A Beginner´s Guide to Buying, Selling, Using, and Mining Lisk:
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For years, central banks across the globe have been buying government agency issued securities and government backed mortgages in attempt to spur economic growth and investment. Now that this era of quantitative easing (QE) is winding down, several mysteries remain. One thing that isn’t a mystery, however, is central bank authority.
If QE has taught economists anything, it’s that central bankers have too much power. For years, central bankers have had economies at their fingertips. By controlling the money supply and the rate at which money is lent, there are few areas of the economy central banks haven’t touched. At the drop of a hat, they can bring the world to its knees.
It’s no wonder that libertarians like cryptocurrencies. Cryptocurrencies are free from government manipulation and regulation. They aren’t controlled by a central bank, restoring the powers of supply and demand back to the people. One coin, Lisk, is an excellent example of how cryptocurrencies and the blockchain technology behind them can change the current system.
Lisk is fundamentally a decentralized network called a blockchain. Blockchains are distributed ledgers or databases that keep a record of all transactions that occur on the network. By nature, they are decentralized, meaning they are free from the control of any central authority. Decentralization also means that all participants can view and audit the blockchain, ensuring accountability and transparency.
Lisk can also refer to a platform token that runs Lisk’s blockchain framework. The framework, called Lisk App SDK, allows users to develop their own sidechains and blockchain based applications. Lisk users can utilize the framework to create independent social networks, games, financial apps, and more for public or private use.
Lisk is a relatively new cryptocurrency. As a result, a majority of the information available about Lisk must be found online. One place to start is its blog, which contains a host of updates and definitions. Another great resource is the Lisk Reddit page, where interested parties can find explanations, discussions, and Q&A’s.
The only way to purchase Lisk is to buy it through an exchange. In order to do this, one must first create an account with an exchange that sells Lisk. Bittrex and Poloniex are two examples. Next, the account needs to be funded with cash or with a credit card.
Investors who have US dollars or Euros can purchase Lisk directly through compatible exchanges. Otherwise, they will have to purchase another coin like Bitcoin or Ethereum first. Then, they must convert their Bitcoins or Ethereum to Lisk coins. This is an extra step, but can be done quickly. The end result is the same.
In order to cash out of a Lisk position, users should follow the reverse outline of the steps above. Those with US dollars and Euros can convert Lisk coins directly to dollars or Euros. Those that don’t will need to first turn Lisk into Bitcoin or Ethereum, and then exchange these cryptocurrencies for the fiat currency of their choice. Next, the user must transfer the money to a traditional bank account, and once the funds have settled, they can be withdrawn in cash from an ATM.
Lisk has two primary uses. First, it can be utilized as an asset in an investment portfolio. To use Lisk in this manner, investors typically follow one of two strategies. The first is a buy and hold strategy. In this case, the investor purchases Lisk coins and simply holds them in his or her wallet. The hope is that the coin’s price will appreciate over time. The second strategy is an active trading strategy. Here, investors buy and sell Lisk frequently to capitalize on price movements. In either case, the goal is to buy low and sell high.
One advantage of investing in cryptocurrencies is that they are free from central control. This means that corporations, governments, and central bankers don’t have direct influence on them. So, unlike dollars, Euros, or pounds, cryptocurrencies don’t have their exchange rates manipulated by monetary policy. Instead, they operate solely based upon supply and demand.
The second use for Lisk is as a token on Lisk’s blockchain powered platform. The platform is powered by the Lisk tokens; no action can be taken without them. These tokens can be used to create sidechains off of the Lisk main chain. Thus users, using Lisk tokens, can create their own platforms with their own corresponding tokens. These platforms are free from Lisk control and are fully decentralized--they simply build off of Lisk’s blockchain. This removes the need to develop an independent consensus algorithm and networking protocols.
In order for groups of transactions, called blocks, to be added to the larger blockchain, they must be verified. This verification process is called mining. Cryptocurrency miners are typically required to solve complex problems by using programming power and algorithms. Once the problem is solved, the block is verified and added to the chain.
Miners are rewarded for solving blocks, typically in the base coins of the blockchain they are mining. They can use mining calculators to determine the profitability of a given block. Mining calculators can also help miners decide whether to mine solo or in mining pools.
Solo miners typically have a higher payout ratio because there is only one miner to receive the reward. However, sometimes overall profitability is stunted because individual miners have less computing output than pools. Lisk coins cannot be mined in this traditional sense.
Just because Lisk coins can’t be mined doesn’t mean their market cap is stuck. The coin’s market cap can increase as its price increases, and this is where a majority of its growth has come from in the past.
What’s more, Lisk follows the Delegated Proof of Stake protocol, which means that all Lisk holders elect mainchain delegates who secure the network. There are a max of 101 mainchain delegates who earn block generation rewards. Thus there is an incentive to own more coins and participate in the blockchain as an active delegate. The profitability of mainchain delegates is higher than that of other participants because these delegates have the benefit of both price appreciation and dividend-like rewards.
Lisk doesn’t face the same scaling problems that other blockchains do. It is a modular cryptocurrency that can use sidechains to help the network scale. By using sidechains, the team can deploy various features into the main network as simple blockchain applications. This will help streamline the main chain and keep the transactions processing quickly.
Overall, Lisk is a promising cryptocurrency. Not only does it share the advantages of other cryptocurrencies like decentralization and potential investment gains, it also has a practical use on Lisk’s blockchain app creating platform.