A majority of all internet bandwidth globally is dedicated to videos. Cisco Systems Inc (NASDAQ: CSCO), a monumental tech conglomerate with inside information on internet traffic, predicted that it will make up more than 80% of all IP traffic in 2021. Startups and content creators that are self-reliant on video streaming have suffered tremendously trying to keep up with the cost of transcoding video. Transcoding is the process in which creators convert videos to different formats to allow more end users to access the content. This process can take a lot of computation, and cloud service providers charge high rates for the service.
Livepeer aims to undercut providers like Amazon Web Service (Amazon.com Inc., NASDAQ: AMZN), offering significantly cheaper video transcoding with the power of decentralized computation. The project wants to facilitate the creation of a global open video infrastructure. So far the platform hasn’t attracted enough attention to open the world of video streaming up to everyone, but it’s focused on expansion and it might eventually reach its lofty goal.
What is Livepeer?
Livepeer is an ERC-20 token on the Ethereum network used to effectively coordinate resources to Livepeer participants and incentivize staking. The token is minted and distributed to investors that stake their tokens to help Livepeer run smoothly with a variable inflation rate. An algorithm alters the inflation rate, aiming to keep the percentage of LPT staked out of its total supply near 50%. It intends to keep the other 50% out of the protocol and on exchanges to promote sufficient liquidity for investment and further adoption.
Livepeer network participants fall into 2 groups, orchestrators and delegators. Orchestrators are doing the dirty work of transcoding video in return for fees paid in Ether. Anyone can dedicate computational resources, including their CPU, GPU and internet bandwidth to become an orchestrator. Orchestrators are assigned more videos to transcode based on the size of their LPT stake on the network.
Delegators are incentivized with both positive and negative feedback to improve the network. They help decide which orchestrators are the most important by delegating their LPT tokens to them, placing the most work in the best hands. Orchestrators cut delegators a specified percentage of fees earned and minted LPT tokens from their node, depending on how much LPT was delegated. Orchestrators can also lose part of their own and their delegators’ stake when they fail to provide valid verification of the transcoding work they are assigned. Delegators should choose wisely because contributing to a bad node could incur significant losses. In the end, hopefully, the most effective and consistent orchestrators will rise above the rest due to this disincentive.
Brief History of Livepeer
Livepeer was founded in 2017 by Doug Petkanics and Eric Tang. They quickly amassed funding with a $3 million SAFT (Simple Agreement for Future Tokens) in 2018 and a Series A investment of $8 million from Digital Currency Group, Inc in 2019. Investors inside and out of the cryptocurrency community recognized that the platform had the potential to disrupt centralized control over video transcoding services.
The protocol launched on Ethereum in May 2018 and had a slow start, struggling to accumulate the requisite amount of computational power. In the first few years, it was mostly used for live-streamed crypto-related events like DevCon. The Livepeer developer team has launched gradual updates to scale the network significantly, increasing its efficiency and decreasing the cost of its services.
LPT shocked the crypto community in March 2021 when its price rose from a mere $5 to $40 in less than a month. It reached its all-time high about a month after that, breaking $43 according to CoinMarketCap. Unfortunately for LPT holders, the token’s price tanked soon after and remains in a bit of a slump at about $15.50.
How to Buy Livepeer
Struggling to find a simple guide on how to invest in Livepeer tokens? Follow these quick steps to get some today!
- Open an online account.
LPT is supported by multiple trading platforms including Gemini and Binance. Gemini will likely be the best option for U.S. and U.K. investors looking to purchase LPT because Binance is unavailable in both countries. To start trading, you set up an account with the exchange of your choice and verify your identity. Exchanges require you to submit your address, Social Security number and a picture of your driver’s license (or another valid ID) per U.S. regulatory policy. Once your account is verified, you can fund the account and start trading.
- Buy a crypto wallet (optional).
Cryptocurrency exchanges have lost users millions of dollars worth of cryptos to malicious hacks in the last decade. Top exchanges including Gemini, Coinbase Global Inc (NASDAQ: COIN) and Binance employ immense security measures to keep user funds safe, but software and hardware wallets generally give users more control over their cryptos. Software wallets are often easier to use and more versatile than hardware wallets, but they are still somewhat vulnerable to hacks. Hardware wallets are nearly invulnerable to cyberattacks because they are rarely (if ever) directly connected to the internet.
- Make your purchase.
Once your exchange account is set up and verified, the last few steps to buy LPT are a breeze. You can fund your exchange account with another cryptocurrency or by linking your bank account to the platform and depositing USD. Gemini supports ACH payments that allow users to trade with their funds immediately. Gemini also offers free wire transfers, unlike most exchanges. Now that your funds are deposited, look for the trading pair with LPT, set your desired price and make your purchase.
Cryptocurrency Exchanges For Livepeer
Although Binance supports Livepeer, the U.S website has yet to add the cryptocurrency to the platform. For U.S based investors, Gemini is your best bet for easy access to LPT. Make sure to use a reputable exchange with strong security measures in place to mitigate the risk of low liquidity and being hacked.
Best Crypto Wallets for Livepeer (LPT)
Best Hardware Wallet: Ledger
Hardware wallets, or cold wallets, are physical devices kept offline for maximum security. They are often a bit clunkier to use than their software counterparts, but that's the price you pay for peace of mind. Ledger is a wildly popular hardware wallet brand with 2 secure devices named the Ledger Nano S and the Ledger Nano X. Both devices have the same secure chip that generates and encrypts the wallet’s private key, never to be seen by anyone, not even Ledger. The Ledger Nano X, the pricier model, adds a larger screen and Bluetooth functionality to the Nano S for seamless on-the-go use. The Nano S is probably all most crypto investors need for security, but the extra ease of the Nano X may be worth the extra cost for you.
Best Software Wallet: Coinbase Wallet
Software wallets offer a trade-off between security and ease of use. They are more vulnerable to hacks than cold wallets, but they are usually free and more flexible. For example, most decentralized finance (DeFi) applications require users to have a software wallet to use them. One of the best software wallets on the market is Coinbase Wallet.
Coinbase Wallet supports most major cryptos including Livepeer and is available as a browser extension and as a mobile app on iOS and Android. Most wallet apps can’t compete with its features including crypto swap and a tab for storing non-fungible tokens (NFTs). The application also has a built-in DeFi browser that makes it simple to interact with complex decentralized applications.
Trade, Sell or Convert your LPT
LPT has been an incredibly volatile asset, especially in the past few months. You should know how to trade or sell your tokens before it experiences more dramatic price shifts. The easiest way to close your position in the token is to sell it on the same exchange you bought it from. Send your tokens to the exchange if you didn’t leave them there, find the trading pair with LPT you want and complete the trade. You could use a decentralized exchange (DEX) like Uniswap instead to swap for a greater variety of cryptos. This solution is a bit more complicated and requires a software wallet (or a supported hardware wallet).
Current Crypto Prices
The cryptocurrency community continues to debate whether the astonishing 2020 to 2021 bull run led by the two largest cryptos, Bitcoin and Ethereum, is over. Bitcoin reached an all-time high of almost $65,000 in April and Ethereum soon followed in its wake, skyrocketing to nearly $4,200 about a month later. In only a few weeks, however, both assets had lost more than 40% of their value to a monumental, but not altogether unusual, crash that rippled across the entire crypto market. The nosedive was likely due to a few influential factors including the Chinese government’s recent ban on crypto services and mining and Tesla’s decision to stop accepting Bitcoin as payment.
Is LPT a Good Investment?
LPT may be a good investment for extremely risk-tolerant investors, but it is by no means a safe investment. It seems to be as volatile as an altcoin can be with the market capitalization it has. Its monumental and stunningly quick move from $5 to over $40 may entice investors looking to make incredible returns, but investors have absolutely no assurance that it will happen again. Since the token hit its all-time high, it has mostly decreased in value week after week, but it has the potential to recover in the future.
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