Is staking cryptocurrency worth it in 2021? Well from someone who has been doing it for the last year I would have to say its a big fat yes! Staking is basically another worth for “earning interest” for holding a particular cryptocurrency. Its actually quite an amazing concept. Before we get more into this lets cover some of the basics.
A Brief Explanation of Cryptocurrencies
Cryptocurrencies are virtual or digital money in the form of tokens or “coins.” For the most part, they are not physical items, although a few have become present as credit cards. “Crypto” refers to the intricate cryptography needed for the creation and processing of digital currencies and their transactions. They are developed as code by software teams with a focus on “monetary decentralization, with built in mechanisms for issuance, via “mining.” The intention of the cryptocurrencies is to be free from any form of government manipulation or price control.
What is Cryptocurrency Staking?
Cryptocurrency staking is the act of holding funds in a cryptocurrency wallet in order to support the security and operations of a blockchain network. It is the active process of transaction validation. This is similar to digital mining, on a proof-of-stake (PoS) blockchain. Anyone having a minimum-required balance of a specific cryptocurrency can validate transactions and earn staking rewards. Then you’ll be able to stake your coins directly from your crypto wallet app.
Examples of the top ten most broadly traded cryptocurrencies:
- Bitcoin cash (BCH)
- Litecoin (LTC)
- Stellar (XLM)
- Ethereum (ETH)
- Polkadot (DOT)
- Binance Coin (BNB)
- Cardano (ADA)
- Monero (XMR)
- Tether (USDT)
Where Can You Stake Cryptocurrency?
So is staking cryptocurrency worth it in 2021? Well let’s also take a look at where this can actually be done. In order to “stake” tokens, an individual locks their tokens into the (POS) blockchain of their choice. In order to keep the blockchain network secure to validate every transaction on the network, the tokens are utilized to gain consensus. The end user (“validator”) who offered up their tokens to achieve consensus rewarded with new coins from the network. The reward is offered proportionally to the amount staked. Therefore the greater number staked, the greater the validation power is.
eToro is an innovative investment platform that was one of the earliest pioneers in the space of cryptocurrency investing and trading. Any user of E-Toro that holds a minimum number of supported coins for staking is eligible to receive staking rewards.
eToro utilizes are transparent process which takes a snapshot of the user’s portfolio at the beginning of the month and outlines how many coins are available for staking. At the end of the month, an average daily amount is calculated based on the daily units available, and the rewards for staking are automatically applied to the users account, provided the dollar amount is greater than 1 USD.
What Coins are available for Staking Crypto Currency on eToro?
eToro was launched in 2007, and was at the forefront of cryptocurrency trading and investing. They are known for their intensive graphics and offer the ability to “copy” trades. Which follows certain established traders and mimic their trades and risk tolerance/prevention measures.
- Offered to investors in the United States in 2018, users get access to a decent number of cryptocurrencies, including Bitcoin, Ethereum, Ripple and about 12 others.
- It receives positive feedback for the attractive and easy to navigate trading platform and website. The website and mobile apps are virtually the same.
- “Copy Trading” gives users the ability to mimic established, profitable traders and copy their trading moves and risk management techniques.
- Traders are charged based on the spread; there are no stated “trading commissions.” The most popular cryptocurrencies offer narrow spreads; the more esoteric crypto often have spreads that would equate to significantly expensive commissions.
- For newer, less capitalized traders, the minimum purchase price of $25 limits the potential expansion of balances over several coin types.
- Copy trades, while popular, require clients to have significantly larger balances in order to enact those trades. Typically, copied trades require a $200 minimum.
Currently, E-Toro offers Cardano (ADA) and Tron (TRX) for staking, with plans on offering additional staking options.
What are the Benefits to Staking Cryptocurrency?
Staking can be divided into two broad categories: PoS (Proof-of-Stake) and DPoS (Delegated Proof of Stake).
- Proof of Stake (PoS) is designed to freeze the user’s tokens for an established period of time to validate transactions through a specific network.
- Delegated Proof of Stake (DPoS) establishes a delegate elected by stakeholders who is assigned to become a validator or block producer.
The main benefits for staking cryptocurrencies is the ability to get a percentage of tokens for staking the transaction. Which later on grows your crypto reserve. Users who apply to become a DPoS can earn transaction fees. It also allows the user to reduce transaction fees for staking on exchanges. Because there is very little risk due to the generally conservative nature of the investments, staking cryptocurrency is an excellent way of supplementing a return on savings.
So is staking cryptocurrency worth it in 2021? I think the clear answer is still yes. Given the prominence of cryptocurrency, and its rise as an alternative investment vehicle, there are now numerous investing platforms catering to the novice investor. Staking cryptocurrency is a relatively low risk, passive methodology to enhance overall saving returns on accounts. You will also get coin appreciation value in most cases which makes it a win win. If you would like to begin your staking journey click here.
Disclaimer: eToro USA LLC; Investments are subject to market risk, including the possible loss of principal.