Proof-of-work was the first consensus algorithm that managed to prove itself, but it isn’t the only consensus algorithm. More energy efficient algorithms, like proof-of-stake, have been in development over recent years.
Welcome to the Proof of Stake Community
A Proof of Stake consensus model will not only be an economical advancement by increasing transaction speed and reducing fees, it will also be an ecological advancement by lowering the excessive energy consumption used by Proof of Work mining.
Everyone knows the magic of compounding interest, where you’re earning interest (say, for letting a bank use your money), then earning interest on that interest. As the interest accumulates, it gets automatically reinvested, and earns even more interest.
Staking and Masternodes, while usually implemented together, are actually completely separate consensus mechanisms. Just like Scrypt mining on Litecoin is different than SHA 256 mining on Bitcoin. They both accomplish distributed consensus via locking of “stake” ,which acts like collateral that they will not attack the network, and get rewards for verifying transactions. So while that is the same, their functions are still significantly different.
Read MoreCoinbase – Buy & Sell Bitcoin, Ethereum, and more with trust. Coinbase is a secure platform that makes it easy to buy, sell, and store cryptocurrency like Bitcoin, Ethereum, and more. Based in the USA, Coinbase is available in over 30 countries worldwide.
Passive income investing with cryptocurrencies is essentially the same as with dividend paying stocks. In the stock market, there are certain companies that pay out dividends to stock owners – a portion of their profits that is split up evenly and distributed to each shareholder.
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All a network participant has to do is hold the specific cryptocurrency in the network’s dedicated wallet to start earning interest or dividend payouts.
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Proof-of-work was the first consensus algorithm that managed to prove itself, but it isn’t the only consensus algorithm. More energy efficient algorithms, like proof-of-stake, have been in development over recent years.
According to Bloomberg, investors turn to staking for gains in the crypto bear market, but there are risks.
If the Hodl strategy didn’t work for you, here is a little tutorial explaining how to compound your crypto portfolio thanks to staking! Let’s hope this will help, so you can hold cryptos and earn interest at the same time.