Passive Income: Staking Crypto
There are many ways to make money through crypto, for example staking. Staking is a very easy to do so grab a cup of coffee and let's go.
What is staking?
Staking is one of the most easiest ways of earning yield on your crypto sitting in your wallet. When you stake you provide extra security to the blockchain by increasing decentralization. Some examples of blockchains that offer staking are Ethereum, Luna, Cardano, and many more. Also, some individual coins will offer staking that earns yield as well. Check out this video to learn how I earn Ethereum passively through staking $GMX!
How does staking work?
Cryptocurrencies that offer staking, create new blocks on that specific blockchain that include new transactions like a simple transfer from Coinbase to your wallet! First, users have to decide if they want to stake by checking the yield. Usually, users are paid in the same token they stake, for example, staking Ethereum, earns you Ethereum. You are putting your crypto to work and can un-stake them later if you would like. Unfortunately, you can’t stake with every crypto currency like Bitcoin due to it’s different blockchain design. One reason why staking is becoming so popular is due to Environmental regulations. Staking requires significantly less energy consumption. For example, Ethereum's energy usage will soon decrease by ~99.95% after the merge.
How do you stake?
First you need to buy a cryptocurrency that offers staking, for example Ethereum or Luna. Then you have two options, to stake it on an exchange which is easy or move your crypto to a personal wallet and stake yourself. If you are new, I recommend staking on an exchange like Coinbase simply because it’s very easy and you wont have to worry about anything. Now, using a wallet requires more knowledge about the blockchain, but is very important to decentralization. However, for every coin it’s different so I recommend looking at the requirements before choosing whether you want to stake that specific token.
Benefits of Staking?
It’s an easy way to earn interest on assets you already own. You don’t need equipment to stake unless, you want to do it yourself. It’s more environmentally friendly compared to mining. You also improve the security of the blockchain and it’s transactions by staking. It’s a very passive process and can withdraw depending on that specific coin. FYI, if you stake Ethereum on Coinbase you will NOT be able to withdraw until Ethereum upgrades, which maybe in 6 months.
Risks of staking:
Usually staking requires lockup periods that can range from 7-14 days, during this period you will not be able to sell your crypto. Also, crypto is very volatile so if you do decide to stake, during some period the losses may offset your interest earned. One important tip, is to figure out which coin you would like to stake then decide if you are willing to lockup you’re coins.
Final thoughts:
As someone who enjoys passive income, it’s great to just have everything working in the background without active oversight. I’ve been apart of a large mining operation in the past and seen how much wasted energy was produced, which makes me more appreciative of staking. Overall, I hope you enjoyed this video, and I’ll see you on the next one, peace!
TLDR: Check out my Youtube Video: