What Is Staking?

What Is Staking?

We can hear more and more investors asking the question, “What is crypto staking?” This new trend has emerged recently and is taking over the cryptocurrency world. Cryptocurrency staking is often seen as a response to the ever-increasing energy demand of crypto mining. In essence, staking crypto is the process of buying and saving cryptocurrencies, which turns you from an investor into one of the active verifying nodes of the network. The buyer simply needs to hold these tokens to join the network security infrastructure and receive the corresponding reward.

How Cryptocurrency Staking Works

To start staking a cryptocurrency, you must first buy its tokens on the network. After that, you need to put them on hold — each network has its own procedure for this. Most often, cryptocurrency staking is a fairly simple and streamlined process, so you will not have any problems with it — just follow the instructions of the Emirex platform.

How Is Staking Different From Mining?

Benefits and risks of staking in Cryptocurrencies The Nation Newspaper

Traditional mining is a network maintenance process based on the use of the Proof of Work (PoW) algorithm. Participants in this process are called miners. They generate blocks that are needed to store information about accounts and transactions. To get a new block, the user needs to perform certain calculations and find a secret combination of characters.

Now, ordinary computers can no longer maintain the required level of computing power to receive blocks of the bitcoin network. Users have to invest in the purchase of expensive equipment designed specifically for mining. One example of a suitable technique is application-specific integrated circuits (ASICs).

Blockchains based on the Proof of Stake (PoS) algorithm relieve network participants from such difficulties. All you need to earn passive income is to keep coins in your wallet and not use them. The number of assets on the account can be accumulated, thereby increasing the chances of mining a block. Such a process does not require the connection of powerful equipment, which makes the entry threshold for staking much lower than for mining. Plus, some coins are inexpensive, and people with little capital can earn on their storage.