Crypto Staking: A Basic Guide For Beginners

Crypto staking is one way to earn passive income from crypto assets. Crypto staking means you lock a certain amount of your crypto assets in a digital wallet to support blockchain network operations that use the Proof of Stake (PoS) mechanism.

By staking, you contribute to maintaining network security and consensus, while getting rewards in the form of the same or different crypto assets.

What is Proof of Stake (PoS)?

Proof of Stake (PoS) is one of the consensus mechanisms used by some blockchains to reach agreement among network participants. This mechanism is different from Proof of Work (PoW).

PoS focuses on the number of coins or stakes a person has as a requirement to become a validator. A validator is a person whose job is to create or validate new blocks on the blockchain.

The main advantage of PoS is its energy efficiency. Without the need to compete to solve power-intensive mathematical puzzles as in PoW, PoS significantly reduces energy consumption.

In addition, PoS is also considered more secure and democratic, because it does not allow for 51% attacks that can occur if someone controls more than half of the network's computing power.

What Blockchains Use PoS?

Some blockchains that use the PoS mechanism include:

Ethereum 2.0 

Ethereum is one of the largest and most popular blockchains in the world, supporting a variety of decentralized applications (dApps) and smart contracts. Currently, Ethereum still uses PoW, but is in the process of transitioning to PoS via Ethereum 2.0.

Ethereum 2.0 aims to improve the scalability, security, and energy efficiency of the Ethereum network. To stake on Ethereum 2.0, you need at least 32 ETH and run your own validator node or join a staking pool service.

Staking rewards on Ethereum 2.0 vary depending on the total amount of ETH staked on the network, but are estimated to be around 5-10% per year.

Cardano 

Cardano is a third generation blockchain designed to be a more scalable, interoperable and sustainable platform than previous generations. Cardano uses a PoS mechanism called Ouroboros, which is claimed to be one of the first PoS consensus protocols proven to be mathematically secure.

To stake on Cardano, you can use the official Cardano wallet, namely Daedalus or Yoroi, and choose one of the thousands of available stake pools. Staking rewards on Cardano range between 4-6% per year.

Solana 

Solana is a high-performance blockchain capable of processing over 50,000 transactions per second with low fees. Solana uses a PoS mechanism combined with an innovation called Proof of History (PoH), which allows the network to record time sequences accurately and efficiently.

To stake on Solana, you can use a Solana wallet such as Phantom, Solflare, or Sollet, and choose a validator that you trust. Staking rewards on Solana vary depending on validator performance, but average around 7.5% per year.

How to Stake crypto?

To stake crypto, you need to fulfill several requirements, including:

• Own a crypto asset that supports staking, such as ETH, ADA, or SOL.
• Store these crypto assets in a secure digital wallet that supports staking, such as Metamask, Daedalus, or Phantom.
• Choose a validator or stake pool that is trusted and offers rewards commensurate with risk.
• Following different staking procedures for each blockchain, such as sending crypto assets to a specific address, delegating crypto assets to validators, or agreeing to staking terms and conditions.
• Wait for a certain period of time to earn staking rewards, which can range from a few minutes to several months, depending on the blockchain and stake pool chosen.

What are the Benefits and Risks of Staking crypto?

Advantage

Crypto staking has several advantages, such as:

• Earn regular passive income without the need for trading or speculation.
• Contribute to maintaining the security and consensus of the blockchain network you support.
• Increase the value of your crypto asset if the price rises or stabilizes.
• Gain access to additional features or services offered by some blockchains or stake pools, such as voting, governance, or airdrops.

Risk

However, crypto staking also carries some risks, such as:

• Lose some or all of your crypto assets if a technical error, fraud, or hack occurs in the wallet, validator, or stake pool you use.
• Cannot access or use your crypto assets during the staking period, which can limit your flexibility and liquidity.
• Earn lower than expected staking rewards if there are changes to network parameters, such as inflation rate, participation rate, or commission rate.
• Experience a loss if the price of the crypto asset you stake falls significantly or is lower than the staking reward you get.

How to Stake Crypto on Bittime

You can stake crypto assets in an easy and safe way via Bittime . Bittime is one of the best crypto applications in Indonesia which is officially registered with Bappbeti. 

There are several assets that can be staked on Bittime, with varying APY interest and a choice of short asset lockup periods ranging from 7 days to 30 days.

With Bittime, crypto staking isn't just about holding assets; it's about opening the door to growing your portfolio in a safe and efficient way.

Click to start your staking today and experience the difference with Bittime!

Also read: 

What is Liquid Staking?

What is Staking?

How to stake?

USDT staking vs. Staking Other Cryptos: Which is More Profitable?

DISCLAIMER : This article is informational in nature and is not an offer or invitation to sell or buy any crypto assets. Trading crypto assets is a high-risk activity. Crypto asset prices are volatile, where prices can change significantly from time to time and Bittime is not responsible for changes in fluctuations in crypto asset exchange rates.