April 5, 2020 / Beginners

What Is Cryptocurrency Staking

 

Staking is a process to make a passive profit from cryptocurrencies using PoS or DPoS algorithms. The main thing is to keep coins in own wallet to get the benefit to partake in crypto mining and make a profit.

There are many cryptocurrencies that take part in staking such as DASH, PIVX, Tezos, Cosmos, Lisk, Waves, VeChain, etc. Ethereum also will be able to get on this list because the project’s team is actively operating on the development of PoS mining.

Each cryptocurrency has its own requirements for staking. In one case, coins are simply credited depending on the number of coins that keep users account, in the other, the user needs to have a certain minimum number of coins. At the same time, the crypto is transferred to the validator, which distributes the benefits depending on the contribution of each participant.

To date, staking is actively offered by crypto exchanges and custodial services. These services use the cryptocurrency for mining, and pay some profit to users.

Staking Risks

Many cryptocurrencies have limits on the number of coins in the address. Therefore, users are forced to pool together with the subsequent profit distribution.

There is a risk of centralization – the concentration of the bulk of the coins in the hands of large players. This is especially true for young cryptocurrencies that have appeared recently and have a tiny price.

The decrease in cryptocurrency circulation – users seek to keep coins in the account for as long as possible to get maximum profit.

The Future Of Staking

This is quite an intriguing issue. We have to consider the plans of Ethereum to move to PoS.

The crypto world is described by certain adventurism, and staking largely falls into this very definition. Will the strong and the most persistent win – time will tell.

 

Discuss

1 Star2 Stars3 Stars4 Stars5 Stars (No Ratings Yet)
Loading...

/ Похожие записи