What Is Litecoin Worth?

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Any currency even the U.S. dollar, even gold bullion is only as valuable as society thinks it is. Were the Federal Reserve to start circulating too many banknotes, the value of the dollar would plummet in short order. This phenomenon transcends currency. Any good or service becomes less valuable the more readily and cheaply available it is. The creators of litecoin understood from the start that it would be difficult for a new currency to develop a reputation in the marketplace. But by restricting the number of litecoins in circulation, the founders could at least allay people’s fears of overproduction.

Litecoins, in fact, derive from bitcoins, sort of. The way to obtain litecoins is to start with a bitcoin account, then trade your bitcoins for litecoins at the going rate (currently about 146 litecoins to 1 bitcoin) at an online cryptocurrency exchange. But why trade one digitally constructed cryptocurrency for another less recognizable one? There are advantages inherent to litecoin over bitcoin. Litecoin can handle more transactions, given the shorter block generation time. Litecoin also has a barely perceptible transaction fee. It costs 1/1000 of a litecoin to process a transaction, regardless of its size. That’s about 2¢ in current exchange rates. Contrast that with PayPal’s 3 percent fee.

If we consider the U.S. dollar to be of constant value of course it isn’t, but we need to have one static quantity when comparing cryptocurrencieslitecoin’s variability becomes clear. Through most of 2013, litecoin’s market capitalization was similar to today’s. But during a 3-week span in November 2013, its market cap increased 20-fold. It’s been gradually declining to its previous level ever since, even as the user base has increased.

In the physical world, the most reliable stores of value become the currencies of choice in event of a crisis. In the late 1990s and early 2000s, Zimbabwe became synonymous with hyperinflation. When inflation reached 89.7 sextillion percent (give or take a few points) and rendered the Zimbabwean dollar worthless, that wiped out the fortunes of many people unfortunate enough to have held liquid assets. People had no choice but to use something more stableprimarily the U.S. dollar and South African rand—for daily commerce. Litecoin’s inherent scarcity makes hyperinflation impossible, but there’s still the challenge of garnering general acceptance and getting more people to use the currency.

How Litecoin Is Made?

Like all cryptocurrencies, litecoin is not issued by a government, which historically has been the only entity that society trusts to issue money. Instead being regulated by a Federal Reserve and coming off a press at the Bureau of Engraving and Printing, litecoins are created by the elaborate procedure called mining, which consists of processing a list of litecoin transactions. Unlike traditional currencies, the supply of litecoins is fixed.

There will ultimately be only 84 million litecoins in circulation and not one more. Every 2.5 minutes (as opposed to 10 minutes for bitcoin), the litecoin network generates a what is called a block—a ledger entry of recent litecoin transactions throughout the world. And here is where litecoin’s inherent value derives.

The block is verified by mining software and made visible to any “miner” who wants to see it. Once a miner verifies it, the next block enters the chain, which is a record of every litecoin transaction, ever.

Is Litecoin Giving Bitcoin a Run for its Money?

This question has been on the minds of many players in the cryptocurrency industry. Ever since its introduction, Bitcoin has always been at the top. This can be explained by the fact that it was the first digital currency presented to the public. Consequently, Bitcoin has gone ahead to set the bar for virtually all types of digital currencies that have come after it. Bitcoin also has the highest market share and value of in the alternative currency section.

Litecoin has firmly taken the number two slot in the alternative currency industry. At some point, its fate seemed to be tied to that of Bitcoin. When Bitcoin appreciated in value, the same happened to Litecoin. If Bitcoin’s price dropped, so did that of Litecoin. This trend became predictable and familiar. Litecoin showed that it could keep up with the pace, but just could not gain any further ground on Bitcoin.

What will be the total number of Litecoins?

The total number of Litecoins that will be produced after mining would be around 84 million, meaning that there would be more Litecoins than Bitcoins. Therefore, this might lead to more liquidity whereas it might also mean less value for the Litecoin. You need to understand that liquidity is not going to be necessarily true because they can be divided into smaller fractions. Nevertheless, people can still use it for other services, which means that they might be more readily used.

Is it easy to access Litecoins?

It is not as easy to access Litecoins as Bitcoins. The method is still quite similar to the option of cash. BTC-E offers majority of Litecoins, and this is a Russian exchange. An intermediary might need to be used such as Perfect Money, which can become expensive because the fee is quite high. You can also exchange Bitcoins for Litecoins, which is a method that has become extremely popular. Since it is a separate network, even if Bitcoins do not work or become redundant, Litecoins would not necessarily become so.

What are the differences between Litecoin and Bitcoin?

There are three principal differences between the two. In fact, Litecoin developers want to make it better than Bitcoin.

The first difference is that the network of Litecoin processes a block within 2.5 minutes, as compared to the 10 minutes processing time of Bitcoin’s block. Therefore, this will lead to faster transaction outcomes. However, this means that there would be increase in the number of blocks that are orphaned along with an increased size of the blockchain, which can be potential drawbacks. However, there is great resistance to the spending attack.

The second difference is that it is uses a memory-hard function algorithm, which is in the form of a script.

Furthermore, another difference includes the fact that it is able to produce 84 million litecoins, which is four times more than the currency units which are issued by the Bitcoin network.

However, because Litecoin uses scrypt algorithm, this means that mining Litecoins are more difficult and ultimately more expensive, as well.

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