Beginners Guide

What is Cryptocurrency Staking? Explained in Layman’s Terms

Written by: Qadir AK

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Qadir AK

Qadir Ak is the founder of Coinpedia. He has over a decade of experience writing about technology and has been covering the blockchain and cryptocurrency space since 2010. He has also interviewed a few prominent experts within the cryptocurrency space.

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Oct 3, 2020

Staking means holding cryptocurrency or tokens to support a network operation and getting a reward for it. Naturally, this process is typical for blockchains using the PoS protocol or any of its versions.

Staking brings in the concepts of familiarity, engagement, and reward into the ecosystem.

In this article, we will provide you with the complete guide on Staking and glance at its working, benefits, and much more. Let us look into this review in detail now.

What is Staking?

Staking generally refers to the holding of your cryptocurrency funds in a wallet and hence supporting the functionality of a blockchain system. The cryptos are being locked in their wallets by the stakeholders. They are then rewarded by the network in return. Staking provides a way of making an income.

Staking is a process similar to having a savings account with your bank and earning interest on the deposits. Staking is a great addition to the cryptocurrency space which offers notable applications. Staking also brings the aspects of familiarity, engagement, and reward into the ecosystem. This makes the investment all the more worthwhile.

What is Proof of Stake (PoS)?

Proof of stake is a protocol that allows the participants to stake the coins. It then randomly grants one of them the right to validate the next block at unique intervals. The chances of getting chosen are dependent on the number of coins. There are higher chances if you have a higher amount of the coins locked up.

Sunny King and Scott Nadal initially implemented proof of stake in their Peercoin 2012 paper. They were the first to describe and implement this idea for the crypto project Peercoin (PPC). Originally, its blockchain was using a hybrid of PoW and PoS.

The development of the blocks ...

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