Ever wanted to mine cryptocoins but found it daunting? Or maybe you figured out after purchasing expensive video cards or dedicated ASICs that mining is a technological arms race that favors deep pockets — in other words, a losing proposition.
So, what’s are a person to do? How can they join the cryptocoin revolution, amass coins, and hopefully profit from the growing phenomenon? Well, one could simply buy coins from one of the many exchanges and sit on them, hoping the price goes up. Or one could seek out specific coins that reward you just for holding them. The often misunderstood process is called staking or more formally proof-of-stake minting.
How is This Different Than Mining?
Basically, the strategy involves taking the money you would have spent on mining hardware and purchasing high-stake coins from a coin exchange, sending them to your personal wallet, and from there watching the balance grow.
Yes, it’s just that simple.
In this scenario, proof-of-stake minting replaces the usual proof-of-work mining for block generation, otherwise known as securing the network and processing transactions. The more coins you hold in your wallet, the more chances you have of solving blocks and reaping stake rewards.
The Easiest Way to Stake
Right now for the average user, the simplest way to stake their coins without the need for downloading cold wallets is through POSWallet. It also has staking pools, allowing you to receive a relatively steady flow of stakes and minimize dry spells.
You can read our guide on how to get signed up on POSWallet and start easily staking here.
Coins that are being staked are much more illiquid than coins kept in an exchange account. That is part of their purpose– having people put thousands of coins in storage and not be constantly trading them or at risk of dumping them due to the whims of trading bots ensures eventual stability in prices.
However, should that plunge happen regardless, you might not be able to unstake your currency and sell it fast enough.
Short of losing your staking wallet or account access, this is the biggest risk to staking your currency.
There is no need for specialized hardware or software beyond your own personal computer and the specific coin wallet – a typical PC or laptop can easily run several staking wallets simultaneously – and the wallet does all the work of minting for you automatically. It’s like having a high-interest bank account on your home computer.
Of course, all POS coins have different parameters and rewards for staking but mechanics are essentially the same. Coins sit in your wallet gathering weight, a product of the amount of coins times coin age.
Here are some of the most popular PoS coins:
It is likely that Ether will soon transition to a PoS model as well, which will mark the a huge shift in the general cryptocurrency community towards PoS models if it has not already started shifting.
In closing, minting coins via the staking process is a simple and profitable way ordinary people can effectively mine cryptocurrencies without all the hassles of actual mining.