Staking cryptocurrency means that you are holding cryptocurrency to verify transactions and support the network. In exchange for holding the crypto and strengthen the network, you will receive a reward. You can also call it an interest. With staking you can generate a passive income by holding coins. Besides that you receive a reward (in the form of extra tokens), you can earn extra when the coin increases in value. Not all cryptocurrencies support staking. In this article we will explain everything about the staking process and which cryptocurrencies can be staked.
How does cryptocurrency staking work?It sounds very simple; just hold some crypto and receive a reward, but there is a lot more involved. With the Proof-of-Work mechanism, new blocks need to be mined to verify the transactions. Bitcoin is one of those coins. With the Proof-of-Stake mechanism, new blocks are produced and verified by staking. This means that you don’t need special computers to solve difficult math problems, what the case is with mining. Staking is all about how many coins you are holding. The amount determines your reward. A user who has secured more of a certain coin is more likely to be chosen as the new block validator.
Besides the fact that with staking, you provide support and strengthen the network, it also increases scalability.
What are the conditions for crypto staking?It is important that the blockchain uses the Proof-of-Stake mechanism. In general, the following rules apply most of the time:
Which platforms offer crypto staking?There are more and more exchanges that offer staking solutions. You usually receive your rewards when you keep your coins in your exchange wallet. Keep in mind that most exchanges that offer this service charge a small percentage of your profit. By staking at an exchange you become a member of a very large staking pool.
The following exchanges offer staking:
Staking rewardsWith crypto staking you will receive a reward. This is usually a fixed percentage per year. The percentage is an indication and could theoretically change. It is possible to receive rewards individually or using a pool. In a pool, multiple coin holders put their coins together to increase the chance of validating a block. As a result, the revenues can also be higher.
What are the advantages of staking?More and more investors are choosing for crypto staking:
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