What Is Cryptocurrency Staking? A Guide To Making Passive Earnings

FinanceFeeds Editorial Team

There’s definitely been occasions where you’ve thought of ways where you can make more money, fast, and without even having to leave your house. It’s sort of the ultimate dream, isn’t it?

While not necessarily a realistic one, it doesn’t mean that it’s not possible. Investing in crypto staking can be a viable option to ensure a long-term commitment to earning more crypto and rewards.

Let’s focus on the basic terms you need to know and how you should go about crypto staking.

What is passive income?

A passive income is any sort of earnings that come your way without having to put in any significant effort or labor. Normally, we are referring to earnings from investments, from acquired assets and from sharing or selling those assets. It may not need any day-to-day attention, but it does require some consistent work now and then.

What is crypto staking?

One example of such an investment that can get you passive rewards is crypto staking. Staking your cryptocurrencies means that you lock up a certain portion as a future investment with the aim of gaining rewards through an exchange over a period of time. Crypto staking is often compared to the more traditional bank deposit model, where your cash is deposited in a high-yield savings account and the bank awards you an interest based on your account balance.

That’s why crypto staking is associated with passive income and can be an investment that can generate high frequency of crypto assets.

Crypto staking is possible for cryptocurrencies that use the proof-of-stake mechanism model. Currently, the number of cryptos that use this is rather limited, but it can be done through various popular cryptocurrency exchanges.

What is the proof-of-stake model?

The proof-of-stake model is a consensus mechanism. It’s a way for blockchains to validate transactions. It is a more scalable and efficient option that can handle a higher number of transactions and it requires new assets to be validated before they get added to a blockchain network.

Due to its nature, crypto staking does not require daily attention or effort. By holding onto your cryptocurrencies it means you can end up earning passive rewards.

Risk Warning: Cryptocurrencies are highly volatile and trading can result in the loss of your invested funds. Before investing you should be aware that cryptocurrencies may not be suitable for all investors. You should therefore carefully consider whether trading or holding digital assets is suitable for you in light of your financial condition and not invest money that you cannot afford to lose.

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