Everyone has heard about profiting from cryptocurrency trading and mining. Staking is yet another way of profiting from cryptos. Let us have a look at what exactly staking is and how can you benefit from it.
What is staking?
Simply put, mining is getting rewarded for solving complex mathematical problems (Proof of Work consensus mechanism), whereas, staking is getting rewarded for locking coins in a dedicated wallet with a function of staking them on the network, for a required period of time (Proof of Stake consensus mechanism).
In staking, the locked coins serve as a guarantee for fraudulent transactions not being approved under the risk of losing the coins. For transaction confirmation, there is a reward, just like in mining.
The main difference between mining and staking is using locked coins to create blocks and support the system.
Staking is a great way to get passive income: there is no need for large investment into machinery or electric power.
What are the benefits of staking?
- Easy and low-cost: no need for costly machinery or heavy electricity bills. The Proof of Stake participation requires only your normal laptop.
- Passive profit: by holding a sufficient quantity of coins in their wallet, users are able to perform transaction confirmations and get rewarded for that.
- Environmentally friendly: the absence of large electricity consumption means less pollution
- Safe: Proof of Stake helps to eliminate the 51% attacks, as they are only possible in scenarios where more than 50% of the total number of coins is owned by one person.
Did you know that you can profit from staking with Emirex? Read our next article on this topic to find out how!
Digital Commodities Asset Exchange in the Middle East, focusing on tokenised commodities. Licensed and Regulated. Tokenisation advisory.