Tag: proof of stake

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Crypto Daily Topic Cryptocurrencies

How to Take Advantage of Ethereum 2.0

Ethereum, the decentralized blockchain that features smart contracts, will be getting a series of upgrades that will see improved scalability, security, and sustainability. This massive upgrade will create new opportunities for investors. Apart from allowing Ethereum users to earn passively from staking, smart investors can take advantage of price changes during the launch of Ethereum 2.0 and multiply their investments. 

Ethereum, the decentralized blockchain that features smart contracts, will be getting a series of upgrades that will see improved scalability, security, and sustainability. This massive upgrade will create new opportunities for investors. Apart from allowing Ethereum users to earn passively from staking, smart investors can take advantage of price changes during the launch of Ethereum 2.0 and multiply their investments. 

Ethereum, the decentralized blockchain that features smart contracts, will be getting a series of upgrades that will see improved scalability, security, and sustainability. This massive upgrade will create new opportunities for investors. Apart from allowing Ethereum users to earn passively from staking, smart investors can take advantage of price changes during the launch of Ethereum 2.0 and multiply their investments. 

In this article, we will look at what is Ethereum 2.0, what investment opportunities it creates, and how you can be part of this development.

What is Etherum 2.0 All About?

Also known as Eth2, Ethereum 2.0 is fundamentally a shift from the current proof-of-work (PoW) consensus mechanism to a proof-of-stake (PoS) model. In the PoW model, the generation of new blocks relies on the computing power of each node on the network that is taking part in transaction validation. On the other hand, PoS relies on virtual miners (also called validators) and Ether deposits to achieve consensus. 

Besides changing the consensus mechanism, Eth2 also introduces shard chains – a mechanism that ‘splits’ the Ethereum blockchain and shares the processing task among different nodes. This approach increases the network’s processing capability by allowing concurrent processing of transactions – a shift from the traditional sequential processing. 

While the upgrade is squarely technical, its economic and financial implications will be far-reaching. 

How Will Eth 2.0 Affect Prices?

Whenever a major event happens on certain crypto, its prices are bound to change due to increased speculation. In the wake of the anticipated Eth2 launch, upward price movements were observed. The launch was set to happen on 1st December, and a week to this launch, ETH prices had gone as high as $600. While this rally might have been due to other factors, such as the general positive sentiment on cryptocurrencies, the surge observed just a week before the event can’t be coincidental. 

Speculation aside, Eth2 is bringing improved transaction speeds and lower costs – factors likely to increase demand for the crypto. Already, exchanges are reporting declined sell pressure, which indicates that investors are not eager to sell ETH at the moment. The speed and transaction cost improvements will also automatically cascade to tokens that run on the Ethereum blockchain. This will trigger even more demand for the crypto and, thus, better prices. 

Staking in Eth 2.0

The introduction of staking in Eth2 creates a new opportunity for investors to earn by validating transactions, and this is the latest investment opportunity we would like to discuss. 

Simply put, staking in Eth2 implies depositing 32 ETH to activate validator software – the tool you will be using to process transactions. As a validator, you will have the power (and duty) to process transactions and add new blocks to the blockchain, and earn rewards while at it.

Rewards are given to validators for pushing transaction batches into new blocks and validating other validators’ work. While there are bountiful rewards in staking, you might lose ETH if you are unavailable to perform validations or if you use your stake against Eth2 validation specifications. 

How to Stake in Eth 2.0

Staking involves sending 32 ETH to the following address: 

0x00000000219ab540356cbb839cbe05303d7705fa

However, you will need to use the launchpad dedicated for this purpose. The address above is for verification purposes only. The process involves several distinct steps, summarized as follows:

  1. Review Eth2 staking agreement/ terms and conditions
    1. Sign up on the launchpad. This will involve depositing the 32 ETH.
    2. Agree that it is your responsibility to keep your validator online.
    3. Agree that you are liable to slashing (incurring a large penalty) if you act against validation specifications.
    4. Agree that you understand that your mnemonic (or seed) is the only way to access your funds and that you will keep it safe.
    5. Agree to safeguard your key stores, which will hold your keys, and provide the public keys to the launchpad site to activate your validator.
    6. Agree that you cannot transfer your staked ETH until Phase 1 and that you cannot withdraw until Phase 2.
    7. Agree that once you exit, you cannot rejoin as staking is a long-term commitment. (The completion of each phase depends on reaching a certain amount of staked ETH. Thus, withdrawals will keep extending timelines for this smart contract).
    8. Accept early adoption risks, i.e., software and design flaws that may result in the loss of your ETH.
    9. Agree that you are technically capable of configuring a validator.
  2. Select an Eth1 client that will run parallel to your Eth2 client. This is necessary to process deposit transactions coming from the Eth1 chain.
  3. Select an Eth2 client and set up a node. You can choose between Prysm, Nimbus, Lighthouse, and Teku. Nimbus is one of the most versatile as it can run even on older smartphones.
  4. Select the number of validators you would like to run and the operating system you will use. Remember, to operate each validator, you will need 64 ETH.
  5. Upload the validator which you downloaded/ built from the previous step.
  6. Finally, connect your wallet.

While staking in Eth2 is quite technical, especially for the average user, a comprehensive step-by-step guide is provided on the Ethereum launchpad website. It is also worth acknowledging the thoroughness with which the documentation was put together by the Eth2 team to guide potential validators. If you use this guide, you are unlikely to get stuck simply due to technical difficulty. 

Is Eth 2.0 Staking a Good Idea?

Staking in Eth2 is a double-edged sword – it comes with both benefits and risks. When you commit your ETH to the staking contract, you are almost guaranteed returns just from staking. However, returns are highly variable. In fact, it is impossible to tell how much you can earn by staking a fixed amount of ETH until you actually receive the reward. Even so, if you stake and consistently participate in validation, you will get rewarded. 

Secondly, staking means locking your ETH to the network for some time, without the possibility of withdrawing it at least until Phase 1.5. This is akin to depositing with a fixed account, whose interest can be compared to the growth of ETH in the near future. 

While staking is a good way to earn from Eth2, you might want to consider the following risks:

  • Staking is a one-way deposit. ETH you send to the contract address cannot be withdrawn until an unknown future date (this is until Phase 1.5 of the upgrade is reached).
  • Profits you earn from staking also remain staked until this unknown future date.
  • Validation is a responsibility that all stakers must undertake. By being offline, you will lose as much as you would have earned if you were available for validation.

Final Thoughts

The coming of Eth2 brings with it exciting investment opportunities. Other than the traditional trading and HODLing, Eth2 allows you to commit some funds to the network and join other validators and earn exclusive rewards from it. Risks, including early-adoption software bugs and slashing due to being offline, exist. However, all considered, staking is a worthy venture that ETH investors should consider. 

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Cryptocurrencies

5 Best Staking Coins in 2020: Checking Out Number 4

Investors stake their cryptocurrencies by locking their assets for the reward incentives. Staking is similar to saving in banks because users lock their money in preferred financial services, but crypto staking earns higher ROI than fiat savings in banks. 

Investors stake their cryptocurrencies by locking their assets for the reward incentives. Staking is similar to saving in banks because users lock their money in preferred financial services, but crypto staking earns higher ROI than fiat savings in banks. 

Investors stake their cryptocurrencies by locking their assets for the reward incentives. Staking is similar to saving in banks because users lock their money in preferred financial services, but crypto staking earns higher ROI than fiat savings in banks. 

Staking is an innovation that allows users to reap maximum gains from their digital investments. Users can earn passively when their nodes validate and add blocks to blockchain networks.

Staking coins utilize a special, more user-friendly blockchain consensus for mining cryptocurrencies called Proof of Stake. In this article, we take a look at five of the best staking coins in 2020 you need to check out. But first, let’s get into the nitty-gritty details of the mining consensus. 

Proof of Stake vs. Proof of Work

Traditional Proof of Work (PoW) validates blocks of transaction information via complex cryptographic computing that generates consensus. In contrast, Proof of Stake (PoS) relies on democratic, open-source electioneering to select validating nodes for every block.

PoW rewards miners for solving mathematical problems with newly created crypto tokens, while PoS rewards validators with transaction fees. PoS systems select random users in the blockchains, making the networks impressively secure.

Proof of Stake systems start by selling a stock of pre-mined coins, and others switch from PoW systems. The switching process is called forging, and it includes locking coins in stakes. The size of each stake determines if it’s viable for validating the next block. Robust stakes have a more competitive advantage.

Nodes forge blocks by first authenticating transactions to match details on previous information blocks. Designers had to address the concern that wealthier nodes could get all the staking bids. Therefore, crypto startups implement:

  • Coinage selection: this strategy considers how long users lock their coins in stake. Coinage is determined by the number of coins multiplied by the period of stake. Coinage is reset to zero after forging, and networks stipulate minimum coinages for staking. This way, nodes with large stakes don’t get dominant control over the network.
  • Randomized block selection: this strategy is predictable, but it provides sufficient protection from corruption. The system selects validating nodes transparently via stake sizes and hash values.

Now, without further ado, let’s review the best staking coins in 2020 worth your time and fiscal investment. 

Best Five Staking Coins in 2020

NOW Token

This digital asset is native to ChangeNOW, a robust crypto exchange platform. The staking coin empowers users to buy numerous products within the NOW infrastructure.

The staking rewards are annual, and staking longer rewards more. You can lock as little as 10 NOW tokens and manage these digital assets via:

  • Token Freezer.
  • Guarda Wallets staking tools.
  • BEPTools.

The tool you use to freeze your tokens will automatically predict your rewards every week. Users stand to gain significantly by staking NOW tokens, yielding high interests, weekly rewards, and demanding little principal investments.

Decred (DCR)

This staking coin was announced in 2016, and it forked from Bitcoin. The designers, miners, and validators disagreed with internal Bitcoin governance. Therefore, they created this hybrid coin, which is powered by both PoW and PoS mechanisms.

The Decred platform makes DCR tokens attractive via:

  • Smart contracts.
  • Public proposal platform.
  • Cross-platform wallets.
  • Cross-chain atomic swaps.

Decred PoW/PoS mechanisms require miners to build new blocks by validating transactions. The miners earn 60 percent of block rewards, and DCR holders can obtain voting tickets for all open network proposals.

You can stake DCR in two ways:

  • As a solo voter.
  • Through voting service providers.

When voting solo, you need to use the native command line and connect your wallet to Decred’s blockchain. Voting service providers charge about five percent of rewards for staking on behalf of users.

It supports user democracy, empowering network members to vote for consensus. However, much like Bitcoin, Decred can’t scale easily, and it falls behind in transaction speeds.

Tezos (XTZ)

This cryptocurrency is novel compared to others since it was launched in June 2020. It serves multi-purposes and is reliable for executing smart contracts. It is the native coin of a self-correchttps://tezos.com/ting platform.

The Tezos blockchain utilizes a unique codebase, using the OCaml computer language. Its PoS consensus implements delegated Liquid Proof of Stake.

XTZ is popular because it offers high staking to third-parties, who claim up to 25 percent of staking rewards. The 2020 ROI for staking Tezos is 5-6%. It is stabilized by its codebase, which allows self-correcting and built-in governance. Thus, it minimizes the risk of hard forks like the case of Bitcoin’s blockchain.

Tezos are created via ‘baking,’ which is just another name for staking. Validators allowing fraudulent transactions are to lose all their staked Tezos immediately the incorruptible blockchain flags incorrect validating. This is significant because bakers must have 8,000 Tezos to stake.

Algorand (ALGO)

ALGO is permissionless and decentralized. It transcends bordered economies and bypasses the need for financial regulators and other third-parties. ALGOs are great staking coins because of the low transaction costs involved.

This coin is native to the Algorand network, which utilizes Pure Proof of Stake to validate transactions. It does not facilitate users to delegate staking responsibilities to other nodes.

This blockchain reduces the risk of dominant users taking over. It decentralizes the network and disallows staking delegations. Thus, it reserves the voting power for the majority’s interests. Staking ALHGOs is relatively easy, and you only need a non-custodial wallet to hold ALGO tokens.

Just one ALGO is enough for staking. Users can earn ten percent annual interest, 5.46% staking on StakingRewards.com, or eight percent on Binance. Algorand facilitates 1,000 transactions per second, attracting them because of easy user experiences. Staking rewards are paid out every 20 minutes.

Loom Network (LOOM)

The Loom Network is a Platform as a Service meant for dApp developers. It supports Solidarity dApps running on side chains of the crypto network. This platform allows different application developers to personalize their consensus-building mechanisms.

Validating Loom transactions is easy, and users can rely on Delegated Proof of Stake. Scaling becomes easier, but users still enjoy Ethereum’s blockchain security.

These staking coins come into the market in 2018, but users started staking LOOM tokens a year later. By 2020, the Loom Basechain bridged different chains via impeccably high performance.

Cross-chain functionality makes LOOMs attractive stake coins. Developers use this Platform as a Service network to pay for hosting, and staking users can enjoy the rewards of creating new blocks.

All you need is one of the following wallets that are compatible with Loom’s blockchain:

  • Trezor.
  • Metamask.
  • Ledger.

Users must meet gas costs on the Ethereum network by depositing some ETH. Afterward, they need to connect their wallets to the LOOM Basechain Wallet for staking.

This network is popular because you can delegate staking to validators, who will claim 25% of your stake rewards. You can expect an annual ROI of 17% from LOOM stakes.

Parting Shot

Let’s agree that these coins are all pretty attractive investment options. Their main benefits include:

  1. Fast delivery.
  2. Lucrative ROI.
  3. Transparent, immutable accounting.
  4. Daily and annual payouts.

Validators are much quicker than bitcoin miners, which makes staking coins appealing to novice users. 

Staking crypto coins is a great investment option for crypto users. It makes it easier to earn high-interest rates on your savings, and you can conveniently, securely convert fiat currency into digital currencies. 

Embrace staking coins as crypto asset institutionalization edges closer to reality. The next time your friends ask for a great investment idea, share this article with them. 

You can also check out these coins for yourself and start earning passively. Please share your best staking coins in the comments section. 

Categories
Cryptocurrencies

What’s Ethereum 2.0 and Why Does it Matter? 

After a years-long wait, Ethereum 2.0 is finally here. Well, almost. The major upgrade will see the Ethereum network fix various scalability and security issues. The most notable shift will perhaps be moving from a proof-of-work (PoW) consensus mechanism to a proof-of-stake (PoS) protocol. 

After a years-long wait, Ethereum 2.0 is finally here. Well, almost. The major upgrade will see the Ethereum network fix various scalability and security issues. The most notable shift will perhaps be moving from a proof-of-work (PoW) consensus mechanism to a proof-of-stake (PoS) protocol. 

After a years-long wait, Ethereum 2.0 is finally here. Well, almost. The major upgrade will see the Ethereum network fix various scalability and security issues. The most notable shift will perhaps be moving from a proof-of-work (PoW) consensus mechanism to a proof-of-stake (PoS) protocol. 

But this is just a scratch on the surface. With Ethereum being one of the most important cryptocurrencies in the world, Ethereum 2.0 is set to shake up not just the Ethereum ecosystem but cryptoverse in general. 

Understanding Ethereum 2.0

Ethereum 2.0 is an upgrade to the Ethereum protocol. Also known as Eth2 or Serenity, the update is meant to improve the scalability and security of Ethereum. The current Ethereum blockchain, with the scalability of 15 transactions per second (TPS), can simply not handle the volume that would be required to handle millions of transactions per second. Eth2 will not just power dramatically more than that; it will also remove bottlenecks for developers and users.

Ethereum founder Vitalik Buterin and the team have been working on Eth2 for years now. This is because scaling a blockchain without sacrificing security and decentralization is not an easy task. Eth2 will address these issues through several important features that will be starkly different from the Ethereum we have now. 

What’s the difference between Ethereum and Ethereum 2.0? 

What will mainly distinguish the two versions is that Ethereum 2.0 will feature a proof-of-stake consensus, implementing shard chains and the beacon chain. Let’s look at each of these features in more detail. 

#1. Proof-of-stake 

Ethereum currently implements a proof-of-work consensus model to secure the network and maintain and facilitate an incentive mechanism to reward miners who confirm and validate transactions on the network. Unfortunately, PoW requires huge amounts of energy – which is not sustainable in the long run. 

PoS is a far faster and sustainable alternative to PoW. PoS involves granting stakers in the network the right to become a validator and get paid to verify transactions. Other validators can confirm the “minting” of the block. If there are enough confirmations, the block can be added to the blockchain. Validators will then be rewarded with block rewards for the successful block. 

PoS is a lot of times better than PoW when it comes to energy-efficiency. This is because, unlike PoW, there isn’t an energy-intensive process required to validate blocks. This is also good news for individuals who want to help secure the network. 

Another feature that a PoS model will enable security on Ethereum 2.0 not previously possible with PoW. PoW is susceptible to a 51% attack. The PoS model will not only reward validators for being honest; it will penalize attempts at fraud. One such penalty will be ‘slashing,’ which will not only involve the validator in question being forced out, but all/part of their stake will be penalized. 

#2. Sharding 

Individuals who wish to access the Ethereum network have to do that via a node. Nodes store a copy of the entire Ethereum network, meaning they have to download it. This takes up too much storage and slows things down. 

Shard chains act like the blockchain but only hold a specific subset of the blockchain in question. This means nodes only have to manage a ‘shard’ of the entire network. This goes a long way in increasing transaction throughput and enhancing scalability. 

#3. The beacon chain 

Shard chains will work in a parallel version. This necessitates a mechanism of sorts to keep them in sync with one another. Enter the beacon chain, which will facilitate consensus to shard chains. 

Beacon chain is a completely new, proof-of-stake blockchain rendering that will be the coordinator of the whole ecosystem. The chain will facilitate data sharing between the shard chains and facilitate scalability. The beacon chain will be the first roll-out feature of Eth2. 

How Ethereum 2.0 Will Be Rolled Out 

Ethereum 2.0 will not be released at once but rather in three phases. Each phase will feature a crucial feature to contribute to the success of the new blockchain. 

#1. Phase 0

Phase 0 constitutes the first rollout, and it will come down to the release of the beacon chain, which is central to the network’s functioning. The beacon chain will start accepting stakers’ deposits in preparation for the proof-of-stake consensus. All registered stakers will not be able to withdraw from the contract until shard chains are put in place. Afterward, staking deposits will be locked up until the next rollout. The Phase needed a minimum threshold of 524,288 ETH to launch. This target has already been met and even passed. 

#2. Phase 1/1.5

The next phase will be two phases combined: Phase 1 and Phase 1.5. Phase 1 will bring with it shard chains, which will allow validators to produce blocks via a PoS consensus. Phase 1.5 will officially now introduce shard chains and begin the transition from proof-of-work to proof-of-stake. This phase will be released in 2021. 

#3. Phase 2 

This will be the final phase, whereby the blockchain will fully support shard chains – which will have taken on new features and capabilities. The shards will have the ability to integrate with smart contracts, allowing decentralized applications (DApps) developers to mesh seamlessly with the network. This phase will be slowly rolled out in 2021 and beyond. 

When Will Ethereum 2.0 Be Released? 

The Ethereum 2.0 upgrade will start rolling out on December 1, according to a blog post by the Ethereum Foundation on November 4. The launch is conditional on at least 16,383 validators, each staking 32 ETH to make up 524,288 ETH. Vitalik Buterin led the way in depositing ETH, putting up 3,200 (worth more than $1 million), according to Etherscan, which tracks Ethereum transactions. See the launch pad where ETH is being deposited here. 

Ethereum enthusiasts are naturally excited about the launch and hope everything will fall in place. If the launch is successful, the Ethereum network as we know it will change a lot – and for the better. 

Closing Thoughts 

Ethereum 2.0 is a long-awaited update to the world’s second most popular crypto and blockchain network. Having been introduced to the world of smart contracts and DApps, the network has been the most popular go-to option for DApp developers worldwide. But in recent years, the network has been grappling with scalability issues that would have proven unsustainable in the long term.

The rollout of the new network will take a while, even longer than many expect. But as long as the train will soon leave the station – that’s good enough news for the community. 

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Crypto Guides

Is EOS A Better Investment Than Ethereum Right Now?

Introduction

Introduction

Introduction

EOS and Ethereum both are popular blockchain smart contract platforms. To know whether EOS is a better investment or Ethereum, we will need to compare the two technologies by exploring basic concepts and comparing their mechanisms to draw out the necessary conclusions. After Ethereum was introduced in the crypto industry, two years later, EOS was launched and claimed to fix the flaws in Ethereum. EOS is a strong, scalable contender and might outperform Ethereum. The battle of EOS vs. Ethereum is the most interesting and happening space in the crypto industry. 

What is Ethereum?

Ethereum is a blockchain platform launched in 2015 by Vitalik Buterin. It allows users to send and receive funds independently without the assistance of any third party. It was the first blockchain project to install the smart technology contract. In this technology, some predefined conditions are applied, and users are needed to justify the conditions to proceed with transactions without the need for an intermediate body. This decentralized blockchain has its own cryptocurrency called Ether (ETH), which is tradable in most of the crypto exchanges. 

What is EOS?

EOS is a new blockchain platform that can also manage smart contracts. The Block.one company launched this project in 2017. It has created history by raising the highest Initial Coin Offering(ICO), worth more than $2.5 billion. It has its own EOS coin, which can be transferred from wallet to wallet. EOS aims to become the most scalable, cheapest, and fastest blockchain platform. 

Scalability

Presently Ethereum can support 15 transactions per second, whereas EOS can serve up to at least 10,000 transactions/second. EOS using IoT provides for inter-blockchain communication, which creates blockchains to allow more transactions. Ethereum is working on two protocols called “Plasma” and “Sharding” to increase transaction numbers per second. 

Transaction Cost

On Ethereum, users need to pay gas for each transaction, but EOS works completely in a different way. EOS blockchain users deposit their token to cover the bandwidth required for the transaction. 

Consensus Mechanism

Ethereum is based upon the proof-of-work model, and EOS follows the proof-of-stake model. The transactions are verified without the support of any intermediate system. Ethereum generates random puzzles at every node before confirming the transactions. These puzzles are so difficult to solve that you need to take the help of experts called “Miners.” While EOS offers to stake your coins to verify transactions, the stakers have a chance to earn the rewards. 

EOS Vs. Ethereum: Who holds the future?

Ethereum, just after Bitcoin, is the most popular cryptocurrency across the world. EOS, right from its initial days, is performing exceptionally well. EOS is yet to achieve growth that Ethereum has already achieved, but EOS is significantly better than Ethereum. EOS is a more user-friendly cryptocurrency than ETH. It’s still too early to think about how far EOS will go because the blockchain ecosystem is highly unpredictable. 

Conclusion 

EOS is younger than Ethereum and has improved scalability and transaction fees as compared to Ethereum, but still, it’s under so much controversy because of its more centralized layout. If Ethereum successfully implements the proof-of-stake mechanism, then EOS might not be able to outperform it. On the other hand, if Ethereum doesn’t reduce it’s transaction costs, then EOS will easily overtake Ethereum soon is what crypto experts believe. Cheers! 

Categories
Cryptocurrencies

Why you Should Consider Staking Cryptocurrencies

The most popular way to make money in the crypto industry is trading or mining. But recently, the two methods are proving difficult due to unprecedented market trends and the high electric power consumption associated with mining. 

The most popular way to make money in the crypto industry is trading or mining. But recently, the two methods are proving difficult due to unprecedented market trends and the high electric power consumption associated with mining. 

The most popular way to make money in the crypto industry is trading or mining. But recently, the two methods are proving difficult due to unprecedented market trends and the high electric power consumption associated with mining. 

Unknown to many, you can earn passive income from owning and holding a digital currency in a wallet for a fixed period of time. It’s pretty much like saving money in a fixed deposit account. The longer the money stays in the account, the more interest you earn. What makes coin staking even more lucrative is the fact that you can reinvest your earned coin tokens to reap more returns. So, you don’t have to study complex price charts or try to time the market. You earn guaranteed income regardless of market highs and lows. 

How the Coin Staking Process Works

Cryptocurrency staking is derived from the “Proof-of-Stake” (POS) algorithm. See, in the case of Proof-of-Work, the creation of new blocks, as well as validation of transactions, relies on solving complex mathematical calculations. This process relies heavily on the mining power of a GPU/CPU, which is why it’s an expensive method. The higher the mining power, the more coins rewards a miner earns. 

Rather than using expensive mining hardware, POS validates transactions and generates new blocks using coins stored in a wallet (network nodes). It’s important to note that not every coin holder is chosen to validate a transaction. Usually, users who have staked significant amounts of coins stand a better chance of being chosen as the next validators. 

Alternatively, you may consider joining a staking pool to increase your chances of validating new blocks and earning coin rewards. Basically, a staking pool works by merging resources of several coin holders to form a stronger staking power. The block rewards are then shared proportionally to an individual’s contribution. 

Advantages and Disadvantages of Coin Staking

In addition to being a more energy-efficient way of earning more coins, crypto staking also offers a wide range of benefits, including: 

☑️Protected Value

The coins mined using computational power risk losing their value over time due to the use of the mining hardware and ASIC. On the other hand, coins earned through staking do not increase or appreciate in value with time. Their value can only fluctuate with the market trends. 

☑️Reduces Centralization Risk

Coin staking eliminates the need for owning expensive mining equipment and other entry barriers such as the technical know-how and knowledge of the market patterns. This is especially the case with staking pools where the entry requirements are relatively low. As such, it offers an opportunity for more investors to join the network, thereby decentralizing its control. 

☑️Enhanced Security

Besides staking cryptos on an online wallet, there are a couple of blockchain networks that allow investors to stake coins in their cold wallets. This method is commonly known as cold staking, and it goes a long way into securing your earnings. Cold staking is particularly useful to stakeholders with large amounts of coins that would otherwise be susceptible to theft if stored in an online wallet.

☑️Reduces the Chance of a 51% Attack

The 51% attack is a common problem in the Proof-of-Work algorithm, where coin rewards are earned through mining. The attack refers to a case whereby a user or group of users controlling the majority of the mining power end up monopolizing the creation of new blocks. As such, they prevent the small-scale miners from completing blocks, which in turn denies them coin rewards. Besides reversing transactions, such attacks also lead to the outflow of small-scale miners as well as a decline of the coin’s value. 

Thanks to the Proof-of-Stake improved architecture, it’s almost impossible for one party to earn extra profits and become the majority holder. Even in the event where a perpetrator succeeds in controlling the largest share, the community can coordinate a hard-fork and delete the offending validator’s holdings. As a result, the price of the coin may increase due to the supply crunch. 

The only drawback of staking cryptocurrencies is that you’ll need to lock them for a fixed period without using them. In a bullish market, locking your coins for long may not be a huge problem. The problem occurs in bearish market conditions, especially when the amount earned through staking is not enough to cover the price depreciation. As such, it makes sense to stake a specific amount of coins depending on your risk tolerance. 

How to Get Started Staking Cryptocurrencies

Staking cryptocurrencies may sound easy and straightforward in theory, but it actually demands a considerable degree of input if you’re to make any reasonable returns. 

i) Choose a Coin to Stake

Finding a good Proof-of-Stake coin requires extensive research of the crypto market. At first, you may easily be lured by POS coins offering the highest percentage of returns. Usually, such coins end up being saturated in the market, making it hard for your stakes to maintain their value. Also, due to their high supply in the market, these coins tend to require a huge financial investment for one to begin staking. 

An ideal POS coin strikes a good balance between returns and the initial investment required. This way, it’s able to maintain a steady value making it suitable for generating passive income rather than being a speculative investment. 

ii) Determine the Minimum Requirements

All POS coins have a minimum number of tokens required in order to begin staking. Dash, for instance, requires about 1000 DASH coins while ETH requires not less than 32 coins. This amount can be brought down to attainable limits by joining a staking pool. But you should be prepared to pay a certain percentage of your rewards to the pool provider as payment for the service. 

Alternatively, you can also invest in coins such as PIVX, NEO, and PART that don’t require a minimum investment amount. However, they don’t pay as well as their counterparts. 

iii) Hot or Cold Staking

For those coins that require staking in an online wallet, you’ll need around-the-clock connection to the internet. A standard computer might serve you just right, preferably one that consumes less power. Small single-board computers such as Raspberry pi and PocketBeagle can also get the job done and even save much more on power bills. 

Cold staking is the best alternative if you want to eliminate the power and internet bills entirely. Coins staked in a hardware wallet are also safer than those in a hot wallet. 

Conclusion

As market volatility and the high cost of mining continues to turn away investors, coin staking is finding its place as an alternative method of earning income from the crypto market. Most importantly, through its long-term approach, coin staking puts the crypto-space on the road to maturation as more investors welcome the idea of earning returns from staking. 

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Crypto Videos

What Is Proof Of Stake & Will It Make Ethereum Better Than Bitcoin

https://youtu.be/iVWWsAGB0K0

 
What is proof of stake, and how does it work?
The proof of stake system is a consensus protocol that came as a response to the shortcomings

https://youtu.be/iVWWsAGB0K0

 
What is proof of stake, and how does it work?
The proof of stake system is a consensus protocol that came as a response to the shortcomings

 

What is proof of stake, and how does it work?

The proof of stake system is a consensus protocol that came as a response to the shortcomings of proof of work. It is attracting a lot of attention as of late, with Ethereum switching its consensus protocol from proof of work to proof of stake. Proof of stake is nothing more than an alternative way to verify transactions on a blockchain.

How does it all work?

Proof of work and proof of stake works very differently, even though they are trying to do the same thing. The proof of work system has its users validate transactions and create new blocks by solving a “puzzle,” which requires some computational power. On the other hand, a proof of stake consensus algorithm requires the user to show ownership of their funds to validate transactions.


When it comes to proof of stake system, the creator of a new block is picked in a pseudo-random way. The block creator has more chance depending on the size of their “stake.” In the proof of stake system, blocks considered forged or minted rather than mined. Nodes who validate transactions and create new blocks with this system are not miners, but rather forgers.
To validate transactions and create blocks, a forger must stake their funds. Their holdings are being held in an escrow account, which acts as collateral for any potential fraud attempts. If a forger tries to validate a fraudulent transaction, they lose both their staked holdings and their rights to participate in the process. This way, the proof of stake protocol incentivizes forgers to validate only non-fraudulent transactions.
An important thing to note is that most proof of stake projects already created and distributed their digital currency units already. When this is the case, the forgers receive transaction fees instead of new cryptocurrency as rewards. This is considered true only if the cryptocurrency cannot inflate itself by minting more and more coins.

Block selection methods

Proof of stake consensus algorithm needs a way to select future forgers. There are two main ways to do so:

Selecting a user randomly
Selecting a user based on their coin age.

Selecting a forger only by the size of their account balance would go against the whole premise of cryptocurrencies, and is a bad idea. That way, people with more funds would get richer, while the ones with fewer funds on their account would be hindered and have less control over block creation. To counter this problem, these two methods have come up as the most popular and reasonable.


Randomized block selection

The randomized block selection method is just what it sounds. The method seeks a user that offers the lowest hash value regarding the size of its stake. As all stake sizes are public, each node can predict (with high probability) whether they will be selected to forge the next block.

Coin age-based selection

This system is a bit different than the randomized block selection one. It selects the next forger based on the ‘coin age’ of the node’s stake. Coin age is a multiplier of the number of days the funds have been staked and the number of coins that are being staked. Coins must be staked for 30 days before they can compete for block creation. Users with larger stakes have an advantage, but so do users who have staked for a longer time. Once a user forges a block, their coin age is reset to zero. After a node forges a block, they must wait at least 30 days before creating another block. This mechanism promotes decentralized forging while maintaining a power balance between large stake forgers and lower stake forgers.
Advantages of proof of stake
Proof of stake is a much more environmentally friendly and efficient consensus algorithm than the proof of work method. The electricity and hardware costs are much lower due to how the method is made.

Unlike proof of work system where a 51% attack is performed by obtaining the majority of hash rate, proof of stake attackers would be required to obtain 51% of the cryptocurrency to perform the attack. Even though performing a 51% attack is possible, forgers with the majority of funds would not risk their money to perform such an attack. If the cryptocurrency price drops due to the attack, their holding value would also drop.

Conclusion

Proof of stake is a consensus algorithm that is created as an answer to the disadvantages of proof of work. It offers a unique way of validating transactions and creating blocks, and it is gaining popularity. With that being said, the Proof of Stake algorithm is not better than Proof of Work on all fronts, and each project should consider both methods before picking the one they like.