With the constant development and growth of the cryptocurrency world, along with the rising number of cryptocurrencies, it’s no surprise that millions of people – whether newbies or crypto enthusiasts – started engaging the cryptocurrency market.
Staking is one of the best ways to increase and boost your earnings.
There are several ways to do this, as several cryptocurrencies authorise transactions using a crypto model referred to as ‘proof of stake.’
Through this model, investors who own the cryptocurrency have the power to stake it, meaning they allow their crypto to be utilised by blockchain to authenticate transactions.
As an exchange for staking crypto, those who participated are eligible for rewards depending on what they’ve staked.
One simple way to understand it is like earning interest on what you have in your savings account.
However, the major difference is bank interest rates are low, but with crypto staking, you can earn up to 10% or more interest.
Just like everything about cryptocurrency, staking can be confusing at first.
However, with enough research and practice, it’s much easier to do than you think, and the best thing is you’re free to unstake your staked crypto if you prefer to utilise it for trading later on.
Once you are confident and have mastered how to stake crypto, you can use it to start earning passive income.
Here are the three simple steps you can follow to master crypto staking:
1. Identify the Cryptocurrencies That Offer Staking
To begin staking, you must have your proof-of-stake cryptocurrency as these are the only types of cryptocurrencies that are available for staking.
Fortunately, the proof-of-stake model is accessible as it gets more and more known due to its efficiency.
The most important part of the staking process is choosing the right cryptocurrency. One common mistake that newbies make is quickly choosing a cryptocurrency based on the rewards it offers.
While it’s indeed tempting to immediately purchase a cryptocurrency that offers 100% or more staking rewards annually, you should consider the fact that many of these cryptos offer poor investments that lead to a descending price.
You must do your research, identify the cryptocurrencies that allow staking, and you should only purchase crypto that is good for long term investment, based on your research and proof online.
While staking is your goal, you should also consider other factors of the cryptocurrencies and don’t make its crypto staking feature the only reason you buy.
Several cryptocurrencies in the market offer stake, such as:
- Cardano (ADA)
- Terra (LUNA)
- Tezos (XTZ)
- Polkadot (DOT)
- Solana (SOL)
Ethereum is in the process of developing the proof-of-stake model. While it’s not 100% there yet, it can already be staked.
2. Purchase the Appropriate Cryptocurrency for Your Needs
After doing extensive research and gaining knowledge about the different cryptocurrencies you can stake, what’s left is to choose one and buy it.
Although it might seem simple, make sure that you consider where you’ll buy.
One of the simplest ways is to just choose one of the cryptocurrency exchanges that possesses a built-in staking feature.
Not every cryptocurrency platform allows crypto staking, so it’s important to do your research on each one of them.
Most of the payment apps and stockbrokers that sell cryptocurrency don’t automatically offer to stake. In addition, they also won’t allow you to transfer the crypto you buy off their platforms.
For instance, you buy cryptocurrency from one of the crypto exchanges; you won’t be able to stake that specific crypto on the platform or even transfer it to another exchange or wallet to stake it.
The best way to approach this is to stick to cryptocurrency exchanges that give you full control of your crypto, such as:
• Kraken
Kraken is a cryptocurrency trading platform founded in the United States. Developed just two years after Bitcoin, it immediately became part of the secured cryptocurrency exchanges on the business.
• Bitcoin System
A beginner-friendly software in full symbiosis with 24/7 support by experts guarantee that this platform is a trustworthy exchange for both – new and experienced traders.
• Binance
Binance is a cryptocurrency trade that operates the most extensive exchange worldwide when it comes to the regular transaction capacity of cryptocurrencies.
• Coinbase
Coinbase is an American company that was founded in 2012 and operated on a cryptocurrency exchange platform.
The company was started by Fred Ehrsam and Brian Armstrong, and in 2021, it eventually became the largest crypto exchange in the US. It functions on remote-first behaviour.
These trading platforms permit users to stake with some of their cryptocurrencies, which means staking what you can buy is achievable in just a few clicks.
These trading platforms also permits you to move your cryptocurrency if you prefer to stake it in a different platform.
3. Stake Your Cryptocurrency Through a Crypto Exchange
This step of the staking process relies on the cryptocurrency you purchased and the crypto exchange where you purchased it.
If you used a crypto exchange that allows you to stake that crypto, most probably it has a staking option or page on your portfolio, so it would be helpful to review the exchange’s help section if you are unsure how to do it.
Another option that the majority of cryptocurrencies use is by staking pool. These pools consist of crypto funds that investors have pooled together or earn more staking rewards.
Staking a pool can be done by putting your crypto to a crypto wallet first. Next, you can start choosing a staking pool and transfer the cryptocurrency through your wallet.
Staking a cryptocurrency is a relatively straightforward process, especially now that there are a great number of cryptocurrency exchanges adopting it.
Once you’ve done your research about the different cryptocurrencies and which is the best choice to purchase, it’s a great idea to do another research if it offers cryptocurrency staking and how staking works for that cryptocurrency.
Doing your research or having a conversation with someone expert in the field can help you choose which staking method works best for you – considering its features and rewards – especially if you’re new to investing in cryptocurrency trading platforms.
Jonathon Spire
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