Litecoin (CCC:LTC-USD) is the fourteenth largest cryptocurrency according to Coinmarketcap with its $12.3 billion market capitalization. At $180.88 on June 1, Litecoin is now down $205.57 from its peak on May 8 of $386.45, or down 52.7%.
But despite this, LTC-USD is still up $54.65 or +43.3% from its price of $126.23 at the end of Dec. 2020. That is quite an achievement for this digital cryptocurrency. Here is the bottom line. Litecoin is probably a good bargain now that it is so far below its peak.
That does not necessarily mean that Litecoin is going to shoot right back up to its previous highs. That, in fact, could take several years, if past history is a guide. Nevertheless, this might be worth the investment at this time.
Litecoin’s Standout Features
Litecoin one of the oldest cryptocurrencies, launched in 2011, with a focus on peer-to-peer transactions, by computer scientist Charlie Lee. It is a more streamlined transfer alternative than Bitcoin for merchants. Litecoin calls itself the cryptocurrency for payments based on blockchain technology.
Litecoin was designed to process money transfers much quicker than Bitcoin (CCC:BTC-USD). Analysts consider it the first successful “alternative currency,” or altcoin to Bitcoin.
For example, Bitcoin’s transaction confirmation time is 10 minutes while Litecoin’s is only 2.5 minutes. Litecoin can process many more transactions than Bitcoin
LITE uses a Scrypt-based proof-of-work validation system. This means it requires miners to validate blockchain transactions. That’s old school, like Bitcoin.
But Scrypt allows miners to generate hashes with commonly available hardware, and so it easier to mine than Bitcoin.
LTC’s payment transfer system is very popular. The number of daily addresses with Litecoin has grown almost threefold in the last 3 years. According to Glassnode they now exceed 74 million and in mid-June 2018 they were at 30.5 million. So over the past three years, the number of addresses has more than doubled (+147%). This works out a compound average growth rate of 35% annually.
Most addresses are created for people who hold Litecoin in their digital wallets, often associated with a major exchange like Coinbase (NASDAQ:COIN).
Litecoin has a limited supply like Bitcoin. It is limited to 84 million LTC tokens. According to Coinmarketcap, it has 66.75 million token coins outstanding. This means its total supply is at 79.5% of the total. That leaves over 20% of the supply that can still be issued. Over time that will help Litecoin to rise as the supply cap gets closer.
What To Do With Litecoin
Litecoin can be bought and traded on Coinbase, Binance, and a number of the major crypto exchanges. This makes its float quite accessible for anyone who may want to buy into the crypto.
I suspect that, given Litecoin’s popularity and huge float, the cryptocurrency will begin to rebound closer to its former highs over the next year or so. As I discussed in my previous article the currency has a reputation. It typically underperforms other larger cryptocurrencies. It also doesn’t help that its original founder, Charlie Lee, sold out all his holdings, even though he later returned to Litecoin.
Litecoin has attracted its own following and some followers who have even become “evangelists” for the crypto. Moreover, a number of mobile and online games have started using Litecoin. One blockchain game, in particular, LiteBringer, has spurred a huge following, as it uses Litecoin in the game.
These kinds of decentralized apps (dApps) are going to help raise Litecoin’s popularity over time. As a result, expect to see Litecoin rise close to its former highs. Even if it takes 2 years for the crypto to rise 113% (as it is down 53% today), its average annual return will be 45.8% annually. That is a decent ROI in almost anybody’s book.
On the date of publication, Mark R. Hake held a long position in Bitcoin (BTC-USD). The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Mark Hake writes about personal finance on mrhake.medium.com and runs the Total Yield Value Guide which you can review here.
