What is Crypto Staking? - Bihari Gyan

What is Crypto Staking?

With cryptocurrency, one way to make a profit is to sell your investment when the market price increases.

There are other ways to make money in crypto, like staking. With staking, you can put your digital assets to work and earn passive income without selling them. 

You have probably heard about staking in reference to the much-anticipated ethereum merge (more on that below). 

In some ways, staking is similar to depositing cash in a high-yield savings account. Banks lend out your deposits, and you earn interest on your account balance.

In theory, staking isn’t too different from the bank deposit model, but the analogy only goes so far. Here’s what you need to know about crypto staking.

Staking is when you lock crypto assets for a set period of time to help support the operation of a blockchain. In return for staking your crypto, you earn more cryptocurrency.

Many blockchains use a proof of stake consensus mechanism.

Under this system, network participants who want to support the blockchain by validating new transactions and adding new blocks must “stake” set sums of cryptocurrency.

Staking helps ensure that only legitimate data and transactions are added to a blockchain.