Litecoin (abbreviated LTC) is a digital peer-to-peer internet currency that enables instant, low-cost payments across the world.
Litecoin is an open source global payment network that is fully decentralized. The payment system doesn’t handle physical currencies such as the USD or GBP. It uses Litecoin as its own unit of account and falls in the category of a virtual or digital currency. You can buy and sell Litecoins for traditional money at various online exchanges.
Difference between Litecoin and other Cryptocurrencies
Litecoin is different from other cryptocurrencies in 3 main ways:
1) Unlike Bitcoin and Ethereum, Litecoin uses a software algorithm (script) to mine units. This helps prevent people from creating powerful custom computers or rigs that can be used to mine the currency.
2) Litecoin has one of the fastest digital currency transaction times of 2.5 minutes compared to Bitcoins’ 10 minutes.
3) Litecoin is the cheapest of the three major cryptocurrencies. As of July 2017 Bitcoin was trading at $2,375, Ethereum $234 and Litecoin at $43. Its lower price is one of the key attractions to investors.
Getting Started with Litecoin
Litecoin wallet: Before buying Litecoins, you first need a digital wallet to store them. Some of the popular Litecoin wallets are Coinbase, Exodus, and Jaxx.
Litecoin exchange: Currently the biggest obstacle facing Litecoin is the limited exchanges ready to deal with it. Litecoin has roughly 2 dozen exchanges, which allow BTC/LTC conversions, making the buying process tricky. UK investors can buy Litecoins from Bittylicious, and BitBargain online exchanges via domestic bank transfer.
Buying Litecoins: After choosing an exchange, open an account and buy the Litecoins. Always store your Litecoins in your personal wallet. Don’t leave you coins in an exchange as hackers might steal them or the exchange may shut down with your investment. You can buy Litecoins with Bitcoin or Cash.
Litecoin CFDs
A Litecoin contract for difference allows investors to tap into the benefits, and risks of Litecoin trading without the need to own the actual coin. You can invest in Litecoin CFDs if you’re confident the prices will rise or fall soon. You buy a contract for difference as opposed to buying actual Litecoins or a future that would require a future delivery of the Litecoin. Such an arrangement allows the buyer, and seller to settle any increase or drop in prices in cash on the date which the contract expires.
If your prediction is correct, and the prices change within that timeframe, you get paid the difference. But, if your prediction is incorrect and prices don’t go as per your intuition, you will have to pay the difference. In reality, the buyer and seller are betting on whether the prices will rise or drop.
The Benefits of Litecoin CFDs
Security: There’s no need to worry your Litecoins will be stolen as CFDs are a derivative product. No actual Litecoins are traded in your name since you potential profits depend on the Litecoin price movement.
Simplicity: You can easily buy Litecoins on your mobile or tablets.
Leverage: You can open a larger position in the market by trading CFDs leverage of up to 10:1.
CFDs allow investors to generate profits from changes in global markets by tapping into the demand and supply of Litecoins. Note that when trading Litecoin CFDs your capital is at risk. Due diligence is thus important for novice traders.
Litecoin Spread Betting
Spread betting allows you to place bets on the price movements of different market instruments. You profit from correct predictions and size of your bet stakes. A spread betting provider will quote two prices – a bid and an offer. The idea is to take a position on whether the price will move higher or lower than the current quotes.
Unlike forex trading, which involves speculating with currencies, spread betting provides more instruments such as stocks, indices, and even the outcome of sports.
Benefits of Spread Betting
Similar to spread betting on other financial instruments, traders who bet on Litecoin don’t actually own any Litecoins. Thus many potential hurdles, and risks associated with Litecoin are neutralized when spread betting.
- You won’t need to get a Litecoin wallet
- Spread bettors don’t have to trade on an exchange. As a result, you can avoid security problems related with exchanges.
- UK residents don’t incur tax on profits associated with trading Litecoin as spread betting is categorized as gambling
- If your intuition tells you Litecoin will lose value, you can short the crypto-currency by selling. Most crypto exchanges don’t allow traders to short. However, spread betting will give you the chance to make a profit or loss in a bear market.
Note that spread betting Litecoin comes with many risks, and losses can exceed your deposits.
Trading Litecoin Binaries
You can trade Litecoin as a medium of exchange or use it as an underlying asset.
Medium of Exchange
When using Litecoin as a medium of exchange, traders will trade various underlying assets with Litecoin. For example, you can trade the EUR/USD currency pair and call upon a rise or fall once the binary option expires. If your trade is successful, you get paid in Litecoin instead of fiat currencies such as USD or GBP.
The benefits of Litecoin binary trading are:
- The cost of transaction is lowest in comparison to other online payments. The lack of a central authority managing Litecoin means there’s no service fee paid when buying or selling Litecoins
- Traders can also use Litecoin in binary options trading to earn extra Litecoin. By denoting transactions in Litecoin, traders can shield themselves from cryptocurrency fluctuations. They will also earn more through profits made in trading
Litecoin as an Underlying Asset
You can trade Litecoin with binary options as an underlying asset in specialized Litecoin exchanges. Its exchange rate in relation to the USD will rise and fall in relation to the demand for it.
Similar to other currencies, investing in Litecoin has a high degree of risk involved. Given the low price point and accessibility via tools such as Coinbase, it’s advisable for novice traders to start trading with small amounts as they gain experience. You never know, Litecoins value could end up skyrocketing like Bitcoin’s in the not so distant future.
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