Litecoin is one of the oldest cryptocurrencies in the market. Besides Bitcoin, it is the only token the current US Securities and Exchange Commission (SEC) chair, Gary Gensler, has attempted to classify as a commodity.
Given its growing popularity in the market, novice crypto traders are exploring how to buy Litecoin. If you want to buy Litecoin, this is the guide for you.
In this comprehensive guide, we dissect everything there is to know about how to buy Litecoin. This guide is abridged to make it easy for beginners to understand everything there is to know about this token.
What Is Litecoin?
Litecoin is an altcoin created in 2011 by ex-Google engineer, Charlie Lee. Litecoin is the only cryptocurrency that can be used as an alternative to Bitcoin, and it is also sometimes referred to as the silver to Bitcoin’s gold.
The Litecoin network runs on instant and low-cost payments. The network uses Bitcoin’s code and has some traits of Bitcoin on its network. Because of its parallelism to Bitcoin, Litecoin has sometimes been used as a testing room for developers appraising applications they want to create on Bitcoin.
For instance, the network adopted Segregated Witness (SegWit) before the Bitcoin network in 2017. SegWit seeks to bring scalability to the blockchain by allowing it to process more transactions per second (TPS). The Lightning Network was also launched on Litecoin before going live on Bitcoin.
Litecoin operates using an open-source blockchain, and a central authority does not control it. Each node operator on the Litecoin network has a copy of each blockchain to guarantee that new transactions do not contradict transaction history.
Like Bitcoin, Litecoin runs using a proof-of-work (PoW) consensus algorithm. While there are some apparent similarities, differences between Bitcoin and Litecoin exist.
Unlike Bitcoin, transactions on the Litecoin network are faster. Additionally, LTC has a larger supply than BTC. Its hashing algorithm also makes mining activities on the network more decentralized and fair, which has helped Litecoin succeed in the market.
Litecoin has a total supply of 84 million, much higher than the 21 million token supply of Bitcoin. It is also deflationary and undergoes the halving cycle like Bitcoin every four years or after every 840,000 blocks.
Litecoin has a total supply of 84 million. Like Bitcoin, it is deflationary and halves every 840,000 blocks (approximately every four years).
Why Should I Invest In Litecoin?
Litecoin was created to enable cheap and efficient transactions. Like Bitcoin, it seeks to secure a new use case as a medium of exchange. Over the years, Litecoin has gotten the green light for payment across multiple platforms.
The Lightning Network is also focused on developments seeking to increase transaction efficiency. Over the years, it has implemented multiple upgrades, including the MimbleWimble upgrade, which aims to improve transaction privacy.
With an active development team behind Litecoin and growing use cases for the token, Litecoin has the potential to grow. However, volatility still affects the value of the token. Like other cryptocurrencies, the price of LTC can swing drastically, as seen in the chart below.
How To Buy Litecoin
Now that we have a basic understanding of Litecoin and how it works, we should explore how to buy Litecoin from a novice trader’s point of view. Below are the steps to follow when investing in this asset:
Choose The Right Cryptocurrency Exchange
The first step is to find where to buy Litecoin. You can buy LTC from a cryptocurrency exchange. However, the dilemma that many novice crypto traders face is picking the suitable exchange from a pool of many exchanges in the market.
When picking a cryptocurrency exchange, it is best to consider the following factors:
- Security
If you want to buy Litecoin on any cryptocurrency exchange, ensure that it has implemented security features like two-factor authentication (2FA), which will prevent unauthorized access to your account. You should also pick an exchange that stores customer funds in offline cold storage where they are free from the prying eyes of hackers.
Regarding security, you should also evaluate whether an exchange has the appropriate licensing. It is best to go with regulated and licensed exchanges in your jurisdiction.
- Reputation
It is also best to check an exchange’s reputation in the market. A straightforward way to do that is by evaluating customer reviews. Knowing what previous users of an exchange are saying will help you determine whether it is the right pick for you.
It is also prudent to evaluate how long an exchange has been operational. Older exchanges tend to have more stability and reliability than new exchanges.
- User experience
The best cryptocurrency exchange for beginners is the one that has an intuitive and user-friendly interface. A user-friendly crypto exchange should possess a mobile application that allows you to trade on the go.
A good and reliable exchange also comes with a robust customer support team. This team answers any queries you might have when using the platform.
- Fees
You should also compare the fees and costs of a cryptocurrency exchange. Evaluate the fees paid by the exchange on your trades. You should also know whether deposit and withdrawal fees affect your profits.
- Liquidity
Lastly, you need to evaluate the liquidity of a cryptocurrency exchange. If an exchange has high liquidity, you can trade crypto assets quickly without significantly affecting the price. An exchange with high volumes also enables you to buy Litecoin instantly without any significant hiccups.
Set Up An Account On A Cryptocurrency Exchange
Once you have picked an exchange, the other step entails creating an account on the platform. The registration process differs from one exchange to the other. However, you need to possess an email address to create an account.
When setting up your exchange account, use a strong password. If available, you should also adopt 2FA to ensure that an unauthorized person will not have access to your account.
Some exchanges require verifying your identity through a know-your-customer (KYC) process. The requisite in the KYC process is a government-issued ID uploaded to the exchange’s review team. You then have to take a real-time picture to compare your identity with that submitted in the government document.
Fund Your Account
After creating your cryptocurrency exchange account, the next step is to deposit funds into the account. You can fund the account through the different methods supported by the exchange.
If you already own a cryptocurrency wallet, you can deposit the crypto assets on that wallet into the exchange. When making the deposit, ensure the cryptocurrencies you want to use are already supported on the exchange.
You can also buy Litecoin with a debit card. Simply link your debit card to the exchange, and the amount you want to invest in Litecoin will be deducted from the card. Before you buy Litecoin with a credit card, ensure that the option is supported in the exchange.
When funding your account, be knowledgeable about any associated fees and costs. It is prudent to select a method that does not charge hefty fees. Explore tips to minimize costs when funding your exchange account to buy Litecoin.
Buy Litecoin
With funds in your account, it is now time to buy Litecoin. The process of buying Litecoin might differ from one exchange to the next. Most exchanges have a “buy” page where you can search for the token you want to purchase and place an order with the amount you are willing to spend.
Before you buy Litecoin on an exchange, it is best that you understand the different order types available. When purchasing, you can place a market order or a limit order.
A market order will be fulfilled at the prevailing price of Litecoin. This type of order is fulfilled instantly, typically within seconds, depending on the exchange’s liquidity.
The other type is the limit order. Unlike a market order, a limit order is not fulfilled instantly. Instead, the exchange will wait until the price falls to your predetermined price. This type of order helps maximize your returns.
If you want to minimize risks, consider setting up a stop-loss order. This order type will not be fulfilled instantly; instead, it allows you to buy or sell Litecoin when it reaches a specified price.
Store Litecoin Safely
After you buy Litecoin, the other step is to store your purchased assets safely. It is not recommended that you store your crypto holdings in an exchange. The reason behind this is that cryptocurrency exchanges are not 100% safe.
For instance, in 2022, FTX, among the largest cryptocurrency exchanges, went under with billions of dollars worth of customer funds after the founders misappropriated customer deposits.
https://twitter.com/HsakaTrades/status/1613209253166055424
The best place to store Litecoin is in self-custody. This involves having a personal wallet where you can control your funds. You can an option to pick between two types of wallets to store Litecoin: cold wallets and hot wallets.
Hot wallets usually come in the form of mobile apps. They allow you to store Litecoin online, making transferring funds back to the exchange easier whenever you want to trade. Hot wallets are recommended if you are a frequent crypto trader.
The other type of wallet is the cold wallet. Cold wallets store your cryptocurrency holdings in external devices such as a USB drive. This type of wallet is recommended when holding large amounts of Litecoin. It is also a classic choice for long-term holders as it is less prone to hacking attacks.
It is important to note that while storing Litecoin in wallets is safer than leaving your assets on exchanges, people often find themselves victims of scams and hacks. You should install an antivirus program on your computers and practice safe browsing. It is also prudent to conduct wallet updates to patch security issues.
Monitoring Your Litecoin Investment
After you buy Litecoin, it is recommended that you become a proactive trader and remain aware of the price changes and any developments in the ecosystem. You must be an active crypto community member on platforms such as X (Twitter) to do so.
Besides following community and project updates, you should also use price tracking tools to remain aware of price movements. You can use crypto price tracking tools like CoinGecko and CoinMarketCap, which let you know the real-time price at which LTC trades.
You can also use the features on a cryptocurrency exchange to set price alerts and remain informed on Litecoin’s price changes.
When investing in crypto assets, knowing the right time to enter and exit a trade is best. Novice investors are always advised to refrain from trading out of fear and greed. The best time to sell crypto is during bull markets, while the best time to buy is during bear markets when the prices are low.
When investing in Litecoin, it is also essential to understand the tax requirements in your jurisdiction. For instance, in the US, the Internal Revenue Service (IRS) taxes consider crypto to be property and subject to capital gains tax.
Other jurisdictions like India have been criticized for imposing heavy crypto taxes. India subjects cryptocurrencies, which are classified as virtual digital assets, to a 30% tax.
In Summary – How to Buy Litecoin
Litecoin is the first alternative cryptocurrency after Bitcoin. Following its launch in 2011, Litecoin has aimed to bring fast and efficient payments through cryptocurrencies. It is classified among the few cryptocurrencies that have gained a solid use case for payment across multiple platforms.
Litecoin’s rapid growth in the digital asset industry has seen the token gain value and much interest from cryptocurrency investors. However, before investing in LTC, it is best to consider this digital asset as unpredictable as other cryptocurrencies.
If you want to buy Litecoin today, begin by picking a reliable exchange. The security of an exchange is a crucial factor to consider before settling on one. Once you fund your account with fiat currency or cryptocurrencies, you should then place an order to buy your assets.
FAQs
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What is Litecoin?
Litecoin went live in 2011 as a fork of Bitcoin. Its creator, Charlie Lee, sought to address the shortcomings of Bitcoin. Over the years, Litecoin has increasingly been used to pay for goods and services and as a form of investment.
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Where can I buy Litecoin?
It is judicious to buy Litecoin from a cryptocurrency exchange. An exchange works like a stock brokerage platform. You simply have to deposit funds into the account and then place an order to buy LTC.
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How do I store Litecoin safely?
You can store Litecoin safely in a hot wallet or a cold wallet. A hot wallet is ideal for frequent traders, while a cold wallet is ideal for long-term traders. You should also take measures to safeguard the integrity of your wallets.
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Is it safe to buy Litecoin?
You should note that Litecoin is speculative like other cryptocurrencies. Besides the price volatility, Litecoin is a safe investment asset. However, you should be aware of the pervasive scams and hacks in the cryptocurrency industry.
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