As the technological development of cryptographic processes focused on cryptocurrencies advances, new concepts and modalities appear that gradually change the paradigm of the crypto ecosystem. One of these new developments has been the Staking process, which is born from another feature implemented in the new cryptocurrencies created.
As the technological development of cryptographic processes focused on cryptocurrencies advances, new concepts and modalities appear that gradually change the paradigm of the crypto ecosystem. One of these new developments has been the Staking process, which is born from another feature implemented in the new cryptocurrencies created.
Staking is a mechanism that occurs mostly in cryptocurrency projects that work under a different mining paradigm than Bitcoin, while Bitcoin operates with Proof of Work, where miners confirm transactions using computing power. This process is what generates new bitcoins within the blockchain they use; unlike the processes that allow the use of Staking that use the mining process called Proof of Participation or Proof of Stake PoS.
Unlike the Bitcoin proof-of-work method, the Pos system does not consume large amounts of energy since the use of large computing units is not necessary, since this system or protocol makes use of nodes that are generated through cryptocurrency deposits. In other words, Staking consists of storing several cryptocurrencies in a special wallet and leaving them protected there, to be able to be part of the blockchain transaction confirmation system. Each time a confirmation is made, the node will receive a reward for the service.
As we mentioned before, Staking is a system very similar to Hodl since it consists of storing the coins in a wallet for an indefinite period; but the terms should not be mixed, since in Staking the storage process guarantees internal participation in the transaction confirmation processes, in addition to allowing the generation of income for each confirmed transaction.
The Staking process is immersed in the Consensus Proof protocol where a validator node is created through a cryptocurrency deposit, which is basically in charge of verifying or validating the creation of a new block.
The validation process is a process that occurs randomly, very similar to a lottery or game of chance, except that the probability of being chosen increases according to the number of stored cryptocurrencies; Unlike cryptocurrencies like Bitcoin, complex computing equipment is not used. This makes this process somewhat more environmentally friendly since large energy demands are not generated, managing the problem of the lack of nodes through the incentive through Staking.
Staking Pool or Staking Groups
Staking groups, like other mining pools, are a group of users who join their efforts (in this case their cryptocurrencies) to obtain better results or probabilities in the verification of transactions. This form is very useful as it allows small participants to join forces to be more competitive. What is striking about this method is that when the reward is collected, it is distributed among the participants or involved.
They are platforms that offer advice and exclusive service to users of coins that allow Staking. It is ideal for new users who are entering this field and do not want to bother with all the technical aspects that this process entails. A great disadvantage of this modality compared to others is that it is less profitable since the profit depends on the percentage of commission that the platform charges on the profits obtained, where some reach up to 25%.
A security feature included within the cryptocurrency ecosystem is that the more crypto we have, the more secure our wallet must be. Under this premise, this methodology is worked on, sometimes there are users with a significant amount of cryptocurrencies available for Staking and it is not recommended to keep these crypto-actives stored in any wallet, which is why certain platforms allow the use of physical or cold wallets offline wallet that gives more security to this type of user since, in the same way, the main idea of Staking is that these cryptocurrencies do not move from the said wallet.
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No, at the moment the practice of Staking is not possible, but later we plan to include in our catalog of cryptocurrencies digital assets that allow the use of staking, so our users can get their cryptocurrencies to perform Staking later.
Of course, according to the developers behind Ethereum, when the migration to the PoS protocol is done, users who own Ether will be able to stake Ethereum.
This is because the Bitcoin Blockchain network protocol is designed to work with the Proof-of-Work protocol which does not allow this earning process exclusive to the Proof-of-Stake protocol.
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