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Cryptocurrency Proof of Stake – What the actual f@*k is it?

Quite a few of the sites I am a member of mention something called staking which you can do with various crypto and tokens. I currently do it on CryptoJams and Es Faucet but I have no clue what it actually is so imma find out, coming? ……

Ok so I’m back and this is what I found out ……

Staking is one of the easiest ways to make money with cryptocurrency. Proof of stake coins can earn you interest over a set period of time. What you do is buy your coin of choice – not Bitcoin as it is a proof of work coin which is a completely different animal see below* – and hold it in your wallet for the specified length of time during which you will earn interest on it.

The amount of interest you receive varies dependent on how long the currency is held for so if you are able to hold it for a longer period of time you will earn higher returns.

The main advantage of staking cryptocurrency is you don’t have to buy your own mining hardware which can get very expensive both to buy and run. With staking you just buy coins, hold them in your wallet and let them earn you money. It is a fairly predictable way to earn money similar to putting it into a fixed bank account.

The downside to staking is that your coins are locked up for the duration of your stake. Which means you can’t sell them during that time. That’s ok while the coin grows in value but it can mean that if the coin’s value drops you could lose big and what you earn might not cover what you lose. 

 

 


So which coins are worth a punt?

I think it’s a personal choice and my current picks are Jams at CryptoJams, Es coin at Es Faucet and I’m going to try Dash at Dash Masternode and NEO at Binance.  I am currently an Es Coin Millionaire, I will be a Scotcoin1000000aire soon too – I love the idea of being a millionaire of any coin and I don’t think I’d get the chance anywhere else except in the cryptoverse.  It feels like winning and who knows what’s going to happen – for me, cryptocurrency is the future of money and I hope I’ll be in the front seat for that, staking is just one of the ways of getting there quicker whilst playing the long game.

 

There are many staking coins to choose from including Dash (one of the more well known cryptocurrencies) which you can stake by running the Dash Masternode but you must own at least 1000 Dash coins to be able to do this.  There are companies that will stake smaller amounts of Dash for you but make sure to do your research first.

 

NEO is a smart contracts open source coin (sorry I don’t really know what that means, if I find out I’ll update) driven by the community. If you hold NEO in your wallet you get a separate token called GAS in return. It’s recommended for staking because it’s easy to get started and you don’t need separate computers to run it. The ROI (return on investment) is 2.5% annually and it is available at Binance, eToro, Kucoin, OKex and Bit-Z. 

 

 

 

Proof of Work vs Proof of Stake

I’m going to attempt to explain the difference between proof of work and proof of stake with the help of the following picture that I got off the interweb:-

Hopefully it’s quite self explanatory but just in case this is what a handsome young man called Ameer Rosic over at blockgeeks has to say about it:-

*Proof of work is a requirement to define an expensive computer calculation, also called mining, that needs to be performed in order to create a new group of trustless transactions (the so-called block) on a distributed ledger called blockchain. Miners are rewarded with crypto.

In proof of stake, instead of miners, there are validators. The validators lock up some of their crypto as a stake in the ecosystem.  When a block gets added, the validators get a block reward in proportion to the amount and age of their stake ie the bigger your stake and the longer it’s been locked up for, the higher your reward.

 

PurpleLioness

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