Do you like technology and investing in cryptocurrencies? Surely you will know that the crypto world, in addition to volatile is very profitable and liquid. That is why it is worth obtaining greater profits from this activity. Through staking.
Do you know what it means? Staking is the development of financial ecosystems around cryptocurrencies and growth needs have created this strategy. It is a process that will allow you to receive rewards.
In addition, you will contribute to the operation and operability of the blockchain, executing a basic activity: saving your cryptocurrencies.
Find out everything, how it works, pros, cons and much more below.
What is staking?
Staking is the process of saving your cryptocurrencies; keep them locked in a wallet. In exchange for keeping your cryptos and strengthening the network, you will be able to receive winnings or rewards, as a kind of interest.
Remember that transactions within the blockchain must be validated in consensus. To do this, each blockchain has a specific protocol. In the case of Bitcoin, for example, it is Proof of Work (PoW) with block mining.
This “Proof of Work” requires high computational technology and demands excessive electricity. This mechanism becomes with the passage of time, increasingly obsolete due to the need for hardware and high power consumption.
But in the case of other cryptocurrencies, Proof of Stake or PoS (Proof of Stake) is used. This method represents an evolution of the process, guaranteeing consensus and providing greater security in the network.
It is here that saved or stored cryptocurrencies are used to verify transactions. Now do you know how to run staking? Keep reading that we will explain it to you shortly.
How does staking work?
First of all, for proof of stake or PoS you don’t need super computers. You will be able to check new blocks through staking and get your reward directly and much easier.El PoS está basado en el staking de criptomonedas, aportándote mayores oportunidades y rendimiento. Click To Tweet
As you know, nodes are validators and have the function of approving each block created. But the choice of nodes is made at random, achieving a greater probability of being chosen who owns more cryptocurrencies.
What does that mean? That the amount of cryptocurrencies you keep saved will determine your profit and the fact of being the new validator of a block.
Since PoS is based on staking, what is the plan? You just need to store your cryptos, use your wallet to make stake and get your reward.
Why is it a good crypto savings system?
One of the main reasons to decide to save on cryptocurrencies is that by keeping them in stake you protect them from devaluation.
Over time, political changes, financial market volatility and many other factors impact currencies. Therefore, it is important to take action and take risks cautiously through smart strategies.
If you want to increase your income and protect it in a safe place without intermediaries, this is your opportunity. You just have to have a really reliable and secure P2P platform.
How are staking rewards calculated?
Usually, the percentage of the rewards for staking is set at a fixed amount on an annual basis. But you can receive your rewards individually or through a pool.
You should know that a pool is several cryptocurrency holders who gather their assets to increase the chances of validating a block. Through this technique, revenues can also increase.
There is also an alternative to Proof of Stake called DPoS (Delegated Proof of Stake) How does it work? We explain.
DPoS is a consensus mechanism where cryptocurrency holders vote for “delegates.” These will be responsible for validating the transactions and maintaining the blockchain.
Votes are proportional to the amount of crypto you own, if elected. Usually, the rewards are distributed to the delegates, and they, in turn, distribute a portion to their constituents.
What are the goals of staking in cryptocurrencies?
The most important goals of cryptocurrency staking are aimed at strengthening the network while promoting energy efficiency.El staking de criptomonedas elimina el uso de potentes equipos y reduce el alto consumo de energía. Click To Tweet
It is a less expensive mechanism than mining and you can rely on a secure platform. If you want to understand more about this process, we invite you to analyze it from your own perspective.
Advantages and disadvantages
Staking is a way to earn income efficiently. However, it is convenient to know the pros and cons to optimize the process.
- The number one benefit of staking is the fact that it doesn’t require powerful mining hardware. Therefore, the electricity demand will not be excessive, in addition to obtaining greater scalability in the network.
- Blockchains using PoS have much more speed.
- Keeping your cryptocurrencies in stake will prevent your assets from devaluing. Which will be really positive for your savings.
- With the use of a platform that gives you the option of staking, you can start very easily.
- Greater probability of becoming a validator and being able to verify transactions on the blockchain, which will translate into better profits.
- If you compare the rewards obtained between mining and staking,the second definitely generates lower profits.
- Storing your cryptocurrencies in an online wallet could be risky, obviously depending on the level of security. Hackers are always looking for the best opportunity to steal the assets of others.
How to do Cryptocurrency staking?
Currently, you can do staking in several ways, which we will explain shortly. Cold Staking: You keep your funds more securely in a cold wallet (offline). It is recommended for holders of large sums of cryptos.
- Staking Group: It consists of the unification of several users to increase the possibilities of validating the blocks. When they receive their rewards, they divide them.
Staking cryptocurrencies can help you generate opportunities within the market. In addition to making a profit in a safe environment, of course depending on the plan you execute.
If you choose a platform that allows you to do so, it is important that it has high security, speed and the best technological tools.
We provide you with the greatest benefits, a solid and advanced structure, with the support you deserve. We are an all-in-one crypto market focused on giving you what you really need, we are Ccoins.