Continuing my beginner series, today I wish to look at crypto staking, what it is, how it works and how you can get staking. Let's get cracking.

Crypto staking is a process where you lock up a certain amount of cryptocurrency in a wallet to support the operations (and security) of a blockchain network. In return, you earn rewards, i.e. additional cryptocurrency. This is similar to earning interest in the bank, but different in that the staking actually helps the blockchain and you are "paid" for that. While both are means of earning passive income, they are fundamentally different in the underlying mechanism and the regulatory environment they operate in. If interested in this comparison drop me a comment and I will delve deeper.

There are Proof-of-Stake (PoS) blockchains and Proof-of-Work (PoW) blockchains in the crypto world. Staking is essentially associated with Proof-of-Stake (PoS) blockchains, where stakers help validate transactions and maintain the network's integrity. Unlike proof-of-work (PoW) systems (e.g., Bitcoin) that rely on mining, PoS networks choose validators based on the number of coins they hold and are willing to "stake" as collateral. The network randomly selects a validator from those who have staked coins. The more coins you stake, the higher your chances of being selected. Validators then confirm and validate transactions, adding new blocks to the blockchain for which they earn staking rewards, typically a portion of the transaction fees or new coins minted by the network.

How do I get in on the action?
First we choose a PoS Cryptocurrency and, after checking that the exchange does offer staking on these coins, buy it on an exchange (like Binance/Kraken etc.) using our account. Some choices (not recommendations) are:

• Ethereum 2.0
• Cardano (ADA)
• Polkadot (DOT)
• Tezos (XTZ)
• Solana
• and many more

Then we move the coins we wish to stake from the exchange to a wallet that supports staking. This could be a hardware wallet, a software wallet, or an exchange wallet that offers staking services.

Staking Methods

• Direct Staking: Use a wallet to directly stake coins on the network. This requires a bit of technical knowledge and a minimum amount of coins.
• Staking Pools: Join a staking pool where multiple users combine their coins to increase their chances of being selected as validators. Pools typically charge a small fee but are user-friendly and require lower minimum stakes.
• Exchange Staking: Some exchanges offer staking services where they handle the technical details, and you just need to hold your coins on the exchange.

Whatever method you use, the mechanism will differ depending on your provider. Follow the instructions provided by your wallet or staking service to lock your coins and start earning rewards. For example if you use a Trezor hardware wallet, Trezor, has added Ethereum staking to its cryptocurrency management application, Trezor Suite. The process is explained on the Trezor site.

If you have a Tangem hardware wallet, Tangem at the moment are using what is called the Wallet Connect protocol to connect to other providers who will provide staking services. See a blog here  to see how it can work.

Keeping track of your staked coins and rewards is usually via mobile or desktop app. Personally, I prefer to maintain my own books so I use MS Excel to track all my investments and recommend that method to everyone. The time spent is justified not only by the feeling of security, but also by the awareness of ones exposure that it brings.

Some platforms offer flexible staking, allowing you to "unstake" your coins at any time, while others may lock your coins for a specific period. Some offer a combination of staking options, where they lock it in for a short period only, and then they calculate your staking rewards to painstaking accuracy as the whole process is automated.

What to watchout for / be aware of

Fees: Be aware of the many fees associated with crypto. The industry is not heavily regulated, there are still many loopholes and there are many fees, which you need to be aware of. Think, that anytime you transfer your crypto from one place to another there will be associated fees. Thew are fees associated with staking, including transaction fees and pool fees.

Lock-up Periods: Some staking methods require you to lock your coins for a fixed duration, which means you can't sell or transfer them during this period. This can be an issue if the rewards you get staking are outdone by the amount of market value your coins are losing. You will have essentially been locked out of selling them, even when you know the price is goind down further. On the flip side, if the market value appreciates, you would have made

Rewards and Risks: Staking rewards vary depending on the cryptocurrency and network conditions. There's also a risk of losing some of your staked coins if the validator you choose performs poorly or engages in malicious activities. As the crypto space is new and regulation is catching up, this is not a distant possibility like in the traditional banking space.

Due diligence: As always I have not, in the foregoing, mentioned any recommendations as you do need to do your due diligence and at least understand what the products/services you get entail, including understanding the fees, the time frames and how you will be paid. Nothing I write here should be taken as financial advice. I have given the key words you can search for and explained what staking means. There is far more to staking than these basics, but this is a good starting point.

Below are some products (I am not a promoter) which are popular.Staking Platforms and Wallets:

• Hardware Wallets: Ledger, Trezor, Tangem
• Software Wallets: Trust Wallet, Atomic Wallet, Exodus
• Exchanges: Binance, Coinbase, Kraken, KuCoin, Swyftx (for Australia - referral link)

Why not try out staking and earn rewards while supporting the blockchain network's security and operations.

*Note: after writing this article I have been informed that Swyftx in Australia no longer support staking due to local regulatory issues. However I have left the link in the text as it is a referral link.