What Does Staking Crypto Mean

Crypto staking has become the new deal as more and more blockchains now use the PoS algorithm to maintain their networks. So what is crypto staking? It is a process where a crypto holder donates a portion of their crypto assets for a period of time as a way of helping to maintain a blockchain network.

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Staking is similar to having your money deposited in the bank because in staking an investor simply locks up their assets in order to earn certain rewards and interests on the assets. If you are a seasoned investor and looking for a good way to make your assets work for you instead of just laying useless in a cold wallet, staking might be a great choice.

Some rewards you earn from staking your cryptocurrency include additional tokens, participation rights, and voting right to maintain a particular blockchain network. However, due to the high volatility nature of cryptocurrency, staking also comes with its own risks. You can lose your assets even with staking.

With that being said, let’s take a closer look into what staking crypto really means.

How Does Crypto Staking Work?

It is simple. When crypto investor leaves their assets in their wallets, the blockchain network can use those assets to build new blocks on the network. That means the more you stake, the higher your chance of having your asset to be selected for building new blocks. When information flows into the new block, the assets of the investor are used to validate it. That means the asset is used as a validator. And when this happens, the holder (the investor) is rewarded by the network.

While staking may look like a good passive form of investment, you should also know that it also comes with some downsides. While you are considering the rewards you get from staking your coins, you should also bear in mind that the market is highly volatile and that can grossly affect your coins too. So, if there is a drop in the value of your coin, then the reward you get for staking such will also reduce.

Not all cryptocurrencies can be staked. The most common stakeable coins are:

  • Ethereum (ETH)
  • Cosmos (ATOM)
  • Tezos (XTZ)
  • Cardano (ADA)
  • Polkadot (DOT)
  • And a few others.

What Are the Steps Involved In Staking Your Cryptocurrency?

Staking is simple, even for beginners. Below, we have highlighted the five easy steps you can follow to start staking your coins. Let’s see them:

  • Determine which coin you want to stake: Remember that not all coins are stakeable. So to begin staking, you need to get a stakeable coin and also decide on the amount you would like to stake.
  • Know the minimum staking requirement of the coin: For Ethereum, for example, the minimum stake is 32 ETH. That is about $47,000 worth of Ether. However, you can join a pool of other investors where you can stake much more than that.
  • Get a crypto wallet for your coin: Go online to download a crypto wallet for your preferred coin – that is the coin you want to stake. You can get a wallet by heading straight to the specific crypto’s main website or getting any compatible crypto wallet.
  • Determine what hardware to use: power supply and uninterrupted internet connections are very important for crypto staking. And you would need a standard desktop computer capable of helping you get the job done.
  • Start staking: Now that you have all the hardware and software requirements ready, you can start staking right away.

There are many platforms that will allow you to stake your coins quickly and easily. Some of them include Coinbase, Staked, Kraken, Stake capital, etc.

Final Note

Staking provides investors an easy and quick way to earn good rewards as additional coins or other benefits on their crypto assets. It can work as a passive form of making money from crypto, and it doesn’t come with many risks like other forms of investment.

However, always do your own research before going with any form of investment strategy. Additionally, you should also get to understand their pros and cons before jumping on the wagon.