What is cryptocurrency staking
Cryptocurrency steking is a popular option for passive income from digital assets. To earn income, you need to keep cryptocurrency in your account. Having coins in the wallet allows the investor to join the project's network to ensure that its blockchain works. As a thank you for such work, the user receives a reward in the form of cryptocurrency.
Many investors consider staking as an additional source of income, with which savings can generate income. It is very important to choose a reliable platform for staking and https://redot.com/staking/ is one of them.
Which cryptocurrencies can be used for staking
All cryptocurrencies for staking are based on the PoS (Proof-of-stake) mining algorithm. This approach to mining digital assets is greener than the alternatives because you don't need to connect a large amount of computing equipment to the asset's network to work.
In terms of the PoS algorithm, mining is as follows:
The network analyzes the amount of assets in users' accounts. Who has more of them - most likely, he will get the right to record information about transactions in the blockchain (for what this process is needed, we dealt earlier). The computing power of the user's hardware will be used for this purpose. Stacking is therefore only possible while the computer or other devices are turned on.
In return for such work, the user will receive a reward in the form of project cryptocurrency.
The process is fully automated and does not require any involvement on the part of the coin owner.
In other words, cryptocurrency stacking is the mining of coins that work based on the PoS algorithm.
In comparison, in order to mine digital assets on the PoW algorithm (Proof-of-work), you need to connect equipment (computers, computer installations or special devices - asics) to the cryptocurrency network. The more computing power of the devices at the user's disposal - the higher will be his income.
In PoW mining, millions of devices around the world compete for the right to capture transaction information in the cryptocurrency blockchain and receive a reward. At this time, the environment suffers because of the work of a large number of machines. Therefore, many popular cryptoprojects, including Ethereum, are striving to switch to a more environmentally friendly PoS.
Thus, when steaking, to earn coins, members of the cryptocurrency community bet on the amount of cryptocurrency in the account, when PoW-mining - on the amount of computing power at their disposal.