When Bitcoin came into existence in 2009, there weren’t a lot of people who expected this cryptocurrency to undergo a meteoric rise in value over the course of next decade. Having surpassed every other traditional instrument in terms of return on investment and popularity, Bitcoin paved way for other cryptocurrencies to follow. Not only that, but the blockchain technology behind it inspired many developers and IT enthusiasts to pursue it and take it beyond the traditional cryptocurrency realm. Lisk is one such cryptocurrency that has managed to capture the interest of crypto-enthusiasts.
What is Lisk?
In the simplest terms, Lisk is a blockchain platform that enables users to develop and deploy their own decentralised applications, quite similar to Ethereum. In addition to this, it claims to be the first cryptocurrency that utilises sidechains and this, in fact, is what separates it from its other competitors.
Sidechains can be thought of as a separate blockchain that is attached to the main/parent blockchain. They are critical because they eliminate the problem of bloat. If more and more people use applications on the same blockchain, then there is a strong possibility that it might be slow in processing transactions.
On the other hand, if the application has been built on a separate chain (which is still linked to the main blockchain), then there is no burden on the entire network and it operates smoothly. All transactions on sidechains are performed in the same way as that on the main blockchain. It is for this reason that Lisk promises to be fast and scalable.
The consensus mechanism utilised by the Link network is known as Delegated Proof of Stake (DPoS). Delegates are essentially systems that are tasked with the responsibility of generating all the blocks within the system. For their efforts, all active delegates are rewarded with Lisk tokens. At the time of writing this article, there are a total of 101 delegates. These delegate systems are chosen by all stakeholders in the Lisk network. The weight of the vote depends on the amount of Lisk tokens a stakeholder possesses.
The native cryptocurrency of the Lisk network is Lisk, popularly known as LSK. At the time of writing this article, a little over 105 million LSK tokens are in circulation and according to Coinmarketcap, the total supply of LSK tokens is capped at a little over 120 million.
Where to buy Lisk (LSK) tokens?
LSK tokens are available for purchase on some of the most prominent cryptocurrency exchanges in the world. However, being an altcoin, it will have to be traded with either Ether or Bitcoin. Some of the exchanges which support Lisk tokens are Binance, CoinEgg, Upbit, Poloniex, Huobi, et cetera.
Lisk (LSK) Wallets
Lisk wallet can be downloaded from the official website. This official wallet can be used to store LSK tokens conveniently. You can also look at other wallets like Jaxx or Exodus. However, the safest way to store your LSK tokens is in a hardware wallet like Nano Ledger S or Trezor.
Lisk (LSK) Mining
As mentioned earlier, Lisk Protocol uses Delegated Proof of Stake system to achieve consensus. Therefore, it is not possible to earn LSK tokens as rewards until and unless your system has been chosen as a delegates system. However, you can mine Bitcoin or Ether and then trade the same for Lisk tokens on any of the cryptocurrency exchanges.
Lisk Price Trends (LSK)
Up until early November 2017, 1 LSK token was trending at around $5. However, by mid-December, the same had soared exponentially to cross $20 mark and in early January, it was moving towards $40. However, the price went down by the end of the month, only to recover again in February. It is worth mentioning that LSK token is one of the few cryptocurrencies which had two bull runs between January and February.
Post mid-February, the cryptocurrency went on a bear run and its price kept falling through the month of March. The coin lost more than 300% in its value and at the time of writing this article, 1 LSK is worth approximately 12 USD.
Risks associated with investing in Lisk
Lisk tokens hold value as long as the network remains operational and popular among the developer. Being a platform for constructing decentralised applications, Lisk tokens act as the native currency of the network. Furthermore, owing to its high volatility and regulatory hurdles which surround the cryptocurrency space, it is not advisable to invest in Lisk tokens.
Instead of investing such a volatile instrument, it is better to consider safer measures like mutual funds. If chosen carefully, they can deliver healthy returns in the long-run.