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Litecoin is a cryptocurrency that emerged more than a decade ago as one of the first alternatives to Bitcoin. Like Bitcoin, Litecoin was conceived as a form of secure payment — though some users keep it in their portfolio because they believe Litecoin is a good investment.
What is Litecoin?
Litecoin, also known as LTC, is based on technology that shares some fundamental similarities with other cryptocurrencies, and it is particularly similar to Bitcoin. However, its creators set out to distinguish it from Bitcoin by processing transactions faster, distributing newly minted coins more broadly and maintaining a larger circulating supply.
Users can buy Litecoin on cryptocurrency exchanges or receive Litecoin as payment. Some people also mine Litecoin, which allows them to earn the cryptocurrency as a reward for devoting computing power to help verify transactions on the network.
Litecoin launched in 2011, making it a relative old-timer in the world of cryptocurrency. For a time it was among the most valuable digital assets, though it has fallen back in recent years. Now, Litecoin ranks around No. 20 in terms of market capitalization, which is the total value of coins in circulation.
But Litecoin enthusiasts say there’s a bright future for the coin, and that factors including ongoing privacy enhancements on its underlying blockchain network make it a strong contender in the digital payments space.
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Litecoin price today
Litecoin, like many other cryptocurrencies, is a volatile asset whose price can change significantly by the day, or even the hour. That means it’s hard for anyone to make a confident Litecoin price prediction. Below is a chart showing Litecoin’s historical and current price.
You decide: Is Litecoin a good investment?
Litecoin is only one piece of the crypto market, which is a very competitive space. And there are other investment options outside of crypto. When making any kind of investing decision, it’s important to weigh the pros and cons.
Track record: Litecoin launched in 2011, far earlier than many other leading crypto projects. While Bitcoin debuted in 2009, Ethereum, now the second-most highly valued cryptocurrency, didn't go live until 2015. Because Litecoin has been around for a relatively long time, it's had a chance to show that it can operate reliably with a large number of users — something newer projects may still be trying to establish.
Significant adoption: One thing many cryptocurrencies have struggled with is moving from idea to execution. Cryptocurrencies usually use a technology known as blockchain to create services that can run without a controlling authority such as a central bank. While the use of crypto for payment remains far from being the norm, Litecoin is positioning itself as a leader in that area. The cryptocurrency’s developers report that Litecoin was part of 42.5 million transactions in 2021. If a lot of people commit to Litecoin as a form of payment, that could push prices higher and reward early adopters.
Differentiation from Bitcoin: Litecoin’s creator, Charlie Lee, developed the cryptocurrency by making several adjustments to Bitcoin’s source code. Among those were measures that confirm transactions four times as quickly as Bitcoin does. Litecoin’s supply is also larger than that of Bitcoin, a feature that could make people more willing to spend it. Lee has said he sees Litecoin as a complement to Bitcoin, rather than a competitor. He argues that Litecoin is better suited as a medium of exchange, while Bitcoin can function as a store of value.
Volatility: Despite Lee’s efforts to make Litecoin more attractive for use in everyday transactions, Litecoin continues to see price fluctuations well beyond what you’d see with established currencies, such as the U.S. dollar. Such short-term price swings, which are common in cryptocurrency, may diminish Litecoin’s usefulness in everyday transactions.
Competition: Since the creation of Litecoin, thousands of other cryptocurrencies have been developed. These include several “stablecoins,” which have various mechanisms to avoid volatility by pegging their value to other assets such as gold or the dollar. Customers may feel more confident spending currencies whose value is more predictable. There are other competitors, too. Bitcoin Cash, for instance, is the product of another effort to make Bitcoin a more attractive medium of exchange.
Sector-wide risks: Even if Litecoin turns out to be among the winners in the crypto space, that doesn’t mean it will see massive global adoption. Some people are optimistic that blockchain technology will displace many of the entrenched players in global finance, but this is by no means a sure bet. If blockchain technology doesn’t reach its full potential, Litecoin may not either.
The author owned Bitcoin and Ethereum at the time of publication.