A Guide to Staking Cryptocurrency and Making Money While You Sleep

Cryptocurrency has changed a lot since it was first thought of as a digital option to cash. Together with the rise of blockchain technology, many new features have been added, such as the idea of "staking." By "staking," cryptocurrency owners can take part in validating the network and earn idle income at the same time. This guide will go over everything you need to know about staking, including what it is, how it works, and how you can stake coin to make passive income.

Understanding Staking:

1. What it means

When people own certain cryptocurrencies, they can "stake" them by locking up a certain number of coins in a pool to help the blockchain network run. Stakers receive rewards from staking their coins and helping secure the network.

2. Proof-of-Work (PoW) vs. Proof-of-Stake (PoS)

Proof-of-Stake (PoS) consensus mechanisms are often linked to staking. They are different from Proof-of-Work (PoW) mechanisms in that they don't use energy-intensive mining methods. To make and verify new blocks, Proof of Stake (PoS) needs validators who lock up a certain amount of coins and in return receive rewards for doing so.

Finding Out How to Start Staking

1. Pick the Right Cryptocurrency

It's important to pick a cryptocurrency that supports holding because not all of them do. Ethereum 2.0, Cardano (ADA), Polkadot (DOT), and Tezos (XTZ) are all well-known holding coins. Personally, I like DOT as it is easy to stake via their wallet or web browser extension. There are other high reward coins such as COSMOS (ATOM) that you can stake and get a great return by staking your coins. (Keep in mind, some coins have an un-lock period that in some cases can take 21 days or more to get your coins back in your possession.

2. Create a wallet:

Pick a wallet that works with the coin you want to stake. Make sure that it works with the staking features. Most hardware wallets such Ledger, Trezor, and software wallets like Exodus are all well-known wallets and will allow you to stake multiple coins.

3. Get some "staking coins":

You need to own the coin that the network supports in order to stake. Get the coins from a trustworthy exchange and move them to your staking pocket. With Ledger, Trezor or Exodus, you can purchase coins directly within their software. Or if you prefer, you can visit some well known exchanges such as Kraken or Coinbase.

The Process of Staking

There are two common ways to stake: assigning and self-staking. When you delegate, you give your coins to a validator to keep safe. When you self-stake, you run a node and help keep the network running.

Picking a Validator

If you choose delegation, be very careful about which auditor you give your coins to. Think about things like fees, reputation, and results. While all this may seem confusing at first, take your time to learn the process.

Locking up your coins

Lock up a certain amount of your coin to start the staking process. How much "stake" you have in the network is often based on how many coins you have locked for staking.

Receiving Rewards

You get paid for your help with network maintenance and security as an auditor or delegator. Most of the time, rewards come in the form of coins that are being created via the blockchain and because you are helping keep the blockchain secure by staking, you reap the rewards.

Words of Wisdom

1. Keep yourself up to date on how the cryptocurrency is developing and the staking system. Find out about any updates or changes that could affect your staking plan.

2. Don't put all your eggs in one basket; just like with any type of investment, diversity is a good thing to exercise.

3. Keep up on news about the blockchain(s)/coin(s) you are staking with, X and YouTube are some good places to info about cryptocurrency.

Staking cryptocurrency is a good way to make money without doing anything, and it also helps keep the blockchain network safe. If you know the basics of staking, pick the right coin, and follow best practices, you can start a journey to earn rewards and help make the future of finance decentralized. As with any investment, it's important to do a lot of study and stay up to date on the latest news about cryptocurrency so you can make smart choices.