Staking cryptocurrency is a great way to generate a passive income. It’s relatively easy to do; all you have to do is to stake crypto and earn rewards. By staking, you hold your tokens/coins on an exchange or in a wallet for a certain period and receive additional tokens as compensation.
Holding your token long enough will automatically earn you the staked coin rewards. Staking, however, is only available to cryptocurrencies that use the proof-of-stake (PoS) model to validate transactions. These cryptocurrencies (such as HI) allow you to receive rewards for staking your assets.
Staking cryptocurrency can be a bit of a challenge for beginners, so we’ve prepared this guide to help you learn how to stake cryptocurrency.
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What Does it Mean to Stake Cryptocurrency?
Cryptocurrency staking involves pledging speciﬁc cryptocurrency to verify transactions on the blockchain. In exchange, users receive a particular amount of cryptocurrency tokens. So, you commit your crypto to the blockchain to be rewarded for validating transactions. Instead of just receiving tokens from transaction fees, users also receive tokens from the network itself.
Crypto staking is typically done through a node – a computer connected to the network that helps process and verify transactions. Staking helps keep the network running smoothly and prevents fraud and errors. In return for providing this service, nodes earn rewards for each transaction they help verify and add to the blockchain.
Pros and Cons of Staking Crypto
This model allows you to earn passive income by staking your coins in a crypto wallet. Once your coins are staked, they will “mine” the next block and earn new coins as rewards. This method of verifying transactions in the blockchain is known as Proof of Stake (PoS). The more coins you stake, the higher your chance of mining a new block and receiving the rewards. Although the reward often comes in the same coin/token you used to stake, some projects allow you to stake one coin and get the other as a reward.
Crypto staking is an excellent way to start generating passive income from your cryptocurrency. Depending on the crypto, you can earn anywhere between 5 to 20 percent per annum on the amount of cryptos you stake. But it’s not a get-rich-quick scheme; you need to stick with it and be patient to reap the rewards. Do it right you can maximize your proﬁts with minimal eﬀort.
Another beneﬁt of staking is it helps to maintain the security and eﬃciency of the blockchain whose coin you’ve staked. When you lock up your coins for a speciﬁc period, you help encourage others to invest, thus further increasing or stabilizing the coin’s price.
- Staking enables you to earn interest on your crypto holdings
- It’s pretty easy to stake cryptocurrency since you don’t need any equipment to get started.
- When you stake cryptocurrency, you help maintain the security and eﬃciency of that coin’s blockchain network.
- Since staking doesn’t require solving complex computational problems, less energy is consumed verifying transactions.
It is advisable to only invest in crypto staking once you have a good grasp of blockchain technology and cryptocurrencies. For example, there is the risk of bugs aﬀecting crypto wallets and possibly your coins not maturing within their allotted period.
Moreover, it is best to research the market before deciding which coins to stake to maximize your returns. It is worth noting that ﬂuctuations and signiﬁcant movements in the market can cause unexpected losses. If your crypto coins are on an exchange, you are also at risk of an exchange hack or exit scam (i.e. the exchange shutting down with all your money).
When staking, you are required to lock up your coins for a speciﬁc time. You may get penalized for withdrawing or selling your crypto before the staking period expires. Also, the unstaking period may take longer than expected, and your assets become inaccessible throughout the staking period.
In summary, the risks of staking include:
- There’s always the risk of losing any interest you earn on your crypto holdings due to the high volatility of cryptocurrencies.
- During the staking period, you have to lock up your coins which means you can’t do anything with your staked assets until the time elapses.
- The unstaking period may take longer than expected, locking you from withdrawing your funds or selling the assets.
How to Stake Cryptocurrency?
Many crypto platforms usually pay at set intervals over time. For example, hi pays out every Friday at an amount equal to 11% of your coins. Of course, each currency has its staking method and rewards schedule, so make sure you do your due diligence.
HI is one of the leading cryptocurrencies you can stake to earn passive income in terms of daily rewards. As a non-proﬁt digital banking system, hi is the world’s ﬁrst cross-platform ﬁnancial service system based on chat tools – no need to install a separate application. You can stake and earn HI directly with the chatbot. To stake hi Dollar, simply head over to Telegram or WhatsApp to register. Alternatively, you can register on the Web App to purchase hi Dollars directly from the website.
The following steps explain how to stake hi Dollars.
- Buy cryptocurrency that supports staking (now you can stake hi Dollars and earn up to 11% yield).
- Transfer your crypto (e.g., USDT) to your hi staking wallet.
- Conﬁrm that the funds have arrived in your wallet.
- Enable staking on the wallet. Sit back and wait to collect your rewards every Friday.