5 Things to Consider if you Want to Buy Litecoin
Before you buy Litecoin for the first time there are several things that must be considered. These include the broker or exchange to use, your preferred payment method, storage options, security, and fees.
Let’s take a look at some of these step-by-step.
Carefully choose your preferred secure payment method
Depending on where you are in the world, you will have various payment methods available.
Popular methods include credit cards, debit cards, bank transfers and PayPal, each with their own advantages and disadvantages. It is important to choose the one that suits your needs best.
Will you need to set up your own wallet?
If you purchase Litecoin with an exchange instead of a broker, you will need to store your coins securely. Several storage options currently exist with varying degrees of risk. Options include leaving the coins on an exchange, moving your coins to a mobile or desktop wallet, or moving the coins to a hardware wallet.
As none of these methods is completely risk free, many traders prefer to enter a contract for difference (CFD) agreement through a broker.
Through a CFD, they can gain exposure to LTC price movements without the need to own the coins outright or set up a wallet. CFDs are generally more flexible trading instruments and offer some margin options many exchanges don’t.
Every time you send Litecoin from one address to another you have to pay a network fee. These fees vary considerably depending on the cryptocurrency.
Fortunately, the fees for sending a transaction are extremely small. That’s why digital currencies like Litecoin are considered disruptive when compared to traditional transfer methods.
A fork of Bitcoin, Litecoin introduced minor technical modifications to the original source code, allowing for faster speeds and lower processing fees making it a faster and cheaper cryptocurrency than Bitcoin for everyday transactions.
Safety and security
As one of the most established cryptocurrencies, Litecoin itself is very secure as it uses a precise consensus algorithm called Scrypt.
The only way that it could be hacked is if somebody gained control of 51% or more of the network. The chance of this happening is nigh impossible, as the network is far too large and the costs too great for anyone considering it.
The safety and security of exchanges and trading platforms also need to be considered.
Many exchanges and brokers employ two-factor authentication (2FA) for further security, an authentication mechanism that requires users to provide two pieces of digital evidence for verification.
Can you understand and navigate the platform?
In deciding where you want to buy Litecoin, you will need to first familiarise yourself with the platform before depositing any money. Exchanges and brokers have different levels of complexity. It is important to understand these thoroughly to avoid costly mistakes.
Fortunately, there is a platform for every level of investor from beginner to expert where you can buy LTC. Generally, brokers are easier to use than exchanges.
Ultimate Beginner's Guide to Trading Litecoin
What is a Litecoin Broker?
Going through a broker is probably one of the easiest ways to gain exposure to LTC price movements. With a broker, your funds are traded via a network of dealers instead of through a centralized exchange.
This process is normally more convenient and flexible than traditional exchanges, with a faster settlement period and better security.
Brokers also offer many deposit methods and accept several fiat currencies, with typically fewer fees than cryptocurrency exchanges.
What is a Litecoin CFD?
Simply put, a Litecoin CFD is an agreement between you and a CFD broker to exchange the difference in the value of Litecoin between the time the contract opens and closes.
A type of futures contract, CFDs do not comprise actual ownership of the cryptocurrency. The sole reason for trading Litecoin through CFDs is to benefit from price movements.
Trading of Litecoin through CFDs is generally a less technical process than trading on a cryptocurrency exchange. You don’t have to worry about securing your coins, or common exchange issues like trading liquidity or slippage fees.
What is the Benefit of Regulation?
Regulation of cryptocurrencies like Litecoin is not something to fear. On the contrary, it is a necessary component in legitimising the market, making it a safer investment.
If choosing to trade through a broker, it is very important to choose one that is regulated by a leading global authority. Regulations done properly are merely laws that will protect an investor’s interests from bad actors and scams.
What is the Best Payment Method for Buying Litecoin?
There is no ‘best method’ to buy Litecoin, only the best method for you. There are a variety of payment methods available for you to purchase Litecoin, each with its own advantages and disadvantages.
Buying Litecoin with PayPal
While PayPal is an extremely easy and convenient payment method used the world over, there aren’t many exchanges that offer it as a form of payment.
Brokers, on the other hand, are usually regulated by a governing body and therefore more likely to offer PayPal as a payment method.
Buying LTC with PayPal through a broker (for trading purposes) is a simple and straightforward process. While PayPal fees are generally low when buying cryptocurrencies in bulk, make sure to confirm any transaction fees beforehand as they do vary.
Purchasing with Cash
Cash and the digital world have never mixed well and purchasing cryptocurrency with cash can be quite an involved process.
Essentially you will need to identify a seller through a P2P marketplace, arrange to meet, and exchange your cash for Litecoin in person.
Via Bank Transfer
By far the most popular payment method for buying Litecoin is via bank transfer. While not as convenient as PayPal or in some cases as fast, it generally has lower fees and is widely accepted by both brokers and exchanges.
Purchasing Litecoin via bank transfer is generally easier with a broker than it is with an exchange. Brokers typically accept a wider range of fiat currencies and the process usually incurs fewer fees. Transfer times are dependent on your bank’s processing.
Buying Litecoin with Credit Cards or Debit Cards
Credit and debit cards typically come with higher fees than other methods mentioned here. They remain a popular method, however, for people wishing to purchase Litecoin conveniently.
Some of the more established exchanges now offer credit and debit cards as a payment method, but many don’t. Brokers are more likely to offer credit and debit cards as a payment method.
Purchasing Litecoin using ATMs
While the number of ATMs offering Litecoin and other digital currencies is growing rapidly, there are still nowhere near the numbers of traditional ATMs.
The main advantage of purchasing LTC through ATMs is convenience and privacy. Unlike traditional exchanges, you will not be required to provide identity documents or pass ‘know your customer’ (KYC) regulatory requirements.
The Verification Process for Trading
Generally speaking, when you sign up to a crypto exchange or broker to purchase Litecoin, you will be required to provide certain identification documents to get verified. This process is intended to protect you and your account from fraud whilst ensuring your identity.
The standard signup process is usually straightforward and typically involves the following verification procedures.
Step 1 - Confirm your phone number
You’ll likely be required to first confirm your phone number with a code sent to your phone, which will then be entered into their security page.
Step 2 - Provide Personal ID
Depending on the crypto exchange platform or broker you’re using, you may be asked to provide identity documents like a scanned passport or driver’s license. In some cases, you will need to provide a utility bill to verify your address.
Long vs Short Term Investment
The digital payments world is ripe for disruption and Litecoin seems well placed to benefit in both the short and longer time frames. You really just need to decide what type of investor you are.
Short-term investors want to ride some bullish momentum and cash out, while longer-term investors are betting that Litecoin will one day become a widely accepted global currency and ‘store of value’ (SOV), with a much higher market cap.
Why Buy, Rather Than Trade?
Long-term investors in Litecoin believe it will become a globally accepted cryptocurrency at the point of sale in stores and will command a much higher price.
Traders generally hold no emotional attachment to the coins they buy. They are only looking to hit a price target before selling. To do this you don’t really need to own and store the digital currency.
Recent price movements suggest interest in cryptocurrencies is growing. If you wish to take possession of your Litecoin for the long-term, you will need to study how to buy it on an exchange and research storage options to keep it secure.
If you are merely looking for trading exposure to LTC price movements without the hassle of owning and securing the coins, you can do this easily through a broker (CFDs).
What Fees Are Involved?
It doesn’t really matter where you purchase a cryptocurrency like Litecoin, you will always be subject to some kind of fees. Both exchanges and brokers will charge you fees to use their services.
These businesses need to do this to remain operational and provide you with a secure location to make your purchase.
Litecoin has been designed to enable instant, near-zero cost payments to anyone in the world. It is a cryptocurrency designed for regular use at the point of sale. As a result, fees are low and not a huge factor in most people’s decision to trade Litecoin.
As with withdrawal fees, brokers usually have fewer deposit fees than exchanges. In some cases, brokers will charge no fees for deposit to encourage clients to use the platform. Generally, your deposit fees will vary depending on your payment method.
Both platforms generally charge withdrawal fees. These fees are applied whether you are withdrawing fiat currency or cryptocurrency.
Brokers’ fees for withdrawals are also usually lower than those of a traditional crypto exchange. It is not uncommon for exchanges to charge 5 percent or 6 percent for withdrawals while broker’s fees typically range between 0 percent and 3 percent, depending on the withdrawal method.
Safely Storing Your Litecoin
Short-term investors often leave their coins on an exchange as they intend to sell them as soon as the coin reaches their price target. The problem is you need to ‘trust’ the exchange with your assets like a bank and they have been known to go out of business.
Longer-term investors often prefer more secure options like dedicated software and hardware wallets that enable full possession of your coins and private keys.
Let’s take a look at the different wallet options for storing your Litecoin.
A web wallet is the wallet of the exchange you are trading on. As mentioned earlier, some people choose to leave their coins on an exchange rather than move them to a personal wallet.
The advantage of this is the ability to respond rapidly to market changes. The problem, however, is that you don’t know if the exchange is going to get hacked, go out of business, or ‘exit scam’ with your coins.
‘Not your keys not your coins’ is the mantra from experienced crypto investors who don’t typically recommend this method.
Desktop wallets are third party software you download to your desktop, which can store your Litecoin and many other cryptocurrencies.
These wallets are a more secure option than leaving Litecoin on an exchange, but only if you select a reputable and established desktop wallet.
Known as ‘hot wallets’ because they are connected to the Internet, desktop wallets are generally considered safer than leaving your Litecoin on an exchange but they still come with risk.
It is a good idea to reinforce your security with measures like 2FA. Highly-rated desktop wallets to store your Litecoin include Exodus Wallet and Atomic Wallet.
Mobile wallets are similar to desktop wallets in that they are also ‘hot wallets’ that are connected to the internet and which feature third party software that safeguards your coins with encryption.
While mobile phones offer some additional security features that desktop computers do not, like pin codes, they also have an attack vector that desktop wallets don’t have.
Hackers have been able to gain access to people’s devices via network providers known as ‘SIM Swaps’, and other practices. Some of the most established Litecoin wallets are the Jaxx Liberty, Cryptonator and Coinomi.
By far the most secure option to keep your LTC safe is a hardware wallet or ‘cold wallet’. These often look like a regular USB drive and enable you to secure your assets in a portable device, which is not connected to the Internet.
Subsequently, these are nearly impossible to hack and they are also not vulnerable to government regulations. The downside is that the coins are not as easily accessible. Some of the more popular hardware wallets include the Trezor and Ledger Nano X.
Many people recommend splitting your cryptocurrency between different storage options to avoid a single point of failure.
A good potential combination would be a hardware wallet for your long-term investment, a hot wallet or desktop wallet for your mid-term investment, and the web wallet of a respected exchange for short-term trading.
If this sounds like too much effort, you can always purchase Litecoin for trading purposes through a broker, with no requirement to secure your digital assets.
What Other Coins Can I Trade or Use to Buy Litecoin?
Historically, Bitcoin has been the cryptocurrency you need to buy, to be able to buy other coins without fiat currency pairs.
Fortunately, as the cryptocurrency market rapidly matures, more and more ‘market pairs’ are now being added to exchanges.
These coin-to-coin markets are now being offered with well-established, market-leading digital currencies.
If you wish to buy Litecoin with ETH, for example, you have to visit a leading cryptocurrency exchange that supports ETH/LTC trading.
To do this, however, you will need to do your research on both the exchange rate and fees to ensure you are getting a good deal.
What’s the Smallest and Largest Amount of Litecoin I Can Buy?
Some people think they have to purchase a whole Litecoin to own LTC. This couldn’t be further from the truth. You can buy fractions of a Litecoin or indeed most other cryptocurrencies.
Bitcoin, for example, is divisible to the 8th decimal place, so each BTC can be split into 100,000,000 units. One unit of Bitcoin (0.00000001) is referred to as a ‘Satoshi’ after its mysterious founder, known only by his pseudonym Satoshi Nakamoto.
With the current price of Bitcoin, a whole Bitcoin is out of reach for most people. Owning a whole Litecoin is a lot more accessible at current prices.
So, is there a minimum purchase for Litecoin? Like ‘Satoshis’ you can own a fraction of Litecoin or subunits known as ‘Photons’. You can't send just one Photon over the network, though — that's too small and would clog it up with tiny transactions. You also have to have a large enough transaction to cover the cost of the fees.
Is there a limit to how much Litecoin can you buy?
The largest amount of LTC you can buy is really only limited to your capital and the purchase limits on the exchange or broker you choose.
Can I Buy Litecoin Anonymously with no ID? Is it Safe and Legal?
While anonymous cryptocurrencies known as ‘privacy coins’ do exist, Litecoin, like Bitcoin, isn’t completely anonymous. Transactions are disclosed on the public blockchain and can be traced back to your address.
You can purchase Litecoin with some anonymity, however, the downside is an inconvenience. The best way is to identify a seller on a P2P marketplace, arrange to meet at a public location and pay cash in exchange for Litecoin.
Is it safe to buy Litecoin in this way? Generally no, it is not the most secure Litecoin purchase method. You’ll need to ensure the person you are buying from is reputable.
ATMs are another way to purchase Litecoin without verification but do incur fees usually in the range of 7-10 percent. Sometimes this fee is ‘hidden’ in the exchange rate.
For most countries, it is both safe and legal to buy. This obviously depends on your government’s regulations.
Will Buying Litecoin Make Me Money?
The golden question on everyone’s lips, does buying Litecoin make you money? If someone tells you it is as clear cut as ‘buy Litecoin get rich’, they are lying.
The fact is that there are many cryptocurrencies available today and there is no guarantee which ones will thrive and which will die.
Litecoin, however, is undoubtedly one of the oldest and most established cryptocurrencies. It has shown great resilience to survive ‘bear markets’, where the price of cryptocurrencies plummeted and some even disappeared.
To determine the future of Litecoin it is prudent to look at the fundamentals of the project and the price history. It looks to have a bright future with a number of integrations and partnerships scheduled for 2020.
It’s a good idea to examine historical price movements, upcoming news, and the macro-political environment to inform any investment decisions. If you want to check out Litecoin’s price history and overall outlook head over to our Litecoin Price Page.
How to Spend Your Litecoin
With all this talk of storage, it is easy to forget Litecoin has been designed to be a digital currency for payments at the point of sale.
With fast near zero-fee transactions, the process of paying for items with Litecoin is becoming more streamlined by the day and worldwide acceptance is growing. Thousands of merchants now accept LTC worldwide as a payment method via various payment providers.
To find out what businesses and services accept LTC, visit the Litecoin Foundation.
How to Sell Your Litecoin
Selling your Litecoin on an exchange is usually a more involved process than selling it with a broker. You will need to understand the mechanics of the exchange to avoid a costly error like a missing zero. You will need to analyze the chart and wait for your sell orders to be hit.
If you purchased Litecoin for trading purposes through a recommended broker the process of selling is far simpler and usually incurs fewer fees.