Staking in cryptocurrency is a term that emerges from growing energy demands resulting from Proof-of-Work (PoW) protocols. It is used to validate the transactions of a Blockchain network. The process of staking reduces power consumption by reducing mining hardware.
What is Cryptocurrency Staking?
In the crypto market staking is a process where we can hold some coins in our wallet that supports the security and operations of the blockchain networks.
In simple words, crypto staking is the locking of crypto assets to receive rewards.
Many exchanges offer to stake cryptocurrencies to their users in their wallets. You can also stake your cryptocurrencies directly from your Trust Wallet.
What is Proof of Stake (PoS)?
To understand staking correctly you need to understand Proof of Stake (PoS) first. Proof of Stake is a mechanism that allows all transactions to be gathered into blocks, these blocks are linked together to create a blockchain. The crypto miners compete to solve a complex mathematical puzzle, who solves first gets the right to add the next block of a blockchain. The solving of puzzles has no purpose except keeping the network secure. To reduce this mining process there is a concept of Proof of Stake.
In Proof of Stake, the main idea is that participants can lock their coins which are called a stake, and at particular intervals, the PoS protocol randomly assigns the right to one of them to validate the next block. If you lock more coins then there are higher chances to validate the next block.
How to Earn From Cryptocurrency Staking?
If you are holding cryptocurrencies, then you can earn rewards from staking. Many exchanges provide the facility of staking to their users. for example, if you are a Binance user you can stake your cryptocurrency in Binance wallet to earn rewards.
You can hold your PoS coins by adding them to the Binance staking pool. One best thing is there no extra charges of staking in Binance. The more you hold at stake more you earn rewards. The rewards are distributed at the start of every month.
I am Pawan Kashyap currently living in Amritsar. I always try to grab new things from the cryptocurrency market. From my observations and trends in the market, I always try to provide the best and accurate information in the form of articles from this blog. Follow us on Facebook, Instagram, and Twitter to join us.