There are many types of digital currencies based on the Bitcoin design. Litecoin is a variant that offers the advantage of transferring data more quickly to its ledger. If you use this currency, your transaction may be recorded four times as quickly. On the other hand, Litecoin faces greater challenges in the area of market acceptance. If you are considering using this virtual currency, you should learn about both its benefits and its risks. A good way to do that is by consulting Bitcoin lawyer Roger E. Naghash, who serves clients in California and the rest of the United States from his Orange County office.Developing a Bitcoin Alternative
The Litecoin system of payment was invented by Charles Lee in 2011 as an improved alternative to Bitcoin. It is based on the same technology as its predecessor, but it marks a major change in the method of generating new coins and logging transactions. Bitcoin’s speed of coin generation and transaction logging has long been regarded as too slow. By using a more lightweight and purposefully chosen type of encryption, Lee designed Litecoin to be quicker and use less energy than its rival’s encryption method.
The other main difference between these digital currencies is the total number of “coins” that each has in circulation. By design, Bitcoin and Litecoin both have upper limits to the number of coins that can be mined. In this way, digital currencies claim to be superior to ordinary government currency, which can be printed in any amounts that a country is willing to allow. Virtual currencies thus are theoretically less vulnerable to hyperinflation.
Some experts believe that Bitcoin did not set the limit of its coins high enough. Litecoin is designed to eventually produce a total number of coins that is about four times higher. This design change makes it capable of more efficiently representing smaller units of currency, a little like quarters when compared to dollars.Common Pitfalls of Litecoin
Litecoin has experienced very slow public adoption compared to Bitcoin, which is much more prevalent in online commerce sites and ordinary cash register transactions. Lee’s currency can be spent on almost anything, as long as two parties are willing to get together and trade it in a purchase transaction. But it can still be difficult to find another party willing to transact in Litecoin with you.
There are also some issues that affect any virtual currency of which you should be aware. These new methods of payment are subject to changing government regulations. Nations around the world are continuing to grapple with taxing, controlling, and monitoring digital currencies. This can create difficulty in complying with the law. An experienced attorney can help you keep up with changing regulatory schemes.
Like other digital currencies, Litecoin is susceptible to dishonest speculation. “Pump and dump” schemes used to be a more common way to manipulate stock markets, but they can be devised in a virtual currency system more easily. This is because digital currency anonymity makes it harder to detect and prevent such schemes. In addition, the irreversible nature of anonymous transactions makes Litecoin refunds challenging. This creates problems when suing for fraud or breach of contract.
Its quasi-anonymous nature and ability to transact quickly over distances make Litecoin attractive for use in criminal enterprises. It is easy to use it to get illegal guns, banned drugs, and other prohibited goods and services. Criminal cases involving digital currencies can become complex, and defendants may require the assistance of a lawyer who understands these transactions.Consult a California Lawyer Experienced in Digital Currency Matters
If you use Litecoin or other virtual currencies, you may be subject to regulatory changes, contract and transaction problems, or even criminal activity. It is best to address these issues without delay and seek the advice of a knowledgeable lawyer. Digital currency attorney Roger E. Naghash will help you navigate this ever-changing landscape, whether you live in California or elsewhere in the nation. Call us today at 949-955-1000 for a free initial consultation at our Southern California office, or use our convenient contact form to set up an appointment.