Litecoin was invented in 2011 by Charlie Lee. It’s built with the same technology as Bitcoin, in that it’s a blockchain-based peer-to-peer cryptocurrency. That means that it also doesn’t have any single controlling entity in charge and all transactions are recorded in its distributed ledger.
Should you buy Litecoin? “Yes” would be the answer to that. While there is no doubt that Bitcoin was a pioneer and has been a great investment for some, it has its limitations as a practical currency. Litecoin can handle more transactions more quickly with almost no transaction fees.
How to buy Litecoin
You can buy Litecoin via different kinds of cryptocurrency marketplaces, but you’ll need to create an account and validate your identity before you can go ahead with any transactions. If your provider doesn’t offer a wallet service, you’ll also need to set up a Litecoin wallet to store your currency. Be aware that it can take anywhere from a few minutes to a few weeks to set all this up, depending on the provider and which method of payment you choose.
Where to buy Litecoin
You can buy Litecoin in three different kinds of cryptocurrency marketplace.
Crypto Exchanges are like your typical stock exchange, so you’ll be able to trade Litecoin directly with others because exchanges are in the business of finding buyers for sellers and sellers for buyers (at a price). Bear in mind that exchanges are often used by professional traders too, so they include high-level features which can sometimes be overwhelming for beginners.
You don’t have to worry about how to buy Litecoin with brokers, because they sell coins to you from their own stock, which means you’re dealing directly with the broker instead of with another individual like yourself. As the broker is acting as a market maker, they charge a higher commission than crypto exchanges. Despite this, when you buy Litecoin from a broker you’ll find it’s a lot less complicated than dealing with an exchange.
Finally, you have the option of using peer-to-peer (P2P) directories. These are platforms that allow two individuals to trade Litecoin directly, so there is no need for a matchmaking algorithm or third-party service provider. The downside to the P2P approach is you lose out on the protection that such a provider would offer.
Things to bear in mind when buying Litecoin
Verification: Before you can start trading, the majority of marketplaces ask you to prove who you are by uploading a copy of your ID, and where you live by uploading a recent utility bill. Verifying this information can take a few minutes, or as we noted already a few weeks. It all depends on the provider.
Wallet Service: when you buy Litecoin you will need to keep it in a crypto wallet. This is a piece of software that acts as a repository for your Litecoin, but they aren’t as straightforward as an ordinary wallet. If you are a beginner then you might want to make sure that your marketplace offers its own wallet service. Even so, be aware that keeping Litecoin in a personal wallet is usually safer. You’ll need to spend some time learning how to do that, but the extra security and peace of mind it brings could be worth it.
Costs: As with most things, the price of Litecoin moves according to supply and demand, so it will fluctuate in line with how many people are buying and selling at any one time. Since cryptocurrency exchanges set market prices, you can usually get Litecoin from them for lower fees and at a better rate than a broker is likely to offer you. As well as trading fees, withdrawals and deposits may also attract their own fees.
Payment method: To buy Litecoin you’ll need to transfer some fiat currency to a marketplace. Exchanges don’t usually offer many payment methods, but broker services usually let you use almost instant options like credit cards or Skrill for an additional cost.
Security: This has to be your biggest priority. Never go with a marketplace that you aren’t sure of. Your chosen provider should have two-factor authentication (2FA) or cold storage as a minimum. And don’t be tempted to keep large amounts of currency in a marketplace wallet because they are sometimes preyed upon by hackers.