Staking Definitions

Without mincing adjectives,  my camera lands on staking.  Actually I do ask myself if it is a silly or prudent measure. 

Staking is locking out some or all your cryptocurrencies with an aim of earning from it.  I tend to believe staking is just like mining. 

Investopedia lists staking as one way of earning passive income. They negate proof of work (POW)  as the only way of earning thus adding proof of stake (POS)  as a way of earning. 

Staking a Currency

A large competitor is proof of stake (PoS). Here, users are rewarded for holding currency in a wallet for a period of time, similar to bank interest. 

Cryotocurrency, a word coined from crypto  and currency or simply called crypto are digital currency which have escaped centralization of central Banks and countries.  The cryptocurrencies are controlled by Decentralized Finance or DeFi. Transactions are controlled by a database known as blockchain.

There are very many ways of acquiring these vital digital monetary, among them we have the following

• Prove of work- is also termed as mining and is a decentralized consensus mechanism that requires network members to expend effort in solving an encrypted hexadecimal number. In a proof of work,  heavy computers are used to expend effort used in solving the encrypted number. POW is a complex idea which is simplified by computation. 
• Proof of stake-locking your tokens to earn from them.  Usually the earning from POS is greater as compared to interest one earns from banks. 

Advantages of staking

Staking has three main advantages

• Easy start
• Earn crypto
• Support crypto projects

Disadvantages

• You may lose your tokens through fraud
• The tokens may depreciate in value

They are summarized as market risk, liquidity risk and loss of assets

 Thanks for reading.