Staking Cryptocurrencies: What Is It and How Does It Work?

    Crypto staking is the process of securing cryptocurrency holdings to earn rewards or interest. Cryptocurrencies rely on blockchain technology, which verifies and records cryptographic transactions. Meanwhile, staking is another term for the process of confirming blockchain transactions.

    Depending on the currency and accompanying technology, these validation procedures are known as “proof-of-stake” or “proof-of-work.” Each of these processes leads to the accomplishment of consensus or the assurance that all transaction data is correct. However, unanimity necessitates involvement. 

    Staking is the technique through which investors actively retain or secure their cryptocurrency holdings in their digital wallets. Stakers are effectively in charge of approving and validating blockchain transactions. Eventually, those who do so are rewarded by the networks, respectively.

    Consider cryptocurrency staking to be analogous to saving money in a savings account. While the depositor’s funds are in the bank, the bank earns interest on them and subsequently uses them for other reasons (lending, etc.). 

    Staking coins is analogous to earning interest, and here’s what you need to know about the process:

    Staking Cryptocurrencies: The Good and the Bad

    Coin staking is a low-risk passive investment strategy, but you have to be smart about choosing the coins to gamble with. It’s a good idea to consider the block rewards associated with your staking currencies, as well as the volatility of cryptocurrency in general—if the coin’s value falls, so does your staking interest.

    How to Stake Cryptocurrencies

    To begin staking cryptocurrency, an investor must first decide on the location and type of asset to stake. Begin with these four simple steps:

    1. Place a cryptocurrency or fiat currency as a bet.
    2. Select and download a staking currency digital wallet. This may necessitate a visit to the cryptocurrency’s main website and download the cryptocurrency’s wallet.
    3. Purchase the needed number of coins. Specific networks require a certain minimum amount of coins to be staked (for example, Ethereum holders must have 32).
    4. Ensure that your computer has enough processing power and a stable internet connection.

    After confirming that all vital components are in place, the detailed process may begin. From here, most people will simply need to check in on their crypto holdings regularly to ensure everything is in working order.

    Coins Frequently Used for Staking

    A large number of coins can be staked in exchange for prizes. The following are some cryptos and coins that can be staked to earn money:

    • Ethereum

    Although it is not a cryptocurrency, Ethereum has become one of the most popular. Ethereum staking requires a minimum of 32 ETH. The annual return on Ethereum staking is projected to be between 5 per cent and 17 per cent.

    • EOS

    EOS coins are built on the EOS blockchain and can be staked similarly to other cryptocurrencies. As of late April 2021, the expected return on EOS staking is 3.2 per cent.


    Staking is a method of gaining additional benefits from your bitcoin holdings. Consider it similar to earning interest on cash saves or dividends on stock investments. In essence, coin holders allow their cryptocurrency for blockchain validation and are reimbursed by the network. Staking also gives cryptocurrency investors an additional cash flow, which is primarily why many people engage with this digital currency.

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