How Do you Like your Stake?

We have talked a lot about Bitcoin Mining but let’s turn the page now and throw another shrimp on the Barbie. Let’s discuss another trend called Cryptocurrency “Staking”.

What if you didn’t HAVE to buy the expensive mining equipment or pay any cost associated with Mining? No massive use of electricity to run the powerful computing machines used to validate transactions, YET, still earn a passive income in the Cryptocurrency markets?

Governments through their Central Bank systems, own all the creation, minting and issuing all of the Fiat currency of the world. They also need infrastructure to be able to carry out this control over the world fiat Currency.

Cryptocurrencies also need an infrastructure within the Blockchain to be able to provide a secure, efficient and stable environment. There are KEY differences on how each one derives its infrastructure.

While Governments depend on the Central Bank System, Blockchains depend on its users to provide the infrastructure with two basic incentive mechanisms. One is Mining and as discussed in a previous blog, miners earn Bitcoin by verifying the transactions that are placed on the Blockchain whereby creating an orderly and secure system. The other mechanism is “Staking”.

So What is Staking?

Staking is the purchasing and holding of a cryptocurrency in a wallet for a certain period of time. This is similar to earning interest rates for holding Fiat in an account for a certain period of time.

This concept is known as PoS or Proof of Staking which is an agreement algorithm by which you can add blocks to the Blockchain. These newly created blocks are actually Staked by someone holding cryptocurrency already and helps to validate a new deal on the Platform.

You can then validate or mine new deals for cryptocurrency equal to the number of Cryptocurrency you have staked. Hence, the more Cryptocurrencies you stake, the higher the power you will have to validate transactions and the more you can earn and increase your wallet holdings.

Staking provides a financial incentive that helps to build a blockchain and helps to keep a node honest. Any Node that tries to broadcast fraudulent information will be shut down and no longer be allowed to do validations or earn the accruing rewards. In many networks the dishonest node will lose any cryptocurrency it has earned as well.

Overall Staking is cheaper than Mining. Since Mining hardware is upgraded continuously you could stand to lose a a good amount of money by selling outdated equipment for mining or be stuck with it.

What is a Staking Pool?

When large PoS networks need big amounts of Staked coins in order to qualify for doing validations, they will pool their Cryptocoins together then divide what is earned among the pool members.

Some Staking pools have voting systems and even though the nodes that can validate are small, this does give the incentive to work for the good of the network.

What are the Benefits of Staking?

  • Forget the costly mining equipment such as ASICs or high-end GPUs as you won’t need them.
  • The cryptocurrency for Staking, you hold in your own crypto-wallet
  • The value of cryptocurrency staked through PoS doesn’t depreciate, however the normal fluctuation of value does effect the value of your Stake.
  • Proof of Stake is more Eco-friendly and energy efficient than the Proof of Work (PoW) used in bitcoin mining.
  • Staking guarantees you a predictable source of income as the value of cryptocurrency increases in a predictable manner.

The only drawback cryptocurrency staking has is that they hold the cryptocurrency up for a period of time. Furthermore, you cannot sell the cryptocurrency until that amount of time runs out.

OK, How do you Earn from Staking?

In cryptocurrency staking, you can calculate the earning rates based on the maturity period you need to keep the Cryptocurrency you stake up. But, every cryptocurrency has different rules and rates while the basic operation method remains the same.

For staking of 3 months, you will receive a minimum of 20% in your returns. In 6 months though, staking grants you a minimum of 50%, and 12 months staking locks you into a 100% return.

How do you get started in Staking?

According to https://www.bitcoinmarketjournal.com/staking-cryptocurrency/ here’s how to get started in Staking:

To start staking cryptocurrency, you need to follow these five steps:

  1. Choose a coin to stake.
    There are a lot of PoS coins available in the altcoin market. One can surf the web and decide which coins they want to stake. On top of that, we have compiled a list of the most profitable coins to stake recently.
  2. Download the wallet.
    A software wallet is essential to the staking process. It is where you store the funds used for staking. Simply go to the website of the coin you want to stake and download the wallet.
  3. Determine the minimum requirements.
    Some coins have a minimum number of coins required in order to stake. Dash requires 1000 DASH while Ethereum plans to start with 32 ETH. Although, there are also coins like PIVX, NEO, and PART that have no required minimum.
  4. Decide what hardware to use.
    Most staking schemes require a validator (staker) to be connected to the network 24/7. Therefore, you need a device that has uninterrupted internet access.A standard desktop computer would do well, preferably one that consumes less power as it needs to run around the clock. A raspberry pi can do the job as well and might save electricity.You can also take advantage of virtual private servers (VPS). Running on the cloud adds a lot of convenience for the staker as it removes maintenance hassles.
  5. Start staking.
    After your wallet is set up, you can begin the staking process. Be sure to be connected to the internet at all times, unless you’re using a VPS. At this point, all that’s left to do is occasionally check in on your node to ensure everything is running smoothly.

About the author

Gail holds one of the most challenging role in the Compumatrix Leadership: Membership. She ensures that that members and potential members enjoy the benefits of being part of the Compumatrix community.

Comments

  1. Thank you, Gail, for taking the time to look for all these topics I had no clue what they were about, in the cryptocurrency world. So this is what Staking means! Looks like a very interesting thing to do. For many, not saying I will do it. But it’s very, very good to learn everything I can, once I decided to work on a cryptocurrency Business.

    1. You are very welcome Maryse. It is my pleasure to open up the whole world of Cryptocurrencies for all to learn, including myself. Staking is yet another path that some may want to take to increase their portfolios and in a generally passive way.

  2. Very interesting topic again, thank you Gail. Like any investment, to buy and hold is a good strategy for long term, in this case the 12 month gives the best return at 100%. This is a great new opportunity in cryptocurrency that requires a lot of study and research before investing.

  3. I like my “stake” well covered with great seasoning and legit reasons to move forward safely and profitably — i do not know enough yet of any of this but i appreciate the posting by Gail it is great information but I will have to do more learning and reading n studying — there is just a ton of ways to go in the crypto world —

    1. I agree RJ, I like my “stake” to be tender and easy to consume! This concept opens new avenues of investing and earning that many were unaware of. I agree on the need to learn all we can about the business we are involved in. This will help us make decisions with applied knowledge going forward!

  4. Thank you for posting this article Gail. This is the first time I have heard of “staking”. What an interesting concept. I like the idea or any kind of pooling of money that would allow you to play with the “big boys” or the “whales” as they say. One little ember by itself cannot burn that bright, but when coupled with hundreds or multiple embers and logs, that can start a huge bonfire.

    1. Hi Jeff, yes Staking IS interesting and appealing since it is basically a passive way to earn more cryptocurrencies. It isn’t “free” to start, but doesn’t seem as costly as mining for to increase our holdings. Something to think about!!

  5. Cryptocurrency staking is one of the methods we can use decent return on investment. In banks, we get interest by keeping our money for fixed amount of time, which in India is called fixed deposit. But the interest we earn there is much less than what we get by cryptocurrency staking. Because of volatility of the prices of cryptocurrencies, there is danger of us not getting return on investment to the extent we expect or even we may lose a big chunk of our investment. Knowing this risk, many investors tend to stake in cryptocurrencies, because of the craze for them.

  6. FINALLY! Over the course of the last year or two, I have seen the battle with various coins over the pros and cons of Proof of Work vs Proof of Stake. I did understand for Proof of Stake you had to “stake” a certain amount of that particular crypto but beyond this, I was clueless. I think one of the biggest problems I have is comparing this to that like apples to “Samsung” LOL

    Really, we get caught up in our world of Fiat and try to run parallels to the World of Crypto. (And it does not compare!)

  7. This is a very interesting article Gail! Thank you for taking the time to investigate “staking” and for your explanation of what it is, and the pros and cons of it. Mostly “pros” as it seems from reading your excellent article. Right now, I do not have enough knowledge about it, nor do I have the means in form of a computer/laptop/ipone which can be used for “staking” only.
    But when I know enough and have the means – I will certainly try!

    1. Thanks Inga, happy that you enjoyed reading and learning. I too see more pros than cons and thinking as soon as I can I may try this as well. Couldn’t hurt to have a passive income in one basket for sure!! I believe there will be more and more avenues available to us as cryptocurrencies are adopted more and more.

  8. Thank you, Thank you, and Thank you again Gail, for this information! I’ve read about staking in the past but it didn’t really sink in for me like it did by reading this well written article. Maybe I just paid much closer attention because I know the author. Nevertheless I am very interested in researching this topic more and I think that I will be moving forward on doing some staking.

    This one fact really lit my fire: “For staking of 3 months, you will receive a minimum of 20% in your returns. In 6 months though, staking grants you a minimum of 50%, and 12 months staking locks you into a 100% return.” I absolutely love those numbers!!! Plus the concept itself, of putting cryptocurrency to work to generate passive income is nothing less than intoxicating to me.

    1. Hey Kevin! you are very welcome and I’m glad you find the information useful. I know sometimes we are just not open to learn something until we are in the right frame of mind then it just clicks. I too like the returns of the investments!! Great way to earn with little risk involved!!

  9. Great article Gail. Love to learn something new about our crypto world. Who does not enjoy the aspect of passive earning, while you park some currency and get one with other business at the same time? Life gets busy and PoS is a good way of doing something for others when it pays out too. Getting new vision for some projects. Thank you for enlightening us.

    1. Thanks Hennie, it’s always good to learn more about our business and I agree, passive income can’t be bad..lol I don’t see anything wrong with having multiple streams of income and a passive one sure fits in a good spot!

  10. This is a very interesting blog Gail and the information is very usefull. I heard a lot about staking but had no idea what it is. Now it has become clear to me though I have to read the blog again to complelety understand it. On a different note: I am vegetarian.

    1. Glad you enjoyed it Joop and it helps to understand. Things change very quickly in the crypto world so it helps to keep a pulse on things. I understand you are not a vegetarian and that’s cool! I am not and love a good steak (notice it was a play on words) but I respect yours and others choice to be one.

    2. Well Joop, thanks to Gail’s clever play on words, even though you are a vegetarian you can now have the opportunity to enjoy a “good stake” and still be true to your vegetarian creed. And of course as a result of enjoying a good stake you will be in a position to make more “bread” and also buy plenty of the finest vegetables that money can buy, all without eating any meat… LOL Seriously speaking though, I agree with you that this is a very interesting blog post and that the information is very useful. I definitely plan to learn more about staking and take advantage of the opportunity for generating passive income, that it provides.

  11. what a great run here this posting is just awesome — and so much good to glean and add to the info folder and this will be read and reread again and again — and I so agree with Gail and so many here but the Speed of Change and Business in the crypto world is one of those sneeze and you missed it — so I gotta feeling if we can more of us out here searching and seeking information the better we can succeed ??

  12. Gail, you have opened my brains, the matter is adjusting to the realities of passive earning, even though here in Africa we have issues with interruptions of power and internet currently, this info is useful in application and timely, now solar energy you will be my friend soon enough.

  13. The picture of delicious steaks being prepared for deserving people(e) shown above, look very delicious!
    This is a very important article you have written for all of us, Gail. An eye-opener!
    Must go deeper and learn all about this new methodology which is coming into use and needs to be pursued and understood.
    The returns on staking are attractive, despite its pros and cons.
    Thank you, Gail, for opening up another avenue of cryptocurrency income, for all of us.

  14. Great information on staking. I definitely need to do more research. It seems like a concept that’s not to daunting with the addition of very nice rewards. The interest rate of 20%, 50% and 100% is outstanding and catches me eye.
    You mentioned the initial start up cost isn’t as bad as actual mining which is great to know!

  15. Like many here , I’ve heard the word staking in the term Proof of staking in oppose to Proof of work. Not until I read this article I came to understand the meaning . Also I see as it says not so costly as mining. A passive way to earn, by holding a coin for certain amount of time and receiving a return for it .
    Yes it opens a new avenues for us crypto-investors. Thank you Gail

  16. This is all new to me but my husband Russell keeps up more than I do, I like the space but I’m not real savvy on all this crypto business. I think I’m getting more info now from these blogs that Gail is presenting, it’s a great way to learn and another tool to use for this never ending learning curve we all face.

  17. A very informative article. I had not been aware of this before.
    A great deal of research would be involved into which coins to Stake, their ROI and minimum amount to invest.
    Although cheaper than mining, buying the minimum amount of coins could be too expensive for many of us which is very unfortunate.

  18. Yes that was a very interesting read Gail, I don’t know a lot about staking but it does require some reasonable capital to get started, also a very good internet connection seems to be an
    essential . As time goes by more and more opportunities will be presented to us for investing, some are hands on and some like staking not so much.

  19. good to see some more of the old timers as i think of them from back in the day — I keep reading and reading and I hope I am leaning towards putting this info into good use very soon — but I do know that with each passing day and the volatility of todays world –information and using that info Wisely will be a big part to success —

  20. It is encouraging to see a blog such as this because it shows how knowledgable our leaders are and how they want to help us understand all the aspects of cryptocurrencies and how we can use that knowledge to enrich ourselves and others!

  21. I was unfamiliar with staking until I read this article. Because I did not understand this concept fully, I watched a YouTube video and asked my dad. Now I know what PoS (Proof of Staking) is and what PoW (Proof of Work) is. I think particular tricky concepts can be easily understood if a little bit more digging is done. Basically, it looks like using these validators in PoS instead of miners in PoW can be more efficient and process transactions quicker.

  22. How do you like your Stake?
    Being from TX, I am thinking Grilled Medium Rare.
    When I saw the word Stake, I am thinking misspelled.
    After reading further, I found a whole new meaning –
    another way to Earn and Learn. Opportunity for those with a desire to accomplish more out of life than just a good meal.
    Winston Hoffman

  23. I enjoyed seeing rjh59’s comment because it brought some humor to me while trying to grasp this concept. While grasping the concept, I realized that the stake that you eat does not have anything to do with the stake that is talked about in this article. Staking is where you put up a certain amount of bitcoin as a way of showing your seriousness as a validator. If the person staking is a “bad validator”, then the bitcoin that they put up to stake can be taken away from them. The more coins one puts up, the more likely they are to get picked to validate the transaction.

  24. Greetings! Staking is a wonderful way to actively participate in the block-chain world in which we live. If you have a computer running anyway why not add some staking wallets and coins running in the background and earning passive rewards. It is that simple, if the computer reboots and is not wallet not unlocked for staking you do not earn. So each time the Microsoft update people take command and reboot you – this does actually cost you money and time to login launch the wallet – enter the staking password – to get back online. One coin called HTML coin is a favorite staking coin of mine, and has some nice projects with smart contracts linking ETH and BTC block-chain, it has some nice projects for birth certificates and land management and many more coming.

  25. Thank you so much Gail. As always you presented the subject matter in an interesting and understandable fashion. I have heard the term staking a lot lately and was wondering what it was. I guess I need to do some research and get my feet wet in this arena. It is great to have a place to continue our education on cryptocurrency. Thanks again!

  26. Normally I like my stake well done but in the cryptoworld I don’t know how to do staking. For me, it is a new item, and before I can start staking I have to study this subject so the information you shared with the membership of Compumatrix is very valuable. I have seen that there are some YouTube videos about the subject too.

  27. Thanks Gail for nice reading and learning material.On a lighter side I like mine Medium rare just like Winston Hoffman with some sides like baked potato,asparagus and mushrooms.
    The article opens up a whole new avenue of earning if you are willing to stake for a specified period of time.As you pointed out it is cheaper than mining with expenses of the equipment and cost of electricity.I was wonder if any of the assets we have are Stakeable[If there is a word like that]

  28. as we progress here in our Biz World and we are able to add parts and streamline other parts and thru Communication and Preparation with the Absolute Speed of not missing a beat and literally stay abreast to all happenings — just by me writing this piece there has been some changes to the crypto /cyber world — it is just that fast at more moments than i care to admit too — great stuff Gail and thank you truly — rj

  29. Thank you, Gail, I am interested! Please put me on the “more information” list as I could definitely use some passive income. Hopefully, this method of cooking is going to be available in our new CDAP kitchen when it opens its doors to the hungry compumatrixites.

  30. What Gail has written about staking is very well understood staking is new for me.
    Much better than costly equipment mining. crypto skating is good for increasing our cryptocurrencies we can do staking for 3,6 and 12 months, If we have a certain amount of crypto then we can do staking,I have chosen my wallet for future staking, Gail, your blog always teaches  us.Thank you for wonderful information.

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