What is crypto staking? Here's how the new crypto craze works, and how to get started

Date:
Mon, 01 Nov 2021 22:05:57 +0000

Description:
Reap rewards by putting your existing cryptoassets to work

FULL STORY ======================================================================

Crypto is back in vogue! Interest in blockchain investing has boomed over the past year, with many investors seeking to diversify their portfolios with cryptoassets. So too has interest in a new way for investors to bolster their existing crypto holdings: staking.

Not only has crypto staking hit the mainstream, its become more accessible than ever, as exchanges like eToro have rolled out dedicated services to give everyday investors the opportunity to get involved. But hold up what exactly is staking and what are the benefits involved? Lets get into it. What is crypto staking?

At its core, crypto staking allows investors to put their cryptoassets to
work in return for rewards. Its often compared to placing cash in a savings account or term deposit: in return for following requirements or locking your money away for a set period of time, you earn interest. But with staking, you're using your cryptoassets to earn more coins or tokens.

Thats the gist, but theres a little bit more involved.

If youre familiar with the basics of crypto, youll have heard of blockchains
- decentralised, digital ledgers used to record transactions for most crypto assets. Different cryptoassets have different mechanisms to maintain the integrity of the blockchain though. For example, Bitcoin uses Proof of Work (PoW) whereby people compete to place the next block in the chain by solving
a numeric problem. The person who does is then rewarded with Bitcoin.

However, the likes of Cardano, Ethereum 2.0 and other crypto assets rely on a mechanism called Proof of Stake (PoS).

Under the PoS system, only holders of a particular cryptoasset who have
agreed to stake their coins are eligible to place (or 'forge) the next block in the blockchain. So its not as easy as simply owning a particular type of cryptoasset it involves actually locking it away for a set amount of time. The forger of the next block in the chain is then assigned randomly, but the more coins staked, the greater the chance of being selected. The benefits of staking

At this point youre probably thinking that this all seems like a lot of effort, so what are the benefits of crypto staking?

The major one is that people who stake their existing cryptoassets to help maintain the integrity of the blockchain can be rewarded by receiving more coins or tokens. This will obviously be a pretty alluring incentive for many investors, as its a way to grow the number of coins or tokens you have
without having to purchase new ones.

Another benefit of staking is that its far more accessible to regular investors. Unlike Bitcoins blockchain, where only people with access to a lot of computing power can mine the currency, the Proof of Stake mechanism allows people to support the blockchain just by holding onto coins. That also makes it a far less energy-intensive practice than Bitcoin mining, which might be
an important personal consideration for some. (Image credit: eToro) How do
you stake on eToro, and what crypto can you stake?

While you can stake on your own, it does require a fair bit of know-how which might be daunting for regular investors plus there are usually minimum coin requirements, which can put it out of reach for those with smaller holdings.

But the good news is that crypto exchanges like eToro have come up with a solution to make staking more accessible (and simpler) for everyday
investors.

eToro allows investors to stake cryptoassets like Cardano , Ethereum 2.0 and Tron on their online platform, simply by holding an open position on their eligible crypto asset for a minimum period of time at least seven days for Tron and nine days for Cardano.

Users then start to earn rewards in the form of more crypto assets, which are automatically paid out on a monthly basis. Of course, eToro does take a cut for the service, but investors can expect to receive a minimum of 75% of the monthly staking yield you can find more info on fees here . Anything else
you need to know?

Like any investment, there are costs and risks involved with crypto staking that are worth considering. For instance, if you're wanting to stake through an exchange, youre likely to be charged a fee or a percentage of the total reward as compensation for the service.

And it wont be news to you that the value of cryptoassets can be quite volatile. That means that if you do choose to lock your coins or tokens away for a longer period of time via staking, theres always the possibility that they could decrease in value.

If youre interested in giving staking a shot, then check out eToros dedicated staking service , where youll also be able to find answers to more of your burning questions about the staking process.



======================================================================
Link to news story: https://www.techradar.com/news/what-is-crypto-staking-heres-how-the-new-crypto -craze-works-and-how-to-get-started/


--- Mystic BBS v1.12 A47 (Linux/64)
* Origin: tqwNet Technology News (1337:1/100)