Home Tech Crypto Explained: What Is Cryptocurrency Staking?

Crypto Explained: What Is Cryptocurrency Staking?

Crypto staking is a method that people can follow to lock some part of their cryptocurrencies as a way to contribute to a blockchain network. This is useful for the network, and also can allow cryptocurrency holders to generate value from cryptos that are simply in their possession, lying idle. People opting to try crypto staking will be required to agree to not withdraw their cryptocurrencies from this process until the end of their agreed time period. This helps the network also to get some advantages.

Since crypto staking as a concept is fairy new, not all blockchain platforms support it. This is used by cryptocurrencies that use a proof of stake model (rather than the proof of work model that Bitcoin and other early cryptocurrencies use). In the proof of stake model, new transactions have to be verified before being added to the blockchain and existing coins are used as validators to confirm blocks. 

When a new block is added to the blockchain, the validator is also rewarded with some of the new coins minted. This is a way by which people can earn “interest” from their cryptocurrency investments. However, there is risk involved as well because of the volatility of the crypto market — if your coins value started to drop, you can’t sell them quickly, which could lead to some losses.

People can lose a part of their funds as a penalty if they violate agreed upon terms. Staking also comes along with some fees, which are deducted from the rewards. Some popular cryptocurrencies that support staking are Ether (after the ETH 2 upgrade for Ethereum), Cardano, Polkadot, and Solana. 

One of the advantages of crypto staking is that if many people get roped in it, the value of the most locked crypto token could increase substantially due to its limited supply. At the same time, the incentive benefits the blockchain as well as the user.

In addition, people choosing crypto staking, get voting rights that allows them to frame what happens to the cryptocurrencies, most locked in crypto staking. As per a report by CoinMedia.org, the entry process into crypto staking is user friendly, that may attract more people towards trying it out.

Interested in cryptocurrency? We discuss all things crypto with WazirX CEO Nischal Shetty and WeekendInvesting founder Alok Jain on Orbital, the Gadgets 360 podcast. Orbital is available on Apple Podcasts, Google Podcasts, Spotify, Amazon Music and wherever you get your podcasts.

Cryptocurrency is an unregulated digital currency, not a legal tender and subject to market risks. The information provided in the article is not intended to be and does not constitute financial advice, trading advice or any other advice or recommendation of any sort offered or endorsed by NDTV. NDTV shall not be responsible for any loss arising from any investment based on any perceived recommendation, forecast or any other information contained in the article.

Source link


macOS Monterey Rolling Out Now as a Free Upgrade: What’s New, How to Download

macOS Monterey, the latest operating system from Apple, has started rolling out to all Mac machines on Monday. Introduced in June at the...

Samsung 32-inch Ultra-HD Smart Monitor M7 (LS32AM700UW) Review: Productivity and Entertainment Combined

Televisions and monitors are often used interchangeably because of their similar hardware, but it isn't often that you come across a product that...

Billionaire Investor Paul Tudor Jones Says Bitcoin Is a Better Hedge Against Inflation Than Gold

Billionaire investor and philanthropist Paul Tudor Jones, who's been a vocal Bitcoin backer in the past has stated that the popular crypto-asset...


Please enter your comment!
Please enter your name here

Most Popular

Prime Minister Narendra Modi To Attend Virtual ASEAN-India Summit On October 28

<!-- -->Prime Minister Modi will attend the 16th East Asia Summit to be held on October 27 virtually. (File)New Delhi: Prime Minister Narendra...

Saudi Arabia Pledges More Than $1 Billion In New Climate Initiatives

<!-- -->Saudi Arabia aims to reach "net zero" emissions of greenhouse gases by 2060 (File)Riyadh: Saudi Arabia's de facto ruler pledged more than...

High Court Raps Delhi On City Planning

<!-- -->In Nehru Place, people can't walk with street vendors everywhere, Delhi High Court said (File)New Delhi: How can we talk of developing...

Tesla Briefly Hits $1 Trillion In Market Value On Wall Street

<!-- -->The landmark came after Hertz announced a deal to purchase Tesla cars (File)New York: Tesla shares surged Monday, briefly lifting the electric...

Recent Comments