Litecoin Soars To Record High

After Bitcoin’s initial split last month it reached a high of roughly $4,500 in mid August. But now it’s trading at its highest level ever, reaching a price of $4,700 in some major exchanges this week. The criptocurrency is up now 350% from roughly $1,000 since the beginning of the year. Bitcoin may be the most widely used and talked about cryptocurrency. But there are other digital currencies out there that have also delivered massive returns. One of them is called Litecoin. This lesser known currency in the same asset class hit a record high of $64 earlier this week, which represents a 1,400% increase since January 1st, 2017.

Launched in 2011, Litecoin has often been referred to as the silver to Bitcoin’s gold. It was invented by Charlie Lee, an MIT graduate who used to work at Google (NASDAQ:GOOGL). Investopedia claims that “Litecoin was developed with the aim to improve on Bitcoin’s shortcomings, and has earned industry support along with high trade volume and liquidity over the years.” Like many other digital currencies, Litecoin runs on an open source payment network that anyone can access. It’s not controlled by any central authority. Other than developers, there are a growing number of merchants who accept Litecoin. Although similar in many ways to Bitcoin, here are some ways Litecoin is different.

• The Litecoin Network generates blocks at a faster rate. It aims to process a block every 2.5 minutes, rather than Bitcoin’s 10 minutes, which allows for faster transaction confirmation. Advantages can include greater resistance to a double spending attack over the same period as Bitcoin.
• Litecoin uses scrypt in its proof-of-work algorithm, a sequential memory-hard function requiring asymptotically more memory than an algorithm which is not memory-hard.
• The Litecoin Network will produce 84 million Litecoins, or four times as many currency units as will be issued by the Bitcoin Network.

Litecoin now has a market capitalization of $3.3 billion, making it the 5th largest cryptocurrency by market cap. Many consumers are making use of Litecoin to buy goods and services. According to CNBC, “Litecoin creator Charlie Lee says that he sees the cryptocurrency being used for purchases whereas bitcoin is more a store of value.”

Because transactions are highly transparent for Litecoin, it’s easy to see where buyers and sellers are coming from. On Monday, during a large upward movement in Litecoin’s price, copious amounts of trading were seen in South Korea. Throughout the year, people in China have also taken an interest in Litecoin. It’s not uncommon for over 50% of all Litecoin trading volume is out of China and South Korea. For example, on Tuesday morning, “36.9 percent of litecoin buying happened in Chinese yuan, followed by 22.4 percent in Korean won, according to Cryptocompare. Depending on the time of day, buying in Korean won is larger than yuan.” Both countries are set to see massive regulatory adjustments to cryptocurrenices, which may change the landscape for litecoin. For this reason alone, we have seen a dramatic upswing in the cryptocurrency asset class as a whole around the world. Regulation will not only bring a more legitimate perception to the cryptocurrency market, but it should also “encourage more participation from individual and institutional investors,” according to Thomas Glucksmann, head of marketing at cryptocurrency exchange Gatecoin.

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There are many digital currencies in the market today. But most likely they will not all survive in the long run. Picking winners and losers in the alt-coins asset space is very difficult. It’s probably a better idea to either not participate at all. But if one decides to buy some digital currency it may be wise to accumulate a small amount each of the top 3 or top 5 cryptocurrencies in order to stay diversified.

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Written By: Modest Money