In addition to benefiting from price increases, there is another way to earn a return on your purchased crypto: crypto staking. You can best compare this with keeping savings in a bank account. Because the bank can use your money to meet other obligations, you receive interest as a reward. With crypto staking you store your crypto in a wallet. This supports the operation and security of the blockchain. As a reward for this, you will receive compensation in the relevant crypto that you stake. Create an account immediately with one of the providers, or read on for more information.
To gain a better understanding of crypto staking, we need to look at how a blockchain works. A blockchain can run on the proof-of-work, proof-of-stake, proof-of-authority or proof-of-space principle. The best-known proof-of-work blockchains are those of Bitcoin and Ethereum. Transactions on the blockchain are validated by miners who present themselves on the blockchain. The miner who can first solve the complex calculation puzzle is chosen to validate the transaction and add the newly generated block to the blockchain. A disadvantage of this method is computing power, and therefore power consumption, which is required to validate transactions.
With a proof-of-stake blockchain, the miners are selected based on the crypto stored in the associated wallet. This takes into account the amount of crypto in the wallet. And how long these have been stored in the wallet. In addition, probability calculation is often used to assign a transaction to a miner. An important difference with proof-of-work blockchains is that newly generated blocks are not allocated to the miners on the basis of computing power, but on the basis of ownership of the crypto itself. This requires significantly less power consumption.
Ultimately, with crypto staking, the miners receive a reward by making their crypto available in a wallet. This reward is released in the form of an amount of crypto of the type of crypto made available.
Rewards vary per blockchain. There are blockchains that pay out a fixed staking percentage. But there are also blockchains that make the staking rewards depend on the amount of cryptocurrencies you have in your wallet. And how long you have had it in your wallet. But variables such as inflation and the amount of tokens already issued on the network can also play a role.
At Binance you can currently get good staking rewards. We have listed the best rewards.
Do you want to start investing in crypto immediately? Then create an account with Binance now.
