Recent trends have created yet another spike in Bitcoin prices, causing a massive rush in trading volume and interest in the currency. Every year, Bitcoin makes headlines during at least a couple of news cycles for its volatility and increasing acceptance globally. While Bitcoin comprises roughly two-thirds of the total crypto market cap of approximately $500 billion, there are other choices for consumers and investors alike to consider.
Litecoin and Tether are two notable examples. With consumer trust backing both and varying benefits for each, some might be wondering if investing in a lesser-known cryptocurrency is a good idea.
Let’s review Litecoin and Tether to determine whether these choices are worth it based on each investor’s priorities.
A Brief History of Litecoin and Tether
Litecoin has existed since 2011 and was one of the first cryptocurrencies to launch following Bitcoin. Since then, Litecoin has developed into a reputable, lower-risk alternative to Bitcoin. Running on scrypt and producing faster transaction times than Bitcoin, Litecoin has become a popular method of payment for software developments and retailers alike (explore this guide to learn more about scrypt).
Tether was launched in 2014, with the primary goal being one that allowed fiat currencies to be used in a digital format (specifically, in a way similar to other cryptos so as to enhance security). The concept of Tether as a stablecoin has allowed it to leap-frog Litecoin, becoming the fourth-largest cryptocurrency in the world based on market cap.
How Litecoin and Tether Are Unique
Ultimately, each of these two currencies offers different experiences due to the fact that they are largely meant for different types of investors and/or consumers.
Litecoin offers much faster transaction speeds as previously mentioned. In a given amount of time, several times the number of transactions can be handled via Litecoin when compared to Bitcoin, making it a superior choice based on efficiency alone.
Owners of Litecoin will also find it easy to exchange LTC to BTC given the currency often is a stand-in for Bitcoin itself.
Tether’s unique selling point is the fact that it is pegged to $1 USD in value. While this might not seem innately useful, Tether offers a hedge against volatility. Users of other cryptocurrencies can quickly move their investments into Tether during turbulent times and avoid unnecessary losses.
With Litecoin, perhaps the biggest potential disadvantage is LTC’s inherent connection to Bitcoin. This means that if Bitcoin suddenly declines in value, LTC will likely do the same – and by a similar amount.
With Tether, the loss of potential growth is a bigger concern. Pegged at $1 USD, keeping investments in Tether for a long period of time results in an indirect loss in value (due to inflation), but even for the short-to-medium term, holding Tether means no opportunity to earn a return on those investments.
Ultimately, Litecoin is a solid alternative coin to Bitcoin for investors who want to avoid overly-exploited crypto markets: however, its rate is often indirectly tied at the hip to Bitcoin’s. Tether offers a great hedge against volatility and can be a solid choice for holding investments during difficult periods. Depending on the exact investment strategies desired, one or both of these currencies may be solid choices during various points of the investing process.