How to Invest In Litecoin - Step-by-Step Guide
Litecoin (LTC) is a blockchain with an aim to provide secure, affordable and quick payments. It is based on the BTC protocol but the hashing algorithm deployed in the blockchain is different. The founder wanted to create a lighter version of Bitcoin so there is a digital currency that can be used for micro-transactions such as at point-of-sale and retail payments.
At the time of writing this guide, Litecoin's native token LTC has a market capitalisation of more than $13.5 billion. The maximum coin supply is capped at 84 million LTC.
Table of Contents
Invest in Litecoin in 3 Steps
Get a Litecoin Wallet
Before you invest in Litecoin, you have to procure a safe LTC wallet that comes in both cold and hot variants. There are a wide range of crypto wallets accessible and you should assess various key elements prior to making a final choice. Contingent upon your investment methodology, you should choose a wallet that offers the ideal mix of ease of use, coin availability, customer service and security.
Join a Litecoin Exchange
The next step you need to take to invest in LTC is to register an account on a digital currency exchange. You have to keep in your mind that you can't buy LTC tokens just like that and first, you should deposit funds either in fiat or in crypto. Once you have done that, you will be able to exchange your funds for LTC tokens.
Invest in Litecoin
When you make your account on a crypto platform, you will need to provide your individual data including your name, email address, country and contact number. It's suggested that you set a solid password that is a blend of upper and lower case letters, a digit and a special character. You will be needed to confirm your identity through documentation that may incorporate your driver's permit, passport or ID card. The verification process is implemented by the crypto platform to conform to Know Your Customer (KYC) and Anti-Money Laundering (AML) guidelines.
Investing in Litecoin Explained
Before putting your money into any digital currency including Litecoin, the main thing to do is get a safe LTC wallet. A number of significant variables that you should take into account prior to getting a wallet include security highlights, private key control, ease of use and client service. Remember that various sorts of investment techniques will require various kinds of LTC wallets.
In the event that you are going in for a long haul and expect to store your LTC tokens for quite a long time, at that point security is the most primary concern on your mind and cold wallets will be a better option. On the other hand, if you are a short-term investor, mobile wallets offer the accessibility you are searching for. It doesn't mean they aren't secure, they simply offer the ideal balance of security and portability to coins so you can trade on the go. When you need something with more features and versatility, you have the alternative to go with a desktop wallet.
Aside from that, there are financial traders who simply need to store their LTC coins for just a few minutes or hours for day trading. For such individuals, hot or web wallets that are incorporated into your exchange account can be very helpful. They may not be as secure as other types of wallets however they offer immediate access to your coins so you can execute your orders and positions within minutes.
You can invest in Litecoin by using exchanges or peer-to-peer (P2P) services. P2P platforms help in connecting buyers with sellers. The best advantage of such transactions is that you can arrange your own terms with the seller including the cost of LTC tokens and payment option.
It doesn't make any difference which platform you pick for putting your money into LTC, all leading exchanges and brokers will request you to verify your identity to guarantee consistency with AML and KYC guidelines. This assists these services with ensuring that there are no illicit and unethical activities on their sites and applications so you have a risk-free investment environment where your own data and digital assets are secure.
Where Can You Invest In Litecoin?
It can be quite a difficult decision to find the right exchange. That is the reason we have done an exhaustive assessment of a multitude of top crypto platforms testing every fundamental feature including ease of use, client service, regulatory compliance, expenses and more. After comprehensive research, here are our top recommendations.
As you join a cryptocurrency platform, you will immediately see that there are various payment modes accessible to you including e-payment methods, credit and debit card and wire transfer. The availability of these payment options is reliant on your country and the platform you pick. In the event that you are only a newbie, the ideal choice for you is a bank card. It is a little costly, however, it will allow you to deposit funds immediately with no issue. After you have deposited your minimum seed capital, you can begin trading or investing in LTC.
Some crypto exchanges permit you to deposit your funds through your bank. This is very easy to use but the money may take some time to move into your account. For this payment mode to work, you should select your favoured fiat money and the name of your bank. The platform will take you to another page where you will be requested to verify your account. When finished with this step, you can move your money into your trading account.
Litecoin Investment Strategies
To put your capital into LTC, there are various short and long haul investment techniques. We will discuss the most used LTC investment techniques and when and how you should use them to earn profits.
Buy and 'Hodl'
What is it?
'Hodl' is only the word 'hold' which has been incorrectly spelt. It has turned into an inside joke of the crypto world that began when a baffled Bitcoin enthusiast said something about holding his coins. The methodology, as you may be suspecting, includes holding your LTC tokens for an extensive stretch until an enormous price surge brings about generous gains. LTC 'hodling' is perhaps the venture for those looking for long-term investment opportunities.
How to use this strategy
For 'hodling' LTC tokens, you need to make an account on a crypto platform and confirm your personal identity. Deposit the minimum seed capital and purchase LTC coins. Don’t forget that this procedure is about your tolerance and discipline and you will be enticed to sell at numerous events. However, you should hang tight for the long haul to give the holding strategy a better chance of success.
When to use this strategy
The ideal time to obtain LTC tokens is when the market is down and the price is seeing a bearish trend. Buy LTC coins and hold them in your protected Litecoin wallet until the correct moment arrives. You need to remember that the digital currency market experiences high and low points consistently and you can't be influenced by these price climbs and drops if you really need to make profits over the long haul. Simply purchase your LTC tokens and disregard the market for the time being.
Buy Fractional Litecoin
What is it?
Much the same as Bitcoin, you don't have to purchase a whole token since the Litecoin network offers smaller units of the currency called Litoshi. The smallest unit you can purchase is 1 Litoshi which equals 0.00000001 LTC. Buying a negligible portion of Litecoin enables you to trade and invest regardless of whether you don't have a lot of capital or not. Partial buying of LTC has transformed into perhaps the most well-known methods of retail LTC venture as it empowers you to purchase Litecoin worth any sum.
How to use this strategy
Quite possibly the best method to execute this investment system is to save a specific sum consistently and put it in LTC. If you can save and put capital into LTC tokens consistently, you will actually be able to buy an adequate number of LTC coins over the long haul increasing your investment stake.
When to use this strategy
This strategy is ideal for individuals who are simply beginning to invest in cryptos and don't have any desire to put a lot of cash into LTC immediately. This incremental investing strategy will allow you to learn and pull out any time you need.
Long Position on Litecoin
What is it?
Opening a long position implies that you are wagering that the price of LTC will go up soon. Since this is about your trust in the asset’s price lookout, long positions are opened through contracts for difference or CFDs which permit you to put in your capital in the asset without actually buying it. You can also do it through leveraged trading but don’t forget that this is a high-risk speculation strategy that should just be utilized by prepared financial traders who know and comprehend their monetary risks and have comprehension of the financial markets and cryptocurrency price movements.
How to use this strategy
When you are certain that LTC cost is going to go up, you have the alternative to go for a long position on LTC by joining a brokerage. In the first place, you should confirm your personal identity and afterwards you will enter the sum you need to invest in your position. You will also be requested to enter the LTC price at which you desire to start your position. When that price point is reached and proceeds in the upward direction, you can close your position and make a great profit. However, if the price doesn’t move forward, you stand to lose money.
When to use this strategy
Long positions can be used to make quick gains when the price of LTC is witnessing a bullish pattern. The right way to use the strategy is to get in and get out quickly so don’t lose money. It cannot be stressed enough that long positions that are opened through leveraged trades should just be utilized by experienced financial investors who are totally mindful of the results if the position turns out badly. This specific procedure is ideal in a market where LTC price is moving upwards because of some obvious factors.
This is one reason why you need to acclimate yourself with digital currencies and the monetary market if you desire to participate in high-risk leverage trading. If you are sufficiently educated in terms of cryptocurrencies and financial markets, you can depend on the outlines, charts, and other direct materials to make better choices and have higher chances of pulling off a long position order in an effective way.
Benefits of Investing in Litecoin
- Deflationary currency – Litecoin is also immune to inflation which means it doesn’t lose value or purchasing power with time.
- Affordable Transactions – Litecoin blockchain provides an affordable way to send and receive the money within minutes at a low price for micro-transactions.
- Accessibility – Since Litecoin is stored in digital variance, you can access your funds from anywhere anytime as long as you have a device and an internet connection.
- User-Friendly – Litecoin is one of the most user-friendly blockchains and anyone can rely on it to send and receive funds.
- Decentralised – Litecoin is completely decentralised which means there aren’t any central authorities like banks and governments who can exercise control over your LTC coins.
- Anonymity – Relying on the Litecoin blockchain means cybercriminals and hackers cannot identify you personally.
- Peer-to-Peer Network – Litecoin blockchain allows you to transact with other individuals directly without any involvement of third parties.
- Scarcity – As there are only 84 million LTC tokens, the scarcity along with increasing demand will continue to lift the price of LTC.
Disadvantages of Investing in Litecoin
- Price volatility – Since LTC is also traded heavily on a daily basis, there is high price volatility which can be quite risky for new investors.
- Beware of scams – The crypto market has seen a diverse variety of scams and frauds that have stolen people’s money. You need to carry out risk management before you invest.
Other Ways of Investing in Litecoin
If you are searching for alternative investment techniques, you have the option to directly meet with an LTC token seller whom you can meet on a P2P cryptocurrency platform. Simply ensure that you meet at a safe spot. You can also rely on ATM Radar to locate the nearest authentic LTC ATM in your region.
Invest in a Litecoin ETF
A Litecoin ETF gives financial investors a lawful and convenient investment technique to put their capital into LTC. It's a monetary driver that monitors the price development of Litecoin and is exchanged on the traditional stock market. ETF's worth surges and diminishes subject to the LTC price. It's an ideal method to invest in LTC for people who don't desire any technical involvement such as managing wallets and handling private keys to LTC tokens.
Trade Litecoin on Leverage
Leveraged trading of LTC tokens will allow you to invest more capital than you have in your account. It is an investment technique that is executed by seasoned traders in a bullish market. They open a leveraged position and close it quickly as soon as their gains are realised. Leverage can be anywhere between 2X and 500X depending on which brokerage website you are using. That being said, minor price movements can also liquidate your account completely. That's why you need to exercise caution and only invest what you can afford to lose.
Since Litecoin is a blockchain-based network, it is secured by highly strong cryptographic encryptions. Just like Bitcoin and a multitude of other cryptocurrencies, Litecoin relies on the Proof of Work protocol for validating transactions in a quick and accurate manner. You can use your own mining equipment or participate in a cloud mining pool to get the reward.
Frequently Asked Questions
Not at all. You can buy 1 Litoshi which equals 0.00000001 LTC. It is the smallest unit of LTC.
The best method to reduce your financial investment risk is to invest in multiple tokens instead of relying on a single coin.
It depends on the country you live in and the regional tax laws. Most countries don’t tax cryptocurrency investment profits but check your local laws before investing.
You can use your own computing resources or join a mining pool to mine Litecoin.
For adhering to AML and KYC laws, brokerage and cryptocurrency exchanges ask you to validate your personal identity. This permits them to prevent illegal and unethical activities on their website and gives a safe and healthy investment environment.