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What Are Bitcoins and Litecoins?

Arto Laakso is a well-known advertising agency entrepreneur, best known for his multi-channel marketing communications skills.

What is Bitcoin?

Bitcoin is a decentralized monetary system. Behind it is not a company, but it is an open community, which develops Bitcoin software together. You can begin to use bitcoins either by installing bitcoin wallet on your computer or mobile phone or use the Internet-based wallets. You can quickly and securely trade bitcoins with other people around the world with your local currency using bitcoin exchange services.

Bitcoin currency has received great publicity in the last few months. Bitcoins are mainly used as means of online payment. People often have the misconception that Bitcoin requires the use of special technical knowledge. Bitcoins are, however, relatively easy to use, as long as you realize some of the basics. These “coins” are created using the computers computational power and the users will get bitcoins in exchange.

This Is Known As Bitcoin Mining

Bitcoins are created in accordance with a predetermined formula. 25 new bitcoins are generated in every 10 minutes. Every four years, the number of new bitcoins automatically will be halved and thereby eventually reach the maximum number of Bitcoin, which is 21 million.

Bitcoin is most commonly used in such a way that you download on your computer or cell phone a Bitcoin wallet, after which you can send and receive bitcoins. To send the bitcoins you first need to acquire them for example by buying or mining.

To obtain bitcoins you don’t need to mine. In fact, mining is a very laborious and for many a poor way to obtain bitcoins. Buying a bitcoin is of course the easiest way. Also, like any other kind of money, you may earn bitcoins by offering products and services. You can quickly and securely trade bitcoins with other people around the world with your local currency.

Bitcoins Brings Several Benefits To The User

Payment is as easy as sending e-mails and the bitcoins has no risk of identity theft. It will also save money because bitcoin economy does not have traditional middlemen taking a share. Bitcoin is also currency that you can save as bitcoin value can not be hampered by creating them from scratch. There are only a limited number of bitcoins, which makes it a good investment opportunity.

The biggest benefit, however, is the fact that you can transfer money from one person to another anywhere in the world and it can be done quickly, privately and almost free. Because it is a global money you can use it anywhere where there is internet.

Historically, the bitcoin liquidity has been quite good. What I mean is that bitcoins can be changed quickly at a reasonable rate to another currency, such as dollars or euros. Exchange rate developments are impossible to predict, but at this point it appears that bitcoin is going to be with us for quite some time.

The bitcoin benefits are enormous also from the merchant point of view. It is difficult to cheat retailers, because bitcoin transfers are irreversible. Handling costs are also smaller than any other means of payment. All of this is reflected in the prices.

Bitcoins has some excellent features compared to the normal currency

  • They are limited to a maximum amount of 21 million units
  • The emergence of new coins, the speed is constant, and the pace will slow down all the time -> no inflation
  • No single entity is not managed currency
  • Works with peer-to-peer networks, in which case no single party can not close the network
  • Transactions are anonymous and fast, they pass directly without the middleman

Examples of Bitcoin Wallets

Bitcoin is such a new phenomenon that the technology is changing very fast. You should therefore always investigate the matter itself, before to use a particular service or software provided.

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What is Litecoin?

Bitcoins might be the best known virtual currency around at the moment, but that doesn’t mean it’s the only option. There are dozens of these cryptocurrencies, including ripple, dogecoin and litecoin. Litecoin is highly regarded and is often compared to being the silver version of a gold bitcoin. Many people are sceptical of investing in different virtual currencies because they are still in their infancy, so is it worthwhile spending money on litecoin trading or not? Stick around, because we plan to answer this today.

Litecoin uses the same Bitcoin protocol and method of transferring money, this means that it’s a tried and tested system. The only difference is the currency used. Instead of Bitcoin (BTC), Litecoin (LTC) are the currency which are traded. These are worth much less than Bitcoins but are expected to rise. Bear in mind that it wasn’t that long ago that Bitcoins were available for under $10 each, now they are worth hundreds.

LiteCoin Mining

Litecoins can be mined in exactly the same way as Bitcoins. They can be mined using a CPU, GPU or dedicated hardware rig. Mining for litecoins is much easier than for bitcoins due to the complexity currently being lower. That being said, you can improve your chances of profiting by joining a pool. A pool allows you to share your resources and improve the chances of finding a block of coins which will then be split between all participants in the pool.

Mining is often seen as a free way to get coins, but it’s far from free. Mining means that your computer will use more power than it would when idle which will cost you more in electricity. You’ve also got to consider the added wear and tear on your computer which will make it break faster, especially if it is a laptop or small form factor computer. That’s the reason many people are starting to turn to litecoin trading.

How Can You Make Money Trading Litecoins?

It is possible to profit from buying and selling litecoins as long as you are clever and prepared to act quickly. All commodities increase and decrease in value over time, whether you are investing in oil, stocks or wood, the principle is the same. You want to buy when the price is low and sell when it is high. This may sound simple, but the problem is knowing when the value of the commodity (litecoin in this case) will be at its lowest and it’s highest. In hindsight you can always see this, but it’s never clear when you are really trading.

How To Buy Litecoins?

If you have decided that you want to invest in litecoins, then you will need to find out how to buy them. Buying litecoins online is very easy. There are a number of litecoin exchanges set up where you can pay using a debit or credit card to receive litecoins. These are then deposited into your litecoin wallet where you can save them until they increase in value. The value of litecoins will change on a daily basis, you will need to track the value of the litecoins so you can improve the chances of you making a profit.

How To Profit From Litecoin Trades

Litecoins can be seen as an investment because the value will change over time. If you can keep them long enough then there is a good chance they will be worth significantly more than when you bought them. By selling them at the higher price you can earn some profit. Normally, the amount of money you earn will be higher than if you put your cash into a savings account at your bank for the same length of time.

Using Litecoin Trading Bots

The problem with litecoin trading is that it can be time consuming. It’s also very easy to get greedy and end up losing money rather than making it. Litecoin trading bots are perfect in this case because they allow you to set strict rules of when to buy and sell litecoins. The bot is fully automated and takes all the guess work and difficulty out of trading litecoins and profiting.

Litecoins have many advantages over bitcoins. As each one is cheaper it is possible to invest a smaller amount of money which will expose you to less risk. The value of these coins is still increasing and so you get very good chances to make a profit. What’s more by holding bitcoin and litecoin together you can diversify your portfolio and make it even safer.

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This article is accurate and true to the best of the author’s knowledge. Content is for informational or entertainment purposes only and does not substitute for personal counsel or professional advice in business, financial, legal, or technical matters.

© 2020 Arto Laakso


George Xu from Philippines on October 08, 2020:

@Othman: It does. That's why you have to get in while early.

Othman from UAE on August 10, 2020:

Whilst am a fan of Crypto, I believe it still has a long way to go.

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