Based on the original Bitcoin blockchain, Litecoin offers improved processing time.
What is Litecoin? How does it work? And how can you start adding some to your portfolio? Read on to find out.
Table of Contents
- What Is Litecoin?
- How Does Litecoin Work?
- How to Buy Litecoin
- Tips for Adding Litecoin to Your Portfolio
What Is Litecoin?
Litecoin is a cryptocurrency created from a fork in the original Bitcoin blockchain more than a decade ago.
Because it’s based on the original blockchain, Litecoin shares similar features with Bitcoin. The main difference between Bitcoin and Litecoin is that litecoin runs on a different algorithm that gives it some unique properties.
Chief among those unique properties is faster transaction processing times when compared to Bitcoin. In fact, that was one of the main reasons that Litecoin was developed.
The History of Litecoin
Former Google engineer Charlie Lee released Litecoin (LTC) as an alternative to Bitcoin (an altcoin) back in 2011.
According to Mr. Lee, “Just a few years after Satoshi’s whitepaper ushered in a new financial and technological paradigm with Bitcoin, I…quickly realized that one of its major drawbacks was speed.
A new block is added to the Bitcoin blockchain approximately every 10 minutes and, thinking of a future where this incredible new technology would be widely adopted, I realized right away that transaction throughput would become a serious scalability problem for the nascent cryptocurrency.
I immediately began working on a solution to complement Bitcoin and in only a week, Litecoin was born.”
How Does Litecoin Work?
Litecoin operates on a proof-of-work (PoW) consensus mechanism that reduces block generation from 10 minutes down to 2.5 minutes (four times faster than Blockchain was at the time of its inception).
As a result, Litecoin’s transaction throughput is roughly four times faster than Bitcoin’s.
Because Litecoin generates four blocks for every one Bitcoin block, Litecoin’s halving events take place every 840,000 blocks (compared to halving every 210,000 blocks for Bitcoin).
How to Buy Litecoin
1) Partner with a Crypto Platform
To get started buying Litecoin, find a crypto platform — like Binance.US — that supports LTC.
It’s also a good idea to partner with a platform that offers reasonable fees, gives you resources and tools to help you make the right choices, and provides access to other popular cryptocurrencies on the market.
Doing so will make it easier to buy, sell, and trade Litecoin (and other cryptos) as you gain more experience.
2) Set Up an Account
Once you’ve chosen the crypto platform that’s right for you, create an account and verify your identity.
Look for an account that comes with advanced security, a range of tokens and coins, low trading fees, advanced trading API, and real-time order books.
Opening an account that offers these features for all of their coins and tokens — not just LTC — provides benefits down the road when you want to diversify your portfolio..
3) Add Funds to the New Account
The next step in buying Litecoin is to fund your account with government-backed money, such as U.S. dollars.
Advanced platforms will allow you to do this via several methods, including:
- Established payment services (e.g., ApplePay or PayPal — check platform for details)
- Debit card
- Credit card
- Bank transfer
- Wire transfer
- ACH debit from an existing bank account
Before you add funds to your new account, we recommend taking the time to verify that the platform you want to use offers a funding method that is convenient for you.
This will make it easier to handle your funds later on.
4) Decide When to Buy
Once you’ve funded your account, you’re ready to buy LTC. To do this, decide how much and when you want to purchase.
Most platforms allow you to control both of those variables and either initiate the buy order manually or set your account to initiate the buy automatically when certain conditions are met (e.g., time and/or price). Auto-Buy on Binance.US is the easiest way to set a recurring buy order that will automatically purchase Litecoin, or the crypto of your choice, on the fixed schedule of your choosing.
5) Keep Your Litecoin Secure
When the purchase is complete, keep your Litecoin secure by storing it in a crypto wallet — either a hot wallet or a cold wallet.
A hot wallet is an online space typically provided by the platform through which you made the purchase. A cold wallet, on the other hand, is an offline space, like an external hard drive. Bianance.US offers safe and secure online storage with 1:1 reserves to give you peace of mind when deciding to store your crypto.
Tips for Adding Litecoin to Your Portfolio
1) Research the Crypto Market
The first step in successfully adding LTC to your portfolio is research. This article helps provide an understanding of Litecoin, but the research doesn’t stop there. Delve deep into topics such as:
- The cryptocurrency market
- How the market works
- What factors affect its movement
- How to read a candlestick chart
- Dollar-cost averaging
- How to spot scams
- Private key vs. public key
- How to perform a technical analysis
- The difference between coins and tokens
- Proof-of-work vs. proof-of-stake
While not all of this is required reading, it is always recommended that you attempt to learn as much as possible about the subject you are investing your money into. Learning about the space is a lifelong pursuit, so continue to research and follow the industry as you go.
2) Research Crypto Platforms
As you’re learning about Litecoin and the various technical aspects of the market, take the time to research the crypto platforms out there.
Don’t just settle for the first one you find. Instead, examine each with a critical eye.
Make a list of questions you have about the platform, including:
- What problems does the platform solve?
- What benefits does the crypto ecosystem offer?
- How many users does the platform have?
- What do users have to say about the platform?
- How cryptographically secure is the platform?
- What are the fees involved in buying LTC and other cryptos?
- Will this platform still be useful as my portfolio grows?
Researching crypto platforms before you commit will help you choose the option that works best for your needs.
3) Formulate a Plan of Attack
One of the best things you can do when buying Litecoin (or any cryptocurrency, for that matter) is to formulate a plan of attack before initiating any transactions.
Rushing headlong into buying, selling, and trading can be a risky endeavor so it’s essential that you take things one step at a time.
Depending on what you want to get out of buying LTC (your strategy), you might make a plan to buy and stake. Or, perhaps, buying and then day trading is more in line with your goals.
Whatever strategy and plan you develop, do your best to stick to it as closely as possible. As you go, resist the urge to follow temporary hype into a losing situation.
4) Limit Your Losses
Another important step in adding Litecoin to your portfolio is setting up a process to limit your losses.
Before you buy, come up with a loss threshold which you won’t go below. This number will be different for everyone and depends, in large part, on what your portfolio can handle and the risks you’re willing to take.
With loss limits in place, you’ll know exactly when to get out of the market should it fall too far. And you’ll avoid getting swept away by the emotion, adrenaline, and excitement that can wind up leading you into a losing position.
At the start, focusing on one cryptocurrency can help you learn about the market and how it moves. Shortly after buying Litecoin, though, it can be useful to diversify into other coins and tokens as well.
Buying a lot of one coin or token can expose you to more risk than you might be willing to handle. Diversifying can help mitigate that risk.
Consider adding a second or third option to some of your LTC buys to add a bit of stability to your portfolio in case one of the cryptocurrencies in your wallet takes a dive.
6) Automate Your Litecoin Acquisition
Buying Litecoin at exactly the right time can be difficult, stressful, and labor-intensive without the assistance of automation features offered by your crypto platform.
Such automation makes it possible to set up recurring buy orders that happen every month, regardless of the price. For example, you might set the system to purchase $100 worth of LTC on the first Monday of every month.
Sometimes, you’ll get more LTC because prices are lower. At other times, you’ll get less LTC because prices are higher.
Overall, automated recurring buy orders may net you more Litecoin than you could bring in by trying to time the market and place orders manually. Auto-Buy on Binance.US was created with this tactic in mind. Customers can easily set their schedule from the buy screen by toggling the Auto-Buy slider on and deciding how often they would like to make a purchase. To use this feature, download the latest version of the Binance.US mobile app.
Buy, Sell, and Trade Litecoin with Binance.US
When you understand Litecoin, have the right tools at hand, and partner with a robust platform, you’ll be able to navigate the world of cryptocurrency more successfully and buy, sell, and trade Litecoin with confidence.
To get started, register for a Binance.US account online or download the Binance.US app.
You can buy LTC, BTC, BNB, and over 140 other cryptocurrencies with a debit card, credit card, or via bank transfer, and get your crypto journey started today.
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