Background

Litecoin is an open source, global payment network that is fully decentralized. It was
created by Ex-google employee Charlie Lee on October 13 2011, with the intention of it being
“The Silver to Bitcoin’s gold”, a faster and lightweight version of Bitcoin.
Litecoin can be used to purchase services or to buy goods and services, and is said to
offer almost zero cost of payments by eliminating a “middleman” that processes these
transactions.
Mechanics
Before you can start mining or purchasing Litecoin, you first need to keep a “wallet” to
store your coins. Wallets for Litecoin are available for download at https://litecoin.com/.
Litecoin can be acquired by purchasing from their official website https://litecoin.com/.
The Litecoin wallet doesn’t hold the actual coins, instead it holds an address which keeps
record of all transactions, and therefore holds your balance. The “address”, which consists of
different letters and numbers is known as a public key. Each public key holds a corresponding
private key, but there is no possible way for other to figure out what your private key is because
any transaction issued from a public key needs to be validated by your private key. You issue
transactions by using a software on your android phone or personal computer, where you input
your private key and transaction details, which include to the number of coins you want to send
and to whom.
This is where mining comes in. Mining consists of processing a list of litecoin
transactions. For a more elaborate explanation, mining is the process by which the blockchain – a
distributed ledger of all transactions ever made on the network – is maintained. What miners
receive are transaction data broadcasted by various participants (other Litecoin users). These
miners have machines that try to verify and compile all of these transactions into a single list
called blocks. They do this by solving a complex mathematical puzzle that is part of the
program.
Mining is competitive. The first person to process the transactions/generate a “hash” is
paid with Litecoin which happens every 2.5 minutes.

Participants
Litecoin’s FounderAfter discovering cryptocurrencies while working in Silicon Valley, a
computer scientist named Charlie Lee embarked on a journey to create the silver to bitcoin’s
gold.
Litecoin in Asia

While Litecoin (LTC) is not popular in many western countries, the cryptocurrency is definitely
popular in Asia. The digital currency is seen as a popularity, which of course Bitcoin is one of
them. Along with this, ATMs that accepts digital cryptocurrencies such as Litecoin, are being
built in many Asian countries, which one of them is South Korea. South Korea’s second largest
cryptocurrency exchange, Bithumb, has integrated Litecoin, making it the eleventh largest
Litecoin exchange in the market. South Korea is a vital market for Litecoin, and the reason is
because 25% of global Litecoin traders are being processed by Bithumb. South Korea is not the
only country, Hong Kong’s cryptocurrency exchange Gatecoin has also added a support for
Litecoin. Now investors will be able to buy and sell Litecoin with Bitcoin. Since Litecoin is now
integrated with SegWit, it fixes the transaction malleability and facilitates long-term and secure
scaling solutions. Also, just like in South Korea, Litecoin is popular amongst traders and
merchants. Lastly, Litecoin can prove to be a safer bet for investors during times of volatility,
compared to the other cryptocurrencies. For the price market value on November 22, 2017,
Litecoin surged 1.32 percent, roughly $70. Litecoin erased a huge chunk of the losses on the
21st, when the cryptocurrency dipped about 4 percent.

Top 5 businesses that welcome Litecoin payments

5. Ellenet

IT solutions provider, Ellenet, is the first Australian firm to accept both bitcoin and litecoin. The service
specializes in film and multimedia production. The decision to welcome litecoin payments was made by
the Australian company’s director, Estelle Asmodelle. She said:

“Crypto currencies are the future, it’s plainly obvious and people need to understand that Bitcoin and
other coins are not going away. Without sounding terse, you can’t stop progress.”

The consultant firm was established in 1998, and now with its adoption of bitcoin and litecoin
digital payments, it hopes to grow even larger. In addition, Ellenet works with digital mining
company Petabit Pty. Ltd,
who works on mining both litecoins and bitcoins. The partnership with Petabit will allow Ellenet to get
into more digital currency-based ventures.

4. Sean’s Outpost

Though not technically a business, Sean’s Outpost, a homeless outreach center, makes this list for its
commitment to allow digital currencies like litecoin to help the local community. The Pensacola, Florida-
based center has provided thousands of meals for the poverty stricken. With the help of bitcoin and
litecoin donations, Sean’s Outpost is able to provide sanctuary and do right by people. However, the
center, which was established by Jason King in honor of his friend, is currently struggling as a massive
flood has decommissioned day-to-day operations. The center is hoping to get more digital coin
donations to assist the people living in the Satoshi forest. King and his team remain positive and patient
and hope that the digital coin community will help them get through this difficult time.

3. eGifter

New York-based eGifter has teamed with payment processor GoCoin to welcome bitcoin and litecoin
transactions. The gift giving site allows users to buy and send gift cards to each other, while earning
points in the process. The move to take in digital currency payments was made wisely, as retailers
like Overstock.com had announced a boom in business after accepting bitcoins. With digital currencies,
businesses can tend to new and interested customer bases. eGifter’s CEO, Tyler Roye says that with
digital coins and GoCoin, the site can remain secure and fraud-free. Rather than holding onto coins, the
company uses GoCoin to convert digital earnings into cash. eGifter started welcoming bitcoin in 2013,
and also began welcoming litecoin and dogecoin in April 2014; adding to the list of payment methods
the company accepts.

2. KnCMiner

KnCMiner is a company that sells mining hardware and equipment, allowing coin enthusiasts an
opportunity to earn litecoins and bitcoins. What’s fitting about the mining company’s involvement with
digital coins is that mining hardware can be purchased with those same coins. Their website stated:

“You will find the Litecoin payment method option when you complete an order through the checkout
on our website.”

Additionally, KnCMiner is creating one of the first effective mining hardware, exclusively, for mining
litecoins. The demand for digital currencies and miners has been high that KnCMiner sold $2 million with
of pre-ordered hardware within just a 4 hour window.

1. Benz and Beamer

A Tesla Model P85 was sold out at Benz and Beamer auto dealership which was bought completely in
litecoins early this year. A customer used 5,447 litecoins to complete the transaction for the luxury car,
worth around $90,000 during the time of the purchase. The transaction went through with payment
processor GoCoin. The car dealer, Naresh Shah explained:

“GoCoin makes it extremely easy for us to accommodate new customers looking to

pay with bitcoin and other emerging digital currencies like litecoin.
Their platform secures the coin exchange for cash within minutes,
creating a real win/win for my dealership and my customers.”

The purchase is by far the largest amount of litecoins used in a single purchase recorded. As litecoins
continue to grow in popularity, more businesses will start to implement them more into their own
structures. There may very well be more purchases that use litecoins the same way as they were at Benz
and Beamer.
Financial Risks
 Price Volatility
Volatility is a measure of how much the price of a financial asset varies over time.
Volatility means that an asset is risky to hold—on any given day, its value may go up or down
substantially. The more volatile an asset, the more people will want to limit their exposure to it,
either by simply not holding it or by hedging. Volatility also increases the cost of hedging, which
is a major contributor to the price of merchant services. If Litecoin volatility decreases, the cost
of converting into and out of Litecoin will decrease as well.
The value of cryptocurrencies may change significantly even in a single day, which would mean
a capital loss of your investment.
Hacking risk
On December 19, 2017, a South Korean cryptocurrency exchange said it would file for
bankruptcy after it was hacked for the second time that year.

"Hard fork" splits.

In simple terms: A hard fork is when a single cryptocurrency splits in two. It occurs when a
cryptocurrency’s existing code is changed, resulting in both an old and new version. Meanwhile
a soft fork is essentially the same thing, but the idea is that only one blockchain (and thus one
coin) will remain valid as users adopt the update. So both fork types create a split, but a hard fork
is meant to create two blockchain/coins and a soft fork is meant to result in one
The result of a fork is generally:

1. One blockchain becomes dominant, resulting in the other blockchain having low
community adoption and value.

2. Both blockchains are adopted, co-existing and operating independently of one another
with roughly equal community adoption and value.

3. Both blockchains are adopted, but one is favored. One of the two chains becomes or
remains the dominate chain (but the other chain maintains a reasonable level of
community support and value).

Any of the three cases can occur with a given fork, but the 3rd option is the most common and
thus the expected outcome over time with hard forks.
Since the value of and support for the currency depend entirely on the community using it,
disagreement between the stakeholders may result in the splitting of the network to support new
competing cryptocurrencies, this is known as a "hard fork".

Early stage technology

With advances in technology, cryptocurrencies are likely to undergo significant changes in the
future. How the existing cryptocurrencies will cope, or benefit, from those changes is to be
determined.

There is also the risk of alternative technologies that could supersede existing cryptocurrencies
and make them obsolete.

Financial Risk Assessment

1) Identify the hazards
Security hazard- prone to hackers, unregulated.
Nature of currency- volatile, uncertain
2) Who might be harmed and how
Client- credit information may be hacked and their accounts may be debited without their
authority.
Client- earned litecoins may be stolen by hackers
Client- May be defrauded when they purchase or transact in bogus websites.
Client- system error may cause unintended loss of litecoins
3) Evaluate the risks and decide on control measures
Voice biometrics
Personal information may be required
User ID and password required
One time pin will be sent to registered phone number
Litecoin.com will inform their clients about legitimate sites
Client should backup his account
Litecoin.com shall set up security measures in their system
Litecoin.com should partner with legitimate websites where its clients can safely transact using
their litecoins and security measures shall be jointly set up by litecoin and its partner sites
4) Record your findings and implement them

5) Review your assessment and update if necessary