Last Updated on May 11, 2022 by Arty Fisher
Staking cryptocurrency coins is a great new way to earn passive income. You don’t need to worry about advertising or hiring employees to get going. All you need is an online wallet, some coins, and your computer.
The exact details can be tricky, so here’s what you need to know about staking cryptocurrency to earn some passive income.
What Is Staking?
When you’re staking cryptocurrency, you don’t need expensive equipment or advanced technical knowledge. Instead, all you need is the currency itself, which you can buy on an exchange. As soon as you have your coins, all you have to do is keep them in your wallet and participate in staking by following a few simple rules.
The Importance of Staking
The primary benefit of staking over mining is that it requires much less computational power. Mining requires specialized hardware that uses a lot of electricity and generates high levels of heat, which makes it an expensive process. What’s more, mining algorithms are designed to become more difficult over time. This means miners must continually upgrade their equipment just to stay competitive.
How to Stake
Staking can be used on many different blockchains like Bitcoin and Ethereum. However, it can be done a few cryptocurrency platforms.
The process of staking requires the user to lock up their coins in a wallet for a specific amount of time before they get rewarded with their stake at the end of the specified time period. This could be anywhere from 24 hours to 6 months depending on the coin you are staking, as some may take longer than others to mature.
In order to stake coins you will need to sign up to the exchange and follow their instructions for setup and configuration. Once you have got your wallet ready, you can then start staking your coins.
When you stake coins, you are contributing towards securing the blockchain and getting rewarded for doing so. This means that when you stake coins, you are helping to keep things fair and secure by verifying transactions and validating blocks for everyone else on the network.
The more coins you have in your wallet and the longer you keep them there, the more rewards you receive for helping validate transactions, which incentivizes users to hold onto their tokens for longer periods of time rather than spending or trading them away, which would increase supply and lower prices.
Staking means locking up some of your coins in order to generate interest. It’s a bit like earning interest in a bank account, except that the interest is paid by doing work for the network.