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Home > Is Staking Risky?

Is Staking Risky?

Written by:  Rex

If you have crypto and want to earn interest on it easily, you can try crypto staking. Therefore, you will not only receive passive income but also support the operation of the blockchain network.

What is the essence of staking?

Staking works similarly to deposits in the bank. You store coins in a crypto wallet, and the blockchain is running. So, you block a certain amount of crypto, that is, you cannot use it for some period.

Staking is more environmentally friendly than mining. The reason for this is that it does not need huge computer power or other additional equipment. Therefore, you will not use lots of electricity.

Furthermore, staking is related to the Proof of Stake technology. When you utilize it, you follow the rule: the higher the amount you store, the more blocks you are able to create. For the confirmed transactions and added new blocks, you will get a reward in the form of some coins.

You can do everything on your own, but for this, you need to understand the technical details of the chosen crypto. Sometimes, it is also expensive as some blockchain networks have an entry threshold.

An easier way is to give coins to a recognized validator, such as a staking exchange Emirex.

Pros and cons of staking

Key benefits of staking include the following points:

  • This is an easy way to earn interest on the cryptocurrency you own.
  • Unlike mining, you don’t need special hardware.
  • You help keep the blockchain running.
  • Staking is more environmentally friendly than mining because it does not require much energy.

However, if the price of your coins drops, you could lose more than you earn by staking. Therefore, this investment option is suitable for those who plan to hold crypto for several years, regardless of price fluctuations.

Jan 21, 2022Rex
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