What Does It Mean to Stake Crypto?

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Table of contents

  1. Empty
  2. What Does It Mean to Stake Crypto?
  3. What Happens When You Stake Crypto?
  4. What to Know before Staking Crypto
  5. Conclusion

Empty

{"blocks":[{"key":"cng3p","text":"Thinking of investing some of your money into crypto? Then you should aim to know everything there is about it.","type":"unstyled","depth":0,"inlineStyleRanges":[{"offset":0,"length":111,"style":"color-rgb(0,0,0)"},{"offset":0,"length":111,"style":"bgcolor-transparent"},{"offset":0,"length":111,"style":"fontsize-11pt"},{"offset":0,"length":111,"style":"fontfamily-Arial"}],"entityRanges":[],"data":{}},{"key":"5s2rr","text":"From choosing the right cryptocurrency to mining and staking for more coins; there’s much crypto investors need to understand beforehand. This way they stand to gain more than they can lose.","type":"unstyled","depth":0,"inlineStyleRanges":[{"offset":0,"length":190,"style":"color-rgb(0,0,0)"},{"offset":0,"length":190,"style":"bgcolor-transparent"},{"offset":0,"length":190,"style":"fontsize-11pt"},{"offset":0,"length":190,"style":"fontfamily-Arial"}],"entityRanges":[],"data":{}},{"key":"5atrv","text":"This article’s focus will be on staking altcoins and what does it mean to stake crypto? That, in addition to explaining how the process works.","type":"unstyled","depth":0,"inlineStyleRanges":[{"offset":0,"length":142,"style":"color-rgb(0,0,0)"},{"offset":0,"length":142,"style":"bgcolor-transparent"},{"offset":0,"length":142,"style":"fontsize-11pt"},{"offset":0,"length":142,"style":"fontfamily-Arial"}],"entityRanges":[],"data":{}}],"entityMap":{}}

What Does It Mean to Stake Crypto?

{"blocks":[{"key":"1n0mu","text":"In layman's terms, staking crypto is similar to allowing the bank to freeze some of your assets. It’s where a third party is given the right to dispose of and use your money for a limited period of time.","type":"unstyled","depth":0,"inlineStyleRanges":[{"offset":0,"length":203,"style":"color-rgb(0,0,0)"},{"offset":0,"length":203,"style":"bgcolor-transparent"},{"offset":0,"length":203,"style":"fontsize-11pt"},{"offset":0,"length":203,"style":"fontfamily-Arial"}],"entityRanges":[],"data":{}},{"key":"29l6f","text":"The only difference is, staking crypto means working with complex blockchain technology. There are no middlemen or banks involved in the process either.","type":"unstyled","depth":0,"inlineStyleRanges":[{"offset":0,"length":152,"style":"color-rgb(0,0,0)"},{"offset":0,"length":152,"style":"bgcolor-transparent"},{"offset":0,"length":152,"style":"fontsize-11pt"},{"offset":0,"length":152,"style":"fontfamily-Arial"}],"entityRanges":[],"data":{}},{"key":"64a82","text":"To truly grasp the meaning of staking, you’ll need to understand how blockchains work first.","type":"unstyled","depth":0,"inlineStyleRanges":[{"offset":0,"length":92,"style":"color-rgb(0,0,0)"},{"offset":0,"length":92,"style":"bgcolor-transparent"},{"offset":0,"length":92,"style":"fontsize-11pt"},{"offset":0,"length":92,"style":"fontfamily-Arial"}],"entityRanges":[],"data":{}},{"key":"2qhe2","text":"What Is Blockchain Technology?","type":"header-three","depth":0,"inlineStyleRanges":[{"offset":0,"length":30,"style":"color-rgb(67,67,67)"},{"offset":0,"length":30,"style":"bgcolor-transparent"},{"offset":0,"length":30,"style":"fontsize-14pt"},{"offset":0,"length":30,"style":"fontfamily-Arial"}],"entityRanges":[],"data":{}},{"key":"7bun2","text":"All cryptocurrencies rely on and function with the help of blockchain technology. No one knows who the mind behind this math-based system is. People just know that they identify themselves as Satoshi Nakamoto.","type":"unstyled","depth":0,"inlineStyleRanges":[{"offset":0,"length":209,"style":"color-rgb(0,0,0)"},{"offset":0,"length":209,"style":"bgcolor-transparent"},{"offset":0,"length":209,"style":"fontsize-11pt"},{"offset":0,"length":209,"style":"fontfamily-Arial"}],"entityRanges":[],"data":{}},{"key":"cqie1","text":"That said, blockchain technology is made of multiple chains with each chain made up of a number of blocks. Every block consists of a limited amount of crypto coins. After a block is fully formed, it fuses with other blocks and together they form a chain.","type":"unstyled","depth":0,"inlineStyleRanges":[{"offset":0,"length":254,"style":"color-rgb(0,0,0)"},{"offset":0,"length":254,"style":"bgcolor-transparent"},{"offset":0,"length":254,"style":"fontsize-11pt"},{"offset":0,"length":254,"style":"fontfamily-Arial"}],"entityRanges":[],"data":{}},{"key":"fe442","text":"A block needs to be accepted first before it can join a blockchain. Validators are those responsible for deciding what blocks of coins go through. With every transaction involving approving altcoins, a small percentage of the money goes back to the validators.","type":"unstyled","depth":0,"inlineStyleRanges":[{"offset":0,"length":260,"style":"color-rgb(0,0,0)"},{"offset":0,"length":260,"style":"bgcolor-transparent"},{"offset":0,"length":260,"style":"fontsize-11pt"},{"offset":0,"length":260,"style":"fontfamily-Arial"}],"entityRanges":[],"data":{}},{"key":"civkn","text":"How Does Staking Crypto Work?","type":"header-three","depth":0,"inlineStyleRanges":[{"offset":0,"length":29,"style":"color-rgb(67,67,67)"},{"offset":0,"length":29,"style":"bgcolor-transparent"},{"offset":0,"length":29,"style":"fontsize-14pt"},{"offset":0,"length":29,"style":"fontfamily-Arial"}],"entityRanges":[],"data":{}},{"key":"803rj","text":"Unlike banks, blockchain networks are decentralized, meaning, all money transactions going through are a matter of public record. ","type":"unstyled","depth":0,"inlineStyleRanges":[{"offset":0,"length":130,"style":"color-rgb(0,0,0)"},{"offset":0,"length":130,"style":"bgcolor-transparent"},{"offset":0,"length":130,"style":"fontsize-11pt"},{"offset":0,"length":130,"style":"fontfamily-Arial"}],"entityRanges":[],"data":{}},{"key":"17kiu","text":"Anyone thinking of investing or is part of a crypto’s blockchain has access to past, present, and future financial transactions. This ensures that the system remains transparent.","type":"unstyled","depth":0,"inlineStyleRanges":[{"offset":0,"length":178,"style":"color-rgb(0,0,0)"},{"offset":0,"length":178,"style":"bgcolor-transparent"},{"offset":0,"length":178,"style":"fontsize-11pt"},{"offset":0,"length":178,"style":"fontfamily-Arial"}],"entityRanges":[],"data":{}},{"key":"clna0","text":"This is also what makes blockchain technology secure and hard to hack. Since every business dealing needs to be validated or verified first through a public ledger, it’s near impossible to get to the main servers.","type":"unstyled","depth":0,"inlineStyleRanges":[{"offset":0,"length":213,"style":"color-rgb(0,0,0)"},{"offset":0,"length":213,"style":"bgcolor-transparent"},{"offset":0,"length":213,"style":"fontsize-11pt"},{"offset":0,"length":213,"style":"fontfamily-Arial"}],"entityRanges":[],"data":{}},{"key":"d2k8c","text":"This brings us back to staking. As cryptocurrencies go from being real dollars to digital altcoins, they go on to become part of a blockchain. For that to happen, they need to be approved first. Once the coins are validated, a small transaction fee is paid to the validator.","type":"unstyled","depth":0,"inlineStyleRanges":[{"offset":0,"length":274,"style":"color-rgb(0,0,0)"},{"offset":0,"length":274,"style":"bgcolor-transparent"},{"offset":0,"length":274,"style":"fontsize-11pt"},{"offset":0,"length":274,"style":"fontfamily-Arial"}],"entityRanges":[],"data":{}},{"key":"74spe","text":"Staking crypto helps boost the aforementioned process. An investor is essentially putting a number of altcoins at ‘stake’ and allowing the network to use them in forging new blocks. In turn, they’ll be getting a small percentage of the resulting fees.","type":"unstyled","depth":0,"inlineStyleRanges":[{"offset":0,"length":251,"style":"color-rgb(0,0,0)"},{"offset":0,"length":251,"style":"bgcolor-transparent"},{"offset":0,"length":251,"style":"fontsize-11pt"},{"offset":0,"length":251,"style":"fontfamily-Arial"}],"entityRanges":[],"data":{}}],"entityMap":{}}

What Happens When You Stake Crypto?

{"blocks":[{"key":"aapik","text":"Investors who stake crypto, end up reaping the same benefits that validators of blocks do. The system is random too, so crypto owners that stake may find themselves being asked to validate a block or two.","type":"unstyled","depth":0,"inlineStyleRanges":[{"offset":0,"length":204,"style":"color-rgb(0,0,0)"},{"offset":0,"length":204,"style":"bgcolor-transparent"},{"offset":0,"length":204,"style":"fontsize-11pt"},{"offset":0,"length":204,"style":"fontfamily-Arial"}],"entityRanges":[],"data":{}},{"key":"ckah8","text":"As a result, the interest they stand to gain on their frozen crypto coins can end up being anywhere from 5 to 17% per year.","type":"unstyled","depth":0,"inlineStyleRanges":[{"offset":0,"length":123,"style":"color-rgb(0,0,0)"},{"offset":0,"length":123,"style":"bgcolor-transparent"},{"offset":0,"length":123,"style":"fontsize-11pt"},{"offset":0,"length":123,"style":"fontfamily-Arial"}],"entityRanges":[],"data":{}},{"key":"4e95j","text":"Keep in mind that staking crypto doesn’t equal losing control of it. All that the process does is put the altcoins to work and wait on them to make money for the owner. They’re still able to ‘unstake’ them whenever they want. ","type":"unstyled","depth":0,"inlineStyleRanges":[{"offset":0,"length":226,"style":"color-rgb(0,0,0)"},{"offset":0,"length":226,"style":"bgcolor-transparent"},{"offset":0,"length":226,"style":"fontsize-11pt"},{"offset":0,"length":226,"style":"fontfamily-Arial"}],"entityRanges":[],"data":{}},{"key":"ajddm","text":"On the other hand, investors aren’t allowed to sell or trade the coins they put at stake. Other validators need to know they can count on staking your holdings in order to create and add new blocks to any chain.","type":"unstyled","depth":0,"inlineStyleRanges":[{"offset":0,"length":211,"style":"color-rgb(0,0,0)"},{"offset":0,"length":211,"style":"bgcolor-transparent"},{"offset":0,"length":211,"style":"fontsize-11pt"},{"offset":0,"length":211,"style":"fontfamily-Arial"}],"entityRanges":[],"data":{}},{"key":"1f5q1","text":"The golden rule to remember when staking crypto is that the higher you go, the more chances you come across to make extra altcoins off of them.","type":"unstyled","depth":0,"inlineStyleRanges":[{"offset":0,"length":143,"style":"color-rgb(0,0,0)"},{"offset":0,"length":143,"style":"bgcolor-transparent"},{"offset":0,"length":143,"style":"fontsize-11pt"},{"offset":0,"length":143,"style":"fontfamily-Arial"}],"entityRanges":[],"data":{}}],"entityMap":{}}

What to Know before Staking Crypto

{"blocks":[{"key":"3cblj","text":"Staking crypto is a simple, straightforward process once you understand how it works. If you’re familiar with mining and trading crypto in the open market, you’ll find that staking is a piece of cake.","type":"unstyled","depth":0,"inlineStyleRanges":[{"offset":0,"length":200,"style":"color-rgb(0,0,0)"},{"offset":0,"length":200,"style":"bgcolor-transparent"},{"offset":0,"length":200,"style":"fontsize-11pt"},{"offset":0,"length":200,"style":"fontfamily-Arial"}],"entityRanges":[],"data":{}},{"key":"34d03","text":"Having said that, there are a few tips one needs to be aware of before staking crypto and they are:","type":"unstyled","depth":0,"inlineStyleRanges":[{"offset":0,"length":99,"style":"color-rgb(0,0,0)"},{"offset":0,"length":99,"style":"bgcolor-transparent"},{"offset":0,"length":99,"style":"fontsize-11pt"},{"offset":0,"length":99,"style":"fontfamily-Arial"}],"entityRanges":[],"data":{}},{"key":"b94q9","text":"Look For Proof of Stake Systems","type":"header-three","depth":0,"inlineStyleRanges":[{"offset":0,"length":31,"style":"color-rgb(67,67,67)"},{"offset":0,"length":31,"style":"bgcolor-transparent"},{"offset":0,"length":31,"style":"fontsize-14pt"},{"offset":0,"length":31,"style":"fontfamily-Arial"}],"entityRanges":[],"data":{}},{"key":"5d0bt","text":"It’s been established that validators approve the transactions that happen when crypto coins go to become part of a block. This process can’t happen without a consensus mechanism in place to facilitate it.","type":"unstyled","depth":0,"inlineStyleRanges":[{"offset":0,"length":205,"style":"color-rgb(0,0,0)"},{"offset":0,"length":205,"style":"bgcolor-transparent"},{"offset":0,"length":205,"style":"fontsize-11pt"},{"offset":0,"length":205,"style":"fontfamily-Arial"}],"entityRanges":[],"data":{}},{"key":"ehqao","text":"Currently, there are two mechanisms used to validate cryptocurrencies. There’s the Proof of Work one (PoW) and the Proof of Stake (PoS).","type":"unstyled","depth":0,"inlineStyleRanges":[{"offset":0,"length":136,"style":"color-rgb(0,0,0)"},{"offset":0,"length":136,"style":"bgcolor-transparent"},{"offset":0,"length":136,"style":"fontsize-11pt"},{"offset":0,"length":136,"style":"fontfamily-Arial"}],"entityRanges":[],"data":{}},{"key":"fbaem","text":"Bitcoin is the only cryptocurrency that’s still using the Proof of Work mechanism. It’s a complicated system that requires solving complex mathematical equations with the help of arbitrary computation.","type":"unstyled","depth":0,"inlineStyleRanges":[{"offset":0,"length":201,"style":"color-rgb(0,0,0)"},{"offset":0,"length":201,"style":"bgcolor-transparent"},{"offset":0,"length":201,"style":"fontsize-11pt"},{"offset":0,"length":201,"style":"fontfamily-Arial"}],"entityRanges":[],"data":{}},{"key":"j7ec","text":"Other cryptocurrencies have opted for Proof of Stake systems because they’re less complicated to solve and don’t need strong computer skills. This makes staking with PoS faster and more efficient. ","type":"unstyled","depth":0,"inlineStyleRanges":[{"offset":0,"length":197,"style":"color-rgb(0,0,0)"},{"offset":0,"length":197,"style":"bgcolor-transparent"},{"offset":0,"length":197,"style":"fontsize-11pt"},{"offset":0,"length":197,"style":"fontfamily-Arial"}],"entityRanges":[],"data":{}},{"key":"aqq0k","text":"Use a Blockchain Wallet","type":"header-three","depth":0,"inlineStyleRanges":[{"offset":0,"length":23,"style":"color-rgb(67,67,67)"},{"offset":0,"length":23,"style":"bgcolor-transparent"},{"offset":0,"length":23,"style":"fontsize-14pt"},{"offset":0,"length":23,"style":"fontfamily-Arial"}],"entityRanges":[],"data":{}},{"key":"ciai2","text":"Staking is a secure enough process due to the public ledger that records every transaction that goes down.","type":"unstyled","depth":0,"inlineStyleRanges":[{"offset":0,"length":106,"style":"color-rgb(0,0,0)"},{"offset":0,"length":106,"style":"bgcolor-transparent"},{"offset":0,"length":106,"style":"fontsize-11pt"},{"offset":0,"length":106,"style":"fontfamily-Arial"}],"entityRanges":[],"data":{}},{"key":"33hse","text":"However, no one should say no to added security. So, why not consider staking crypto through a blockchain wallet?","type":"unstyled","depth":0,"inlineStyleRanges":[{"offset":0,"length":113,"style":"color-rgb(0,0,0)"},{"offset":0,"length":113,"style":"bgcolor-transparent"},{"offset":0,"length":113,"style":"fontsize-11pt"},{"offset":0,"length":113,"style":"fontfamily-Arial"}],"entityRanges":[],"data":{}},{"key":"39j71","text":"Blockchain or crypto wallets are the safest and most secure way to store altcoins. A crypto owner can easily download a wallet for free or purchase a hardware one.","type":"unstyled","depth":0,"inlineStyleRanges":[{"offset":0,"length":163,"style":"color-rgb(0,0,0)"},{"offset":0,"length":163,"style":"bgcolor-transparent"},{"offset":0,"length":163,"style":"fontsize-11pt"},{"offset":0,"length":163,"style":"fontfamily-Arial"}],"entityRanges":[],"data":{}},{"key":"12rn4","text":"Either way, having a wallet makes it easier for investors to store and stake their crypto while keeping track of how much interest they’re gaining.","type":"unstyled","depth":0,"inlineStyleRanges":[{"offset":0,"length":147,"style":"color-rgb(0,0,0)"},{"offset":0,"length":147,"style":"bgcolor-transparent"},{"offset":0,"length":147,"style":"fontsize-11pt"},{"offset":0,"length":147,"style":"fontfamily-Arial"}],"entityRanges":[],"data":{}}],"entityMap":{}}

Conclusion

{"blocks":[{"key":"6smaa","text":"What does it mean to stake crypto? Staking crypto is simply to freeze altcoins into virtual assets. It means that a crypto owner agrees that their coins can be used to support any blockchain network.","type":"unstyled","depth":0,"inlineStyleRanges":[{"offset":0,"length":199,"style":"color-rgb(0,0,0)"},{"offset":0,"length":199,"style":"bgcolor-transparent"},{"offset":0,"length":199,"style":"fontsize-11pt"},{"offset":0,"length":199,"style":"fontfamily-Arial"}],"entityRanges":[],"data":{}},{"key":"17dpt","text":"The benefit of staking crypto is mainly the limitless rewards. These include making passive income. Stakers risk, however, their freedom to do with their ‘staked’ coins whatever they want.","type":"unstyled","depth":0,"inlineStyleRanges":[{"offset":0,"length":188,"style":"color-rgb(0,0,0)"},{"offset":0,"length":188,"style":"bgcolor-transparent"},{"offset":0,"length":188,"style":"fontsize-11pt"},{"offset":0,"length":188,"style":"fontfamily-Arial"}],"entityRanges":[],"data":{}},{"key":"9v3du","text":"Final say? It’s a gamble, but if you understand the math behind it, most investors recommend staking your crypto for higher benefits.","type":"unstyled","depth":0,"inlineStyleRanges":[{"offset":0,"length":133,"style":"color-rgb(0,0,0)"},{"offset":0,"length":133,"style":"bgcolor-transparent"},{"offset":0,"length":133,"style":"fontsize-11pt"},{"offset":0,"length":133,"style":"fontfamily-Arial"}],"entityRanges":[],"data":{}}],"entityMap":{}}