What is Litecoin Trading

December 26, 2017 | Author: | Posted in Litecoin

What is Litecoin Trading

Litecoin is the third largest and most widely held cryptocurrency, on the market. Litecoin is one of the three cryptocurrencies that are traded on Coinbase which is the largest wallet for crypto currencies. Like bitcoin, litecoin is created through a mining process and is not regulated like the dollar by a central bank of country treasury. The most recent headline news about litecoin is that the founder has recently sold off all his litecoin.

How is Litecoin Created

Like other cryptocurrency, Litecoin is mined which is a process that requires a substantial amount of computing power.  The process of mining for cryptocurrencies starts with a technician who will generate a block of transaction that show the track record of all of the trades for a specific grouping of litecoins.  Each time a transaction is conducted it changes the chain which needs to be reflected in the block chain of transactions.  For example, imagine that you receive a $20 bill from a vendor and being immediately able to see every transaction that incorporate that $20 bill from its inception. This is what you see when you purchase a litecoin.

Each time a litecoin is mined it takes a miner 2.5 minutes to generate a block.  This compares to a processing time of 10-minutes which is the time needed to generate a block of bitcoin. What makes cryptocurrencies so unique is that there is a finite number of litecoins that will be generated.  This number will peak at 84, million. If there is more demand for litecoins, the price will rise to reflect the extra interest in this cryptocurrency.  Each time a block of litecoin is generated, a miner verifies the process with software, which allows anyone who wants to evaluate the block to have access to the process.  

Mining for cryptocurrencies is expensive because the computing power needed to mine a coin is very power intensive.  To mine a bitcoin you need a special processing unit, but with litecoins the power needed is less intensive. In fact, many can be mined with off the shelf computers.  

Mining for Litecoin

What is clear is that there is a great incentive to be a miner as each successful transaction block that is create provides a reward to the miner in litecoins.  The process becomes less attractive over time until the last litecoin is mined. The benefits of litecoins is that you can not spend it more than once. This would immediately be detected by the block chain, and wipe out the value of any fraudulent litecoins.

Trading Litecoin

Litecoin has many speculative features and trades like a currency. You can trade litecoin in your wallet against your host currency or against other cryptocurrencies.  For example, you can trade litecoin versus the Euro or the dollar or even against bitcoin. Many traders use a combination of cryptocurrency news as well as technical analysis to determine the future direction of litecoin.  With futures and ETFs joining the cryptocurrency party, this asset class appears to be here to stay.

Author:

This author has published 254 articles or questions so far. More info about the author is coming soon.

Leave a Reply

You must be logged in to post a comment.