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Crypto Staking in 2021: What is cryptocurrency staking, and is it applicable in 2021?

Crypto staking is money you don’t want to miss out on. But the term cryptocurrency staking is a little more complicated than that. And yes, it’s still applicable in 2021. Crypto staking can be considered as the engine that drives most of the cryptocurrencies we have around today.

So, what is cryptocurrency staking? Well, stick around and find out more about this money-making technique that any crypto enthusiast can capitalize on and make a profit. This article is designed for complete beginners in the crypto world or any professional who hasn’t tried the staking protocol to gain profits from the market.

Brew a coffee, put on your favorite Bitcoin T-Shirt, and with that in mind, buckle up and let’s get started.

What is Crypto Staking in 2021?

In simple terms, staking is the process of ‘locking up’ your cryptocurrencies to secure blockchain technology. This protocol is relatively straight forward. And as a bonus for your service, you will share a new block reward in the form of newly minted coins.

More importantly, I’m positive you’ve already heard of the Proof of Stake protocol. That said, staking is at the heart of the proof of stake consensus protocol. The PoS requires the participants to stake their assets in the native network to achieve the distributed consensus.

Additionally, the block rewards are calculated randomly, but the amount of staking assets will significantly impact the rewards you will get.

Unlike the Proof of Work consensus used in Bitcoin’s blockchain, PoS doesn’t require that much energy to solving the puzzle. PoS is also environmentally friendly as compared to the PoW in bitcoin.

How Crypto Staking Works?

Cryptocurrency staking is sometimes referred to as the upgrade of PoW. With the PoW, miners have a complex equation to solve using expensive equipment that consumes high electric power. That’s how the miners validate a new block in the blockchain.

On the other hand, staking is relatively simple. Users will typically buy cryptos and lock them in an account to receive rewards for it. Once the digital assets are locked, the users can participate in transaction approvals.

And when the transaction is validated, the network will randomly select a participation price using the user’s wealth as a factor. Therefore, the more you stake, the higher your chances of winning the rewards.

Crypto Staking in 2021: Types of Cryptocurrency Staking

Currently, we only have two primary crypto staking protocols, which include:

  • Central Staking: in this type of staking, you will have to deposit your digital assets to the services provider, for instance, a crypto exchange. As such, the crypto exchange will have complete control over your funds, and the rewards will be deposited in your account. The downside to this is that you risk losing all your digital assets in case of a theft issue.
  • Decentralized staking: with the dStaking, there’s no need for a third-party exchange to conduct your staking protocols. That essentially means you have complete control of your private keys. Additionally, you retain full ownership of the assets and the rewards. That protects you against frauds and hacking attacks.

Where Can I Stake My Coins?

1.     Cryptocurrency Exchange Platforms

Today, more exchanges are offering their users staking solutions. When you keep your coins in the exchange wallet, you automatically receive rewards. That means staking is giving the traders more opportunities to monetize their idle funds.

That said, some of the leading exchanges where you can stake your coins include;

Binance

Currently, Binance stands as the most significant digital exchange by trading volume. That means Binance is mostly the top choice for investors when they want to stake their coins. This service has been available on Binance since December 2020. What’s more, Binance supports DeFi staking supporting cryptos such as BNB, BTC, BUSD, DAI and USDT.

Coinbase

Coinbase is the other major cryptocurrency exchange that supports the staking of a wide range of coins. The best part is that Coinbase supports the ETH 2.0 staking and other coins such as XTZ and ALGO.

The Private Wallets

The private wallets allow for cold staking of cryptocurrencies. However, the staker needs to keep their coins in one address to avoid losing their staking rewards as moving them breaks them from their lock-up period.

The best part about using hardware wallets is maintaining the coins’ complete control even during staking. Some of the leading cold staking crypto wallets include;

  • Trezor
  • Ledger
  • CoolWallet S
  • TrustWallet

2.     Staking-as-a-service Platforms

In cryptocurrency staking, the exchanges and wallets will double up as storage and trading avenues. However, things are different when it comes to the staking-as-a-service platforms as they are specifically dedicated to staking.

All in all, these platforms will take a percentage of your staking rewards to cover the fees. We can refer to staking on such a platform as soft staking. Some of the common staking-as-a-service platforms include;

MyContainer

Users on MyCointainer will choose between the Basic, Power Plus and Power Max staking options for their digital assets. These three levels determine the staking charges as well. The platform also supports the staking of more than 50 cryptocurrencies.

Stake Capital

Stake Capital supports the staking of the following digital assets; ATOM, LOOM, KAVA, XTZ, LPT and AION.

In Summary; Why are Investors Choosing Staking?

More investors are choosing to stake over mining, and I bet that’s with good reason. That’s because staking helps them generate more passive income just by holding specific cryptos without trading. What’s more, unlike mining, staking has a low energy cost as you don’t need expensive equipment.

On that note, staking is also energy efficient and better for the environment than cryptocurrency mining. When you sum up all this with the fact that crypto staking platforms are simple and easy to use, they are definitely attracting more investors.