Crypto staking denotes the process where a person mints/mines new digital coins for keeping his/her wallets open. What is cryptocurrency staking?
To delve deeper into this concept, consider cryptos like “fiat currency” and the blockchain as a“bank.” The financial organization would allow you to deposit notes and coins for safe storage. Later, you might enjoy some interest and more services, like the possibility of getting a loan from the institution.
The scenario above is almost similar to crypto staking, but instead of working with banks, everything shifts to blockchain, mining pools, mining farms, and super-nodes.
What is Cryptocurrency Staking?
Staking is an important process in crypto networks where people/users are rewarded for participating in validating transactions and securing blockchains. The process is referred to as proof of stake (POS) consensus mechanism. This means that your node/ computer’s computing power is used to verify operations. After committing your coins for staking, a part of the transaction fee is sent to your wallet as a reward.
The more the staked coins, the higher the reward. This implies you can generate passive income using cryptos through staking. So, is there anything else that you need to do?
There is nothing else required of you after staking crypto coins. You simply relax, and the rewards will be funneled to your wallet. Remember to select the most preferred wallet for storing your coins.
Staking: How Does It Work?
The process involves crypto holders locking their coins to help with securing the blockchain network and validating transactions. The rewards are sent to you depending on the nature of the project and agreement with the staking platform. In most instances, the rewards are in portions of new coins that are distributed to the coin holders. The total amount and rate depend on the staked amount.
So, What Exactly is Proof of Stake?
Proof of stake (POS) is a consensus protocol used for validating transactions and distributing rewards among users. So, staking cryptos means that you are investing in a blockchain that uses proof of stake consensus mechanism. Before POS was developed, we had the pioneer protocol, proof of work (POW).
The POW consensus protocol uses a computationally intensive model to validate electronic transactions on blockchain networks. So, it is the computational power that determines your chances of validating transactions when using POW. However, all you need in staking in the POS system is a number of coins.
What are the Best Methods for Staking Cryptos?
Staking can be done with only a small amount and does not require technical expertise or hardware. This makes it desirable for those targeting to invest without proficiency in mining or technical expertise.
For example, you can stake HI right from your wallet by committing it for a minimum period of time. Like other coins, the more HI coins you hold, the more the rewards, but first, you need to select the preferred staking method. Here are some of them:
- Staking through an exchange: This means that you use a crypto exchange and stake from your account.
- Join a staking pool: Staking pool means that your coins are added together with those from other stakers. Because of the large number of coins, there are more chances of getting chosen to validate transactions. The rewards will finally be shared amongst all the participating stakers.
- Become a validator: A validator is a node that stores the entire blockchain and helps to verify transactions and add new blocks to the blockchain. As a validator, you get part of the fee paid by users and newly-minted cryptos.
In this post, we have answered the big question, “what is cryptocurrency staking?” Staking is an awesome method of making passive income. Make sure to also check the transaction fee when selecting a crypto to stake. One of the best coins is hi Dollar, which you can stake to earn returns on a daily basis. Getting started is also easy: you only need to answer simple questions with their chatbot.
With their Flexible Earning Program, HI allows you to earn up to 40% of the deposited coins. Just head to Telegram or WhatsApp and register for an account. You can also join via hi Web App and directly buy HI.