The Disadvantages Of Investing In Litecoin
A Cryptocurrency, or cryptosystem, is a group of binary data that is designed to function as a medium of transaction where in public coin ownership records are kept in a public ledger that is publicly accessible. These can be traced back to its founding father – Abra coins which were the first form of Cryptocurrency. The original intent of Cryptocurrency was for something that was ‘backed’ by real goods and not held within the control of any one person or government. This meant that if the value of the coins increased, the value of all other goods would also increase. However, with the advent of new technology, newer forms of Cryptocurrencies are being introduced to the general public.
One of the newer technologies that have emerged is Litecoin. Litecoin is a Cryptocurrency that is used as payment for web services like eBay. The market capitalization of the Litecoin industry is quite small, and it is not a very well known fact that Litecoin has a unique feature that no other Cryptocurrency has – it is a proof-of-stake system. This means that each time a Litecoin stake is burned and the balance between the holders of this stake is cleared, a new block of Litecoin will be created and placed into the Litecoin network.
One major advantage of the proof-of-stake system of Litecoin is that there is no centralized authority that controls Litecows, meaning there is no need for a central bank to decide how Cryptocurrencies are issued or how they will be traded. Also, with Litecoin, the network is completely self-sufficient. No major economic or governmental institutions have to be involved which greatly reduces the cost of a typical Litecoin transaction. Even though Litecoin does have several advantages over other Cryptocurrency that may appeal to the investor, there are several disadvantages that Litecoin investors need to be aware of. This article will briefly discuss some of these disadvantages so you can decide if Litecoin is right for you.
The first disadvantage of Litecoin compared to other competing Cryptocurrencies is that Litecoin is susceptible to hacking attacks. Because there is not a central ledger that cryptosystem runs through, Litecoin can easily be hacked by an outside source that can change the balance of the ledger. Fortunately, however, most Litecoin investors and traders use various means to protect themselves from outside sources that attempt to manipulate the price of their tokens. One such method is getting a physical security device that you attach to your laptop or desktop computer so that you can securely make transactions on the Internet.
Another disadvantage of Litecoin compared to competing currencies is that it lacks privacy features. Litecoin cannot be protected by a decentralized ledger like the bitcoin protocol. This means that Litecoin can not be used as a ” bearer” currency – meaning you can not withdraw your private transaction information from your online account if you so choose. This is similar to using a credit card in an ATM that has a limited ability to do transactions over the public internet. This type of encryption prevents your information from being stolen by third parties.
With these two disadvantages, it seems that Litecoin may not be the first credible option for beginners looking to get into the world of Cryptocurrencies. But with its growing popularity, this is changing. Many more people are jumping on the Litecoin bandwagon, and the value of this digital money is rapidly increasing. If you are interested in investing in LTC, then you may want to wait out the competition and see how the Litecoin economy evolves before you invest in the first few competing cryptocurrencies.