin?
You can buy Litecoin from most cryptocurrency exchanges and hold it for a long period of time. However, you can also trade perpetual contracts to speculate on LTC at a predetermined price at a specific time in the future.
For example, Bybit offers both spot LTC/USDT and LTCUSDT perpetual contracts. You can buy LTC for USDT stablecoin in a perpetual leveraged contract. Simply fund your verified account with USDT or convert another cryptocurrency to USDT.
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Pros & Cons Of Investing In Litecoin
PROS
It is adopted by major institutions
In the early days of Litecoin, it was mostly used by tech-savvy people and was known as an altcoin. Litecoin has come a long way since then, and in recent years it has become more mainstream among mainstream institutions.
LTC is accepted by merchants including BitPay, Travala and others. In January 2022, 3,070 merchants accepted Litecoin as payment. This is a significant figure. This rapid adoption makes Litecoin one of the leading cryptocurrency investments with real applications.
Litecoin works four times faster than Bitcoin
This crypto network has been shown to process transactions four times faster than Bitcoin. Litecoin block generation time is estimated at 2.5 minutes, while Bitcoin takes 10 minutes. That’s a big difference.
Aside from the encryption algorithms, this setup may be the most important technical difference between Bitcoin and Litecoin. This makes Litecoin an ideal cryptocurrency for small and quick transactions.
Litecoin has a strong team and community
Litecoin has a strong team, the most notable name of which is the creator of Litecoin, Charlie Lee. The coin also has a very passionate and large community.
The team and community work together to ensure the success of Litecoin. They are constantly finding new ways to make Litecoin better and more successful. Litecoin’s team and community are two of its biggest strengths.
Litecoin is a good long-term investment
LTC is a good long-term investment because it has all the characteristics of a successful cryptocurrency and has the potential for widespread adoption among mainstream institutions. Litecoin is faster, cheaper, safer and has a strong team and community.
All these factors make Litecoin a good long-term investment. So, if you are looking for a good long-term investment, Litecoin is a good option.
CONS
Tight monetary policy of the Federal Reserve
The Litecoin network is not immune to the Fed’s monetary policy. The recent quantitative easing measures introduced by the US Federal Reserve may affect the price of Litecoin.
The Fed’s actions could lead to inflation, which would lower the value of Litecoin and other US dollar-denominated assets.
Slow development of technology
The Litecoin network has been criticized for slow technology development. The Litecoin development team is much smaller than the Bitcoin team, so it takes more time to develop new features and updates to Litecoin.
In addition, the development of Litecoin has been slowed by disagreements within the Litecoin community.
Conclusion
Despite being potentially considered a good investment, Litecoin, like other cryptocurrencies, is highly volatile. It’s a high-risk, high-reward investment, even if those rewards pale in comparison to some of the more popular coins.
Because of how volatile cryptocurrency is, the rule of thumb is to only invest what you can afford to lose. It is also recommended to limit cryptocurrency to a small part of your investment portfolio, such as 5% to 10%.
If you’ve already decided to invest in cryptocurrency, the tricky part is deciding whether some or all of your investment should include Litecoin. To Litecoin’s credit, it is much faster than Bitcoin and has lower transaction costs. In addition, it is generally recognized as one of the main coins.
Is Litecoin a Good Investment FAQs
Despite the benefits of Litecoin mentioned in the previous section, there are still risks to investing in it. The aforementioned privacy feature is a double-edged sword for Litecoin, which has also attracted negative attention.
Despite the hype around the transaction privacy that Litecoin introduced with Mimblewimble, problems have emerged on the regulatory front, particularly around Know Your Customer (KYC) and Anti-Money Laundering (AML) rules.
Currently, over 300 merchants accept LTC as payment, including big names like Amazon and Paypal. This gives investors a sense of confidence in Litecoin (LTC) as real-world use cases for this cryptocurrency are identified daily.
Currently, Litecoin has increased in price by more than 5000%. So if you invested $100 in Litecoin (LTC) in 2012, it will be worth over $12,000 by 2018. However, that 12,000 could drop by 80% in 2022 as a result of the recent market crash.
References
primexbt.com – Is Litecoin a Good Investment?
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