Cryptocurrency is our reality, and its impact on the world of finance cannot be denied. It is increasingly used in online transactions and thus makes virtual currency even more popular. Based on this, people have come up with various ways to mine cryptocurrencies. They buy special equipment, solve math problems to close the block, and ultimately receive a reward in the form of virtual currency. Since the world does not stand still, new ways of its accumulation appear. These methods are more progressive and innovative. One of these is staking, which is relatively new and evolving. Here you will learn more about how it works with cryptocurrency. In addition, you will discover certain details of earning cryptocurrency by staking.
What is staking?
Staking is a way of passive earnings, which consists of storing cryptocurrency in your account and making a profit. This way of accumulating virtual currency is to validate transactions and create a new block. The mechanism works on the Proof-of-Stake scheme. More cryptocurrency – more chances to become a validator of a new block. You do not need to stock up on equipment and perform heavy tasks to earn online currency. A simple computer or phone will suffice. These conditions make the process more environmentally friendly and progressive.
An important detail is that the currency should not participate in other transactions. This is somewhat similar to a bank deposit.
Cryptocurrencies and stacking
Can all cryptocurrencies be stacked? The answer is no. It all depends on the consensus mechanism, which exists because there is no definite authoritative body regulating the entire system. Most virtual currencies, such as Bitcoin, originally worked with the Proof-of-Work consensus. This mechanism is much more complicated than the one associated with staking (Proof-of-Stake).
So which virtual currencies can participate in this process?
- Tezos (XTZ)
- Cosmos (ATOM)
- Algorand (ALGO)
- BNB (Up to 30%)
- VeChain (VET)
- Etherium 2.0
Ethereum may become the most important and popular cryptocurrency of 2021. With the transition to Ethereum 2.0, the system of making money on this virtual currency will change. If Ethereum 1.0 used the Proof of Work system, then the updated crypto-coin will work according to the Proof of Stake principle. This will greatly simplify the process of earning money for miners and motivate people to apply staking in practice. Since Ethereum will now be in all consensus mechanisms, the cost of Ethereum will likely rise. Many convert other virtual currencies to Ethereum. Those who have accumulated enough WAX use wax to eth convert. In any case, Ethereum 2.0 will also develop staking, so you need to keep up with the latest news.
Is it profitable to stake now?
While staking is a relatively new and unsettled way to make money on cryptocurrency, it is profitable. The platforms are interested in motivating virtual currency holders to support transactions through staking. The key factor in making big money is already large stock of cryptocurrency in your account. The bigger it is, the more you earn. It is also worthwhile to learn more about different virtual currencies and the percentage of the income from them. Better to consider the most popular ones on the market. In addition, you will be making good cryptocurrency profits if you constantly update your knowledge of how coin staking works.