Staking and Proof-of-Stake are two concepts that you often encounter in the world of crypto currencies. Every day new projects come out where you can go on strike your coins. For example, you can help keep a blockchain or crypto platform running. You also earn free cryptocurrency. How does this work exactly? Read an explanation and watch a video about the concept of strike in crypto! We start this page of the crypto knowledge base with an explanation of what the concept of strike is.
What is strike crypto?
What exactly is strike in crypto? Strike is the purchase of crypto coins and keep them in a cryptocurrency wallet for a certain period of time. This is similar to a fixed deposit in the world of fiat currency with a fixed interest rate at the end of the agreed time in the contract.
This brings us to the concept of Proof-of-Stake, also abbreviated as PoS. It is an agreement algorithm for some cryptocurrencies, which create new blocks that are added to the blockchain. These blocks are basically made by means of staking by someone who is already holding some crypto. It helps to validate a new block or something else on the platform.
You can help validate blocks yourself. So you can go on strike by using crypto coins. The more cryptocurrency you bet, the more power you have to validate transactions. Similarly, the longer you keep the crypto coins in a wallet, the higher the number of coins you receive with the stake. How does the strike process work?
Each of the miners, who contribute to maintaining the network in a Proof-of-Stake blockchain, must own or verify ownership of a number of cryptocurrencies. The crypto amount that participates in the strike shows that the owners of the nodes are investors in the network. It also allows them to participate in the creation of the new block (validation). In the end, they receive all accrued rewards, including newly created cryptocurrency.
Strike of crypto provides a financial incentive to help build the blockchain infrastructure. It also helps to keep all nodes in the network fair. Generally, if a node tries to insert a fraudulent deal into a block, other nodes on the same network will refuse to accept that fraudulent block. The fraudulent node will no longer work to validate new blocks and get a reward for them.
In many PoS networks, a node trying to broadcast fraudulent transactions loses all the cryptocoins it has made available for strike. Staking pools, how does that work?
Staking pools come into play when some Proof-of-Stake networks require large amounts of staking crypto coins to be eligible to validate new blocks. What happens is that the network places their cryptocurrency together. They then distribute the rewards among each member of the crypto staking pool. Benefits of Staking with Cryptocurrency
Staking with cryptocurrency has a number of advantages for, for example, the people who validate blocks. A few examples at a glance:
- It eliminates the need to invest in expensive mining equipment, such as ASICs or high-end GPUs
- You can buy crypto coins and lock (stake) them in your wallet instead of buying equipment for mining. This leads to value growth.
- The value of cryptocoins deployed via strike is not depreciated as time goes on. Although the fluctuations in the crypto price affect the value of the bet.
- Proof-of-Stake is more environmentally friendly and energy efficient than the PoW algorithm used in, for example, the Bitcoin network.
- Staking guarantees you a predictable source of income if the value of the cryptocurrency increases in a predictable way.
- You do not need high-quality (technical) knowledge to participate in crypto strike.
The disadvantage of staking is that cryptocurrencies have to be held for a certain period of time. You will not be able to sell this currency until that period has elapsed. Disadvantages crypto staking
Crypto staking also has some drawbacks. We want to be transparent about this and tell you what the disadvantages are.
- The cryptocurrency that you are going to strike must be held for a certain period of time. You can’t sell the coin in the meantime. You will have to wait until the time has elapsed.
- Before you can turn it into a passive source of income, you have to invest a lot of crypto. The return is a lot higher than on a savings account.
- If you hold cryptocoins longer, you cannot respond to price developments. For day traders it is therefore not interesting.
- There are various cryptos where you can only strike through an exchange. Think, for example, of Bitvavo or Binance. It is then not possible via your own wallet. The disadvantage of this is that you cannot manage this process 100 percent yourself.
- Sometimes there are additional conditions. Think of a minimum threshold or a minimum crypto strike period
How much do you earn by striking crypto?
Reward rates for crypto strike depend on multiple factors. Before you start striking, you can calculate how much currency you will get in return. There are calculators for almost all strike coins with which you can calculate it. However, each cryptocurrency has its own rules and rates. The working method remains virtually the same. For example:
If you participate in a strike for 3 months, you will receive at least 20% in return from your crypto. In six months you get 50% and for a year you receive 100% return. Would you like to participate in the crypto strike yourself?
There are different rules for discontinuing crypto coins. Often the only thing you have to do to strike is buy a certain crypto currency, download a wallet application on the PC and sometimes keep it open. Examples of crypto coins where strikes can be:
- Pivx
- ARK
- DASH
- NEO
- Reddcoin
- Neblio Hotels
- qtum
- OkCash
- NAV Coin
- Stratis Hotels
You now know what strike in Crypto is. If you want to stop your own crypto purchased crypto, you can do this at, for example, Bitvavo.
