Crypto winter is upon us. In other words, a major bear market has hit crypto investors hard. As long-term investors know, bear markets are a natural part of the business cycle. While crypto winter can be especially difficult for crypto enthusiasts to watch out for, there are still ways to earn extra money through your crypto portfolio.
Let us find out what is crypto staking. Plus, learn how you can use this strategy (and invest in crypto) to earn extra money during crypto winter.
What is staking crypto?
At the most basic level, staking crypto is a way to earn passive income from your crypto holdings. As an investor, you can think of staking crypto as a way to earn interest or dividends on more traditional investments.
So how does staking work? Essentially, crypto owners can allow their cryptocurrency to be used to vouch for the accuracy of other transactions on an underlying blockchain network.
The blockchain contains a record of past transactions made with cryptocurrency, and this record must be agreed upon. Otherwise, investors would have no confidence in the legitimacy of the currency. Staking is an approach some cryptos take to validate their blockchain, which gets users to participate in the approval and verification of transactions on the blockchain.
Of course, the back end is relatively complicated. But as an investor, you won't need to get into all the technical details. You would have a few ways of going about this:
Bet cryptocurrency through a crypto exchange: The exchange covers the technical aspects for you. In exchange for handling the back end, the crypto exchange will take a cut of your profits.
Join a Staking Pool: This requires you to transfer your funds to a specific crypto wallet before proceeding with staking. Like a crypto exchange, a pool administrator will handle the back end, and take a cut of your profits.
As you earn with cryptocurrencies, you will receive your rewards in pre-defined cryptocurrencies. Along with this, staking is a way to grow your crypto portfolio. But the downside to betting through a forum or pool is that a cut of the profits goes to the facilitator. Shop around for a fair rate before going ahead with a particular option.
Benefits of Staking Crypto
Like all investment options, there are advantages and disadvantages to betting on crypto. Let's start by exploring the pros:
Passive Income: If you are a believer in the staying power of crypto, you can grow your crypto portfolio through passive investing. You will not have to monitor the verification of your crypto. Instead, the income from staking will appear in your portfolio in the form of crypto.
High Returns Possible: Investors hunting for relatively high returns can find them through crypto staking. Although the exact amount you can earn varies based on several factors, you are likely to earn more than what you earn through a crypto savings account.
Crypto exchanges handle the process: Crypto staking relies on a complex back-end system. But when you deal through a crypto exchange, you essentially outsource any of the complexity. You can just sit back and enjoy the returns.
Risks of Staking Crypto
Crypto is a particularly volatile investment. If you are looking to stake your crypto, there are risks to be aware of. Here's what to know before jumping in:
Volatility: Crypto is a volatile asset. Through crypto staking, you will earn rewards in the form of crypto. Although you can have more cryptocurrency, the value of these assets can rise or fall significantly over time. In addition, your actual rewards may be less than expected.
Lack of Liquidity: When betting crypto, you will need to lock up funds for an extended period of time. The time commitment can range from a few days to a few months, and in some cases, may be an unknown factor to the investor. During the staking period, most exchanges have a lock-up period. Before depositing your funds, make sure you are comfortable with any lock-up periods. , If your property is falling in value, you will not have the chance to withdraw your funds for sale. Additionally, staking a relatively unknown coin may be difficult to sell on major exchanges.
Possible loss of crypto: Crypto is one asset that seems to be particularly prone to theft, without many recourse options. Keeping this risk in mind, it is best to work with the most reputable platforms for crypto staking.
Which cryptocurrencies have betting opportunities?
When you dive into the world of cryptocurrency, you will find that there are hundreds of coins out there. If you are interested in staking opportunities, you will need to find cryptocurrencies that offer staking options.
Some of the cryptocurrencies that offer staking include Algorand, Ethereum, Tezos, Cosmos, Solana, and Cardano. The earnings you can earn through staking may vary depending on the platform and cryptocurrency. For example, Coinbase offers the opportunity for Ethereum with a 4.00% APY offering. Coinbase's top offering is 5.75% APY when you stake Algorand.
Some of the cryptocurrencies that offer staking include Algorand, Ethereum, Tezos, Cosmos, Solana, and Cardano. The earnings you can earn through staking may vary depending on the platform and cryptocurrency. For example, Coinbase offers the opportunity for Ethereum with an offer of 4.00% APY. Coinbase's top offering is 5.75% APY when you stake Algorand.
Is Staking Crypto Right For You?
Staking crypto is a useful option for long-term crypto investors willing to weather a potentially long crypto winter ahead. You can put your crypto to work for you. If you are not worried about exiting the market at short notice, the time commitment to crypto will not be a discouraging factor.
Shop around for the top APY as you consider your cryptocurrency betting opportunities. But consider the stability of crypto. While a small crypto can offer a high APY, there is also a high risk of crypto tanking. Additionally, make sure you are comfortable locking up your funds for an extended period of time before getting started.
Crypto investing made simple
If you want to put your cryptocurrency to work, CryptoKitties is a worthwhile opportunity. But staking crypto comes with risks that not every investor is comfortable with. For investors preferring a different strategy, Q.ai's Crypto Kit could be the right move.
Q.ai uses Artificial Intelligence to monitor changes in the market. As the market changes, Q.ai will automatically make necessary adjustments to your portfolio to keep it in line with your goals and risk tolerance.
Since crypto markets are so volatile, harnessing the power of artificial intelligence is particularly attractive. Even if you prefer to stay on top of changes in the crypto world, Q.ai can take some of the pressure off your commitment to portfolio management.
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