Imagine being able to mine without buying expensive hardware or doing any routine maintenance. That’s what staking cryptocurrency is all about. It is, therefore, a great way to potentially earn passive income in the digital asset markets.
This guide discusses how to stake coins as well as the benefits of staking.
Proof of Stake
Proof of stake is an alternative consensus algorithm that rival’s Bitcoin’s proof of work. Unlike mining, which requires massive electrical power to validate transactions, staking is an eco-friendly process.
An individual partaking in network validation stakes their own coins and is subsequently rewarded more coins, proportional to the number of coins they have staked. The more coins a user stakes, the higher his or her validation power becomes.
Many altcoin proponents believe that proof of stake is more secure than its counterpart (proof of work) since hijacking the network would require more resources. Hijacking a blockchain network is only possible if half the network’s validators are compromised.
Buying coins to stake half a PoS network is exceedingly more expensive than gaining half the hashrate of a PoW network, since buying coins inflates its price until it becomes too expensive. In that sense, PoS can be considered more secure.
Popular coins to stake:
- Ethereum (coming soon)
Staking coins has little to no overhead costs as the process requires no specialized equipment. Although buying the minimum number of coins required for staking might prove to be almost as expensive as mining equipment in some cases.
But by and large, staking is cheaper than mining. It’s also a less risky investment since if it doesn’t work out, you could always sell back your coins or wait for its price to rise. Selling hardware equipment is less cost-effective, and their value drops when newer hardware is introduced in the market.
How to Stake Coins
To start staking cryptocurrency, you need to follow these five steps:
- 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.
- 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.
- 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.
- 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.
- 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.
Staking is considered to be a cheaper and less risky way of partaking in a blockchain network’s validation process. On top of that, it is an environment-friendly way of potentially earning passive income in the digital asset markets.
- What Is Crypto Soft Staking and How Does It Work?
- Best Staking Coins, Rated and Reviewed for 2020
- Best Staking Rewards Calculators for the Top 10 Stakable Coins in 2020
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