If you’ve been around crypto for any length of time, you’ve probably heard the term “staking.” Not quite sure what it means? You’re in the right place.
Here’s a simple breakdown of staking*, how it works, and why it matters.
What is Staking?
Staking is when you commit your cryptocurrency to help support a blockchain network. In return, you may earn rewards over time.
When you stake, your crypto gets “locked” for a certain period. During that time, it can’t be sold or traded, but it’s doing a job behind the scenes. It's helping verify transactions and keep the network running smoothly. In exchange, you may receive a reward, often paid in the same type of crypto you staked.
That’s staking in a nutshell: You lock up your crypto. It supports the network. You may earn more crypto as a reward.
Still Not Clicking? Let’s Look At It A Different Way
Imagine staking like planting a fruit tree.
You place the seed in the ground (your staked crypto). You can’t move it or eat the fruit right away. But over time, as it grows and contributes to the orchard (the network), the tree starts to produce fruit (rewards). When harvest comes, you get your share.
Even if you’re not the one trimming branches or watering every day, your tree is part of the system and it’s working for you.
What is Proof-of-Stake?
To understand staking, you need to know why it exists. That brings us to something called Proof-of-Stake, or PoS.
Proof-of-Stake is a system that certain blockchains use to process and confirm transactions. It’s how the network stays accurate, secure, and decentralized without relying on massive amounts of energy.
Here’s the idea: instead of using computers to solve complex puzzles like Bitcoin does (called Proof-of-Work), Proof-of-Stake relies on people locking up their crypto to help verify transactions. When someone stakes their crypto, they’re signaling trust in the network and in return, they may be selected to help confirm a new block of data.
That’s what your staked crypto is doing - it’s helping the system run.
For example, blockchains like Ethereum, Cardano, Polkadot, and others use Proof-of-Stake.
The Benefits of Staking Crypto
Here are a few reasons why people stake crypto
Earn Rewards
When you stake your crypto, you may receive rewards over time. The amount can vary based on the asset, how long it’s staked, and the network’s performance.
Passive Participation
Once you stake, everything runs in the background. You don’t have to manage anything day to day; your crypto does the work for you.
No Hardware or Mining Required
You don’t need expensive equipment or technical knowledge. With staking, most people simply lock their crypto using a trusted platform or provider.
Energy-Efficient
Unlike crypto mining, staking uses very little power. It’s a more sustainable way to support blockchain technology.
Stake Crypto at iTrustCapital
If you're interested in staking, you can do it inside a Premium Custody Account (PCA) or a tax-advantaged Crypto IRA at iTrustCapital.
Eligible crypto assets include Solana (SOL), with more supported assets planned for the future. We make it easy to stake, all while keeping your assets secure.
Click here to learn more and stake SOL today.
*Staking involves considerable risk.
This article is for informational purposes only and is not intended to constitute investment advice in any way or constitute an offer to buy or sell any cryptocurrency, digital asset or security or to participate in any investment strategy.
iTrustCapital is a fintech software platform for alternative assets. iTrustCapital is not an exchange, funding portal, custodian, trust company, licensed broker, dealer, broker-dealer, investment advisor, investment manager, or adviser in the United States or elsewhere. iTrustCapital is not affiliated with and does not endorse any particular digital asset, precious metal or investment strategy.
Investing in any digital asset or cryptocurrency (including meme coins) carries significant risks due to their speculative and highly volatile nature. Staking involves considerable risk. Past performance is not an indication of future results. No investment is completely risk-free, and every investment carries the potential for losing some or all of the principal amount invested. Cryptocurrency is not legal tender backed by the United States government, nor is it subject to Federal Deposit Insurance Corporation (“FDIC”) insurance or protections. Clients do not receive a choice of custody partner.
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