5 reasons why you should begin staking

As an investor, you must have heard of several crypto investment strategies like hodling, swing trading, or futures trading, how about crypto staking? In a nutshell, staking gives you the chance to earn crypto rewards while you sleep, isn’t it great? Check out 5 reasons to start staking crypto with Tokenize Xchange right away!

What is staking?

Before jumping into 5 reasons why you should begin staking crypto, let us remind you of PoS – Proof of Stake consensus algorithm.

The Proof of Stake (PoS) is a consensus mechanism that states that a new block transaction can be validated according to how many coins the miner is staking. It means that the mining power is no longer based on mining computer rigs, but on the number of coins held by miners. PoS participants (nodes) will receive rewards (including block rewards and transaction fees) to incentive their contributions.

Thus, staking is locking up a certain number of digital coins in the wallet of a Blockchain project for a specific period of time to earn rewards. The amount of rewards depends on your initial investment including the number of coins staked and staking duration. This is similar to how you save your money in a bank account to earn interest at due. Easy peasy!

Types of staking

Staking is divided into 2 types as follows:

Validation

As mentioned, in the Proof of Stake mechanism, validators (or nodes) would stake a certain amount of cryptocurrencies and earn rewards in exchange for transaction verification. In case an issue occurs (confirming a fraudulent transaction), a penalty will be charged. This form of staking has been implemented for various crypto projects such as IOST, WAX, TRX, TomoChain. 

However, staking validation is mostly appropriate for companies and technical enthusiasm instead of individual investors since it has some requirements as below: 

• A secured and effective framework 
• A team of skillful technicians to run and upgrade the framework in the protocol. 
• Staking a minimum amount of tokens (e.g: 32 ETH in Ethereum 2.0)

Delegation

Different from validation, delegated proof of stake is available for most individual traders and investors. By depositing their crypto assets into the wallet of exchanges or project development teams, investors would receive periodic and constant crypto staking rewards. 

Reasons why you should begin staking crypto

You already understand what staking crypto means and how to stake. But what makes crypto staking become a favor among several choices like day trading, swing trading, holding, short, and long? Below are 5 reasons why you should start staking crypto from now on. 

Earn your reward frequently

By staking your assets, investors can guarantee their cryptocurrencies to a crypto protocol to earn rewards in exchange. Crypto staking allows investors to contribute to the network security by locking up their tokens, hence, users are rewarded for protecting the network in the form of native tokens. 

The more cryptos you stake, the higher the rewards you receive. Since your crypto rewards would be automatically distributed on-chain, you will get an amount of passive income while you sleep

A safe choice for risk-averse 

For investors who have zero experience and knowledge in cryptocurrency trading, staking is a safe option to help you avoid investment risks. Once you stake, you would receive a persistent guaranteed reward and be able to get back the initial amount of staked cryptos in due time. After the due date, investors can continue staking their crypto or trade them.  

In other words, staking gives investors the chance to earn a safe and predictable passive income.

Suitable for long-run 

While swing trading can be highly profitable but extremely risky, crypto staking aims for the long run since it promises a long-term and stable gain for investors. No matter how volatile the market is, a good coin would rise in value over the time horizon as long as you have chosen the good ones.

An alternative for PoW

The PoS consensus mechanism eliminates dependence on computing rigs. PoS is a more environmentally friendly and energy-efficient Proof of work – which is still used in the Bitcoin network. 

Said Ryan, the researcher at the Ethereum Foundation:

Instead of buying a bunch of hardware and burning a bunch of energy, I can instead take that asset and lock it in kind of like a security bond.”

Crypto staking would ask individuals to contribute more value into the network by buying tokens with higher liquidity, making them truly vested co-owners. 

Eliminate 51% attack

51% attack refers to a mining entity or a group of attackers gaining control of 51% or more of the hash rate and computing power. Attackers can solve the problems faster than other miners, reverse old transactions, double-spend the coins, and manipulate the awaiting confirmation.

There’s no certain possibility that Bitcoin Blockchain can be manipulated by a group of attackers, however, some smaller PoW blockchains remain vulnerable to 51% attacks. In fact, the 51% attacks on Ethereum Classic in August 2020 raised doubts about the Proof-of-work blockchain’s security protection. By crypto staking, investors can diminish the threat of 51% attacks for small networks. 

How to stake cryptocurrency in Tokenize Xchange

By subscribing to our Crypto Earn program, you can begin staking 30+ cryptocurrencies and earn handsome crypto staking rewards up to 12%! Below are some simple rules to help you with our programs. 

1. Deposit your cryptocurrency to our crypto earn wallet. Please be noted that the minimum amount you need to deposit is 0.01 BTC or 1 ETH.
2. You are able to take out the deposit you have input on the 2nd day of every month, provided that the crypto has been locked up for a minimum timeframe of 30 days. If the lock-up time doesn’t last for 30 days, you will need to withdraw on the 2nd day of the following month.
3. Enjoy your interest of up to 12%.

Click HERE to participate in Crypto Earn program and get rewards!

Keep following our Tokenize Blog to get more information on staking crypto and investment guides! See you next week at Tokenize Technology!