Cryptocurrency staking was a mysterious way to invest in the past, but all that is changing today. This has quickly become a popular route for cryptocurrency investors to make an extra source of passive income while contributing to the security of the blockchain network.
If you’re not familiar with staking, we’ve got you covered. In this blog, let’s take a closer look at what cryptocurrency staking is and why you should consider giving it a try in 2023!
What is meant by staking cryptocurrency in blockchain?
Cryptocurrency staking is the process of holding a substantial number of cryptocurrencies in the digital wallet to be pledged to support the network’s operations. In return, stakers are rewarded with additional cryptocurrency as an incentive. This also helps to validate transactions and maintain the security of the blockchain network. Staking crypto involves choosing a validator, like Kiln.fi, who is responsible for adding transactions to the blockchain. Usually, staking requires a big amount of crypto holdings, but if you cannot individually invest in so much, you can try a staking pool where multiple investors are clubbed by a validator to get the job done.
Is staking a good choice for you?
There are several reasons why an investor could consider staking their cryptocurrency. Firstly, it is a good approach to earn passive income if you’re not in need of immediate liquidity. With staking, you don’t need to actively trade or monitor the markets; simply holding your coins in a staking wallet or with a trusted validator can earn you rewards. Secondly, if you’re a fan of a particular cryptocurrency, you can contribute to the security of the blockchain network by staking your existing coins. The more cryptocurrency that is staked, the more secure the network becomes. By staking your coins, you are actively contributing to the network’s operations and overall security.
Which cryptocurrencies can you stake?
Not all cryptocurrencies can be staked, but many of the most popular ones are available. Ethereum, Cardano, and Polkadot are just a few examples of cryptocurrencies that can be staked by investors. Each cryptocurrency has its own staking requirements, such as a minimum stake amount and staking period. It’s vital to do your homework and pick a cryptocurrency that aligns with your staking goals.
How do you stake cryptocurrency?
To stake cryptocurrency, you need to hold a certain amount of the coin in a staking wallet or on an exchange that supports staking. You then need to choose a validator, which can be done either through the wallet or exchange itself or through a separate staking service. Once you’ve chosen your validator, you can then start earning rewards.
What are the risks of staking?
Before staking, make sure to understand all the risks attached to the market’s volatility. Also, it is essential to do your research and choose a reputable validator with a sustainable track record…
Cryptocurrency staking is a good investing plan if you admire a particular brand of decentralized currency. However, it is always advised to independently research your options and make sure that you would not need these coins for immediate liquidity in the near future. As these are long-term investments, you’ll need to have patience and wait for the results