High cryptocurrencies have been tearing it up prior to now 12 months, and Litecoin (CCC:LTC-USD) is not any exception. The worth of Litecoin has practically tripled prior to now 12 months. Nonetheless, with so many cryptos to select from, it may be troublesome for buyers to know the place to start out.
Right here’s a take a look at the professionals and cons of shopping for LTC.
Liquidity: With a market cap of $11.6 billion, Litecoin is presently one of many 10 most respected cryptos. That dimension means Litecoin has comparatively excessive visibility and excessive liquidity. Its common each day buying and selling quantity is over 2 million cash.
Liquidity is extraordinarily necessary within the crypto market given the acute volatility within the house. With out sufficient liquidity, a single vendor may probably crash the value of a cryptocurrency. Luckily, LTC buyers won’t ever have to fret about getting out of their positions.
Reliability: In relation to the reliability of the underlying software program, Litecoin buyers can relaxation simple figuring out Litecoin is among the oldest cryptos and was basically created as a fork within the Bitcoin (CCC:BTC-USD) blockchain. Like Bitcoin, LTC is open-sourced and decentralized.
Its developer was laptop scientist named Charlie Lee. Lee beforehand labored for Alphabet’s Google (NASDAQ:GOOG, NASDAQ:GOOGL) and now works for Coinbase (NASDAQ:COIN). He’s actually no slouch. Lee’s preliminary purpose was to make Litecoin be to Bitcoin what silver is to gold.
Efficiency: Lee needed to enhance upon Bitcoin, so Litecoin has a number of superior features. Bitcoin transactions take, on common, slightly below 9 minutes to confirm. LTC transactions take solely about 2.5 minutes to confirm. That superior velocity suggests Litecoin could show simpler to scale over time.
Uphill model battle: On this planet of crypto, Bitcoin is boss. Whereas Litecoin could have been constructed to be a substitute for Bitcoin, most buyers see Ethereum (CCC:BTC-USD) as the first different to Bitcoin. Whether or not or not it’s truthful, the truth that Litecoin was a fork of Bitcoin hurts its status as a real different. As of now, many buyers lump Litecoin in with the opposite eight cryptos which might be among the many high 10 in worth aside from Bitcoin or Ethereum.
Dropping market share: One other discouraging issue for Litecoin buyers is that the crypto has been shedding market share, not gaining it. Over the past big cryptocurrency run again in 2017, Litecoin ended the 12 months because the fifth largest crypto by market cap. At present, it’s No. 10.
Up to now three years, the value of Litecoin is up 44.9%. In that very same time, the value of Bitcoin is up 365.4%. Ethereum is up 348.6%.
Litecoin’s creator dumped his cash: Some of the devastating headlines for Litecoin buyers lately got here in 2017 when Lee announced he had bought all of his Litecoin. Lee timed the sale practically completely, saying it in December 2017 inside weeks of the market high.
Lee stated he bought his stake so he couldn’t be accused of manipulating the Litecoin market. He stated it was a battle of curiosity for him to tweet about Litecoin when he owned such a big stake in it and was such an influential voice. Even when his causes for promoting have been admirable, it doesn’t instill confidence within the crypto when the founder dumps all of his holdings.
How To Play It
I’m usually not bullish on cryptocurrencies as a bunch. I feel all cryptocurrencies will face pressures from international regulators in years forward. They’re nonetheless comparatively troublesome to make use of to make on a regular basis purchases. And they’re means, means too risky for anybody to make use of as an affordable retailer of worth.
That being stated, I’m significantly bearish on cryptos aside from Bitcoin and Ethereum. Bitcoin has the true first-mover benefit and model worth. Ethereum has far superior technology and is the preferred different to Bitcoin.
It’s going to be troublesome sufficient for Bitcoin and Ethereum to realize mainstream traction in years forward. I don’t know if cryptocurrencies are the way forward for foreign money or just the newest Wall Road fad. Both means, I’ve a tough time seeing a purpose for Litecoin to outperform Bitcoin or Ethereum within the long-term.
On the date of publication, Wayne Duggan didn’t have (both straight or not directly) any positions within the securities talked about on this article. The opinions expressed on this article are these of the author, topic to the InvestorPlace.com Publishing Guidelines.
Wayne Duggan has been a U.S. Information & World Report Investing contributor since 2016 and is a employees author at Benzinga, the place he has written greater than 7,000 articles. Mr. Duggan is the writer of the guide “Beating Wall Street With Common Sense,” which focuses on investing psychology and sensible methods to outperform the inventory market.