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Trading in financial markets involves significant risk of loss which can exceed deposits and may not be suitable for all investors.
Before trading, please ensure that you fully understand the risks involved
Trading in financial markets involves significant risk of loss which can exceed deposits and may not be suitable for all investors. Before trading, please ensure that you fully understand the risks involved

What is Litecoin?

Litecoin (LTC) is a peer-to-peer cryptocurrency that was set up by Charlie Lee (a former Google employee) in 2011. It shares many similarities with bitcoin and is based on bitcoin’s original source code. However, litecoin іѕ far quісkеr and cheaper. It is an open-source software project released under MIT/X11 lісеnѕеѕ. The соіnѕ creation and transfer іѕ bаѕеd on an ореn source сrурtоgrарhіс рrоtосоl and іѕ not regulated by аnу сеntrаl authority.

Litecoin was designed to be used for cheaper transactions, and to be more efficient for everyday use. In comparison, bitcoin was being used more as a store of value for long-term purposes. The coin limit market cap is much higher on litecoin than bitcoin, and the mining process far quicker. This means transactions are faster and cheaper, although generally smaller in size.

Like bitcoin, litecoin is a form of digital money. Utilizing blockchain technology, litecoin can be used to transfer funds directly between individuals or businesses. This ensures that a public ledger of all transactions is recorded and allows the currency to operate a decentralized payment system free from government control or censorship.

How does litecoin work?

Litecoin involves the creation and transfer of digital coins via an open source, cryptographic protocol. It uses blockchain technology to record a decentralized, public ledger of all transactions.

WHAT IS THE BLOCKCHAIN?

The blockchain is a shared digital ledger which holds a record of all litecoin transactions. Recent cryptocurrency transactions are grouped together into ‘blocks’ by miners. The blocks are then cryptographically secured before they get linked to the existing blockchain. Similar blockchain technology is used for several different cryptocurrencies, including litecoin and bitcoin.

WHAT IS MINING?

Mining is the process of securing each block to the existing blockchain using mining software. Once a block is secured, new units of cryptocurrency get released. Miners can inject these units directly back into the market.

What are the differences between litecoin and bitcoin?

While there are many similarities between bitcoin and litecoin, some of the subtle differences include:

TRANSACTION SPEED

While litecoin requires more sophisticated technology to mine than bitcoin, blocks are generated up to four times faster. Litecoin also processes financial transactions a lot quicker and can also process a higher number of them over the same period.

NUMBER OF COINS

Both bitcoin and litecoin have a finite number of coins in circulation. Bitcoin has 21 million coins available, while litecoin has 84 million available – four times more than bitcoin.

MARKET CAP

Litecoin has a much smaller market cap than bitcoin but is still one of the most traded cryptocurrencies.

ALGORITHMS

Miners must successfully solve hash functions to add new blocks of a cryptocurrency to the blockchain. Litecoin and bitcoin use different mining algorithms, with Scrypt being the hash function used for litecoin, and SHA-256 the hash function used for bitcoin. Scrypt was initially chosen by the litecoin development team to avoid mining being dominated by ASIC-based miners. This would allow CPU and GPU-based miners to compete. The Scrypt mining algorithm is more memory intensive, and this was initially less suited to ASIC miners, giving other miners more opportunity. However, Scrypt-capable ASIC-based miners have developed over time. This means CPU and GPU-based miners no longer have valid mining tools due to the inferior computational powers, and ASICs are able to generate far more hashes per second.

How to trade litecoin

When you buy litecoin on an exchange, the price of one litecoin is usually quoted against the US dollar (USD). In other words, you are selling USD in order to buy litecoin. If the price of litecoin rises you will be able to sell for a profit, because it is now worth more USD than when you bought it. If the price falls and you decide to sell, then you would make a loss.

With Century Financial, you trade litecoin via a contract for difference (CFD) account. This allows you to trade on its price movements without owning the actual cryptocurrency. You aren’t taking ownership of litecoin. Instead, you’re opening a position which will increase or decrease in value depending on litecoin’s price movement against the dollar.

CFDs are leveraged products. This means you only need to deposit a percentage of the full value of a trade in order to open a position. You won’t have to tie up all your capital in one go by buying litecoin outright but can instead use an initial deposit to get exposure to larger amounts. While leveraged trading allows you to magnify your returns, losses will also be magnified as they are based on the full value of the position.

Why trade litecoin with Century Financial?
Open a long or short position*

CFDs allow you to trade on both rising and falling prices.

Efficient use of capital

Leveraged trading means you only deposit a small percentage of the full value of a trade in order to open a position. Remember that both profits and losses will be magnified, and you could lose more than the amount you deposit to open a position.

No exchange account or wallet

Unlike trading the underlying litecoin, there is no need to open an exchange account or wallet to hold the litecoin you have bought. This means no waiting for approval from the exchange, no concerns about keeping your wallet secure.

Trade with an established provider

Century Financial is a licensed and regulated provider. We have over 3 decades of experience in the industry.

Trade responsibly

Cryptocurrencies are still relatively new for most people and can be extremely volatile. We want our clients to have access to in-depth educational materials to support their trading.

What factors affect litecoin’s price?

Litecoin’s volatility is driven by many factors, including:

  • Regulation: cryptocurrencies are currently unregulated by governments and central banks. There are questions about how this could change in this next few years, and what impact this could have on value.
  • Supply: there is a finite number of litecoins available to be mined (84 million). Availability can also fluctuate depending on the rate at which the coins enter the market.
  • Press: prices of litecoin can be affected by public perception, security, longevity and the prices of other cryptocurrencies such as bitcoin.
  • Adoption: litecoin hasn’t currently been adopted by businesses or consumers as a method of payment. But, some see potential in the blockchain technology and think this could become more widely adopted in the future.

*Please note we may, at our sole discretion, restrict your ability to go short.

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