- What is staking?
- How do I start staking?
- What types of staking are there?
- What can I stake?
- Where can I stake?
- How much does staking cost?
- Pros and cons
- The bottom line
What is staking?
How do I start staking?
What types of staking are there?
Proof of stake (PoS)
Delegated proof of stake
What can I stake?
Ethereum (ETH 2.0)
Where can I stake?
How much does staking cost?
Pros and cons
- More environmentally friendly than its counterpart. As mentioned earlier, comparing Proof of Work to Proof of Stake shows that mining does not need to occur to validate transactions. This means there does not need to be tons of ASICs and rigs that take up significant loads of electricity to have a functioning network.
- Potential for high earnings. There are tons of places to start staking coins and the annual percentage yields on many cryptocurrencies can be extremely high. Especially on new and upcoming coins, the ability to not only just buy them to invest in them, but also earn more of that coin through staking is just a double bonus that can generate high earnings.
- Extremely easy To start. The great thing about staking is that overall it is very simple to get started. For most platforms, all you have to do to start staking is just buying the coin and then putting it in the wallet to be staked (for some platforms you can even just buy the coin and you don’t even need to do anything else!). Staking allows for straight-up passive income on many platforms without the need to do any work at all.
- Potential to lose money. Staking can have very high rewards, but the problem is that there is a risk you incur whenever you buy a coin to stake. If the coin you bought to stake were to go down in value, there is a chance that the staking rewards you received do not outweigh the potential loss from the asset you purchased while you were staking.
- APY’s are constantly changing. There are some very high APY’s and APR’s that are promoted when staking, but what is not told to you is that the rate of those yields changes very frequently and for most, it is even daily. One coin that has an APY of 130% one day could have a 10% APY the next. It is usually the more volatile coins that can swing like this, and when you factor in the APY swings with the price swings, it can be a disaster on returns.
- Risk of centralization. The biggest attraction of cryptocurrency is that it is decentralized, but a concept such as delegated proof of stake leads to centralization because there are just a few validators that would be running a whole network.
The bottom line
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