How to Buy and Sell Litecoin Cryptocurrency
Cryptocurrency is a new technology that has excited many investors. Many cryptocurrencies, as their name implies, aim to act like currencies, giving their users a way to store and transfer value.
However, unlike traditional currencies, cryptocurrencies aren’t prone to the regulation and control of central banks. This makes some people feel more confident in them because they fear governmental meddling or overreach into markets.
One popular cryptocurrency is Litecoin, which has a market capitalization of roughly $8 billion, making it one of the largest cryptocurrencies in existence.
What is Litecoin?
Litecoin is one of the earliest spinoffs of Bitcoin. It started in 2011 as an open-source project released on Github by Charlie, who later worked for Coinbase, one of the largest cryptocurrency exchanges in the United States.
Like Bitcoin and many other cryptocurrencies, Liteocin is decentralized and relies on a peer-to-peer network for confirming transactions.
Anyone can join the network and no single person or group has control over the network or over the currency itself.
Litecoin differs from Bitcoin in that it aims to confirm blocks four times faster than Bitcoin, making it a faster network to use for confirming transactions. It also uses a different proof-of-work algorithm for mining.
How to Buy, Sell, and Hold Litecoin
If you’re interested in buying or trading Litecoin, here are some of the best companies to work with.
Robinhood is a well-known and popular company that develops one of the top mobile investing apps in the United States. Customers can open a Robinhood account for free and start trading with no minimum account balance.
Robinhood offers cryptocurrency trading through its app alongside stock and ETF trading. That means that it’s easy to get started with trading cryptos like Litecoin if you already have a Robinhood account. If you’re signing up for the first time making an account is quick and simple.
You can buy Litecoin with no minimum investment amount. Robinhood charges no commissions for purchases or sales, making it one of the cheapest ways to invest in Litecoin.
A drawback of Robinhood is that the company doesn’t give you access to your Litecoin wallet.
Instead, the brokerage holds the cryptocurrency on your behalf.
You don’t have the freedom to transfer additional coins into your Robinhood account, withdraw them to a different wallet, or send them to someone else. If you want a more full-featured wallet, Robinhood isn’t a great choice.
However, if you’re simply looking to invest, Robinhood might be a great fit.
Coinbase is one of the largest cryptocurrency exchanges in the United States. It offers a sleek and easy-to-use interface and a variety of educational materials to help its customers learn about different cryptocurrencies, including Litecoin.
To get started with Coinbase, you’ll need to set up an account and like one of your bank accounts. You can then transfer cash to Coinbase or purchase cryptocurrency using funds directly from your bank account.
You can open an account without paying a fee, but Coinbase does charge a small fee for transactions. The fee charged is typically 0.50% of the transaction plus a fee ranging from $0.99 to $2.99 depending on the size of the transaction.
Coinbase also offers some other useful features. One is the Coinbase card, a Visa debit card that you can use to spend crypto from your Coinbase portfolio. You’ll even earn cash back rewards in the form of crypto, such as Litecoin.
Coinbase also gives you access to your cryptocurrency wallets, meaning you can transfer coins into Coinbase or send them to other people.
Gemini is a high-tech cryptocurrency trading platform designed for advanced investors. It lets people trade many different cryptos, including Litecoin, and offers advanced dashboards and charting tools that you can use to make investing decisions.
Gemini also offers some unique features. Gemini Earn is one of the more interesting ones. If you add crypto to your Gemini Earn account, you’ll earn up to 7.40% APY on your balance, giving you an easy way to earn more crypto. The current rate for Litecoin deposits is 2.77%, which is far better than the rates you’ll earn from a savings account.
Gemini also plans to launch a debit card that will make it easy for customers to spend their cryptocurrencies at stores around the world. In the meantime, Gemini offers Gemini Pay, which lets customers use their cryptocurrencies, like Litecoin, to pay for purchases at more than 30,000 stores across the US.
Fees at Gemini are reasonable, with commissions ranging from $0.99 to 1.49%.
SoFi has a cryptocurrency trading platform that lets customers buy and sell many different coins, such as Litecoin. The minimum investment is just $10, making it easy for anyone to get started. You can place trades through the SoFi website or mobile app and can also buy shares in stocks and ETFs through the service.
SoFi, like Robinhood, holds your Litecoin on your behalf, not giving you full access to your wallet. This isn’t a big deal if you’re just looking to invest but means you can’t use your balance to pay for things or transfer funds to your friends.
SoFi charges a fee of 1.25% for each transaction and there is a minimum investment of $10. You can buy up to $50,000 of crypto each day.
Webull is an online brokerage that offers cryptocurrency trading with minimum investments of just $1. The company offers trading through both its website and mobile app, making it easy to get started.
Webull was made with advanced traders in mind, so if you want access to lots of tools and information, you’ll appreciate its offerings. There are in-depth charting tools and indicators that you can use to inform your trades.
Trading is open seven days a week and trades settle instantly, making Webull a good choice for people who want to try their hand at day trading.
Webull doesn’t charge a commission for crypto trades, but there is a 1% spread, so you’ll have to keep that cost in mind when buying and selling Litecoin.
Can You Buy Things with Litecoin?
Like traditional currencies, many cryptocurrencies seek to be a store of value and medium of exchange. It’s supposed to be easy to use them to conduct transactions with other people.
However, in reality, it can often be hard to use Litecoin and other cryptocurrencies to buy things, especially compared to how easy it is to use traditional currencies.
Litecoin can be very volatile, so many vendors are hesitant to accept it in payment.
Crypto transactions can also take longer to confirm, adding delays to each purchase.
Some companies, like Coinbase and Gemini, are trying to make it easier to use crypto for purchases by offering debit cards that deduct the purchase price from your crypto balance.
There are also websites that accept cryptocurrency transactions for some purchases. Still, these days, it can be hard to use crypto to buy things from physical stores.
Taxes on Litecoin
The IRS treats Litecoin and other cryptocurrencies as property for tax purposes, meaning you have to pay taxes on profits just like any other investment.
The easiest way to think about crypto taxes is to treat the crypto like a stock.
When you buy Litecoin, make note of how much money you paid for it. When you sell Litecoin, note the amount of money you received.
If you turned a profit, you have to pay capital gains taxes.
You pay the short-term rate on investments held for a year or less and the lower, long-term rate on crypto held for more than a year.
You can deduct losses on crypto and other investments from your profits, so you only pay taxes on your next investment profits.
Using crypto for purchases
Keep in mind:
IRS treats using crypto to pay for purchases the same as selling it.
If you pay for something using crypto when the crypto is worth more than you paid for it, you have to book that as a capital gain and pay the tax on it.
Litecoin and other cryptocurrencies are exciting, but investing in them is a big risk.
Cryptocurrency is a new technology and most cryptos are very volatile. There are no guarantees that a cryptocurrency will retain its value or remain popular.
Remember that all investing is subject to risk and only invest money you can afford to lose.
If you have questions about investing or want help with reaching your long-term financial goals, speaking with a financial advisor may be a good idea.