Crypto Staking Explained: Easy Guide 2023

The best way to earn passive income through your cryptocurrency coins or token is crypto staking, it is the most underrated way of earning passive income but it can provide great returns on your holdings in crypto.

There are several options by which you can earn passive income with cryptocurrency like mining, airdrops, ICO, etc but you must also know the power of crypto staking, so let’s get started with what is actually crypto staking and how it works.

What is crypto staking?

Staking is a process in which you can put your crypto assets to work to generate more money from it by helping blockchain to perform various tasks, such as transaction validation and to improve the blockchain process, in return blockchain provides rewards to the holders.

For example- you keep your money in your bank account and it provides you with some returns on it similarly in staking you receive rewards for staking your assets.

In crypto staking you hold/lock your crypto coins for a particular time frame as per the requirements of each staking pool and after completing the time frame you get rewards in your holdings.

What are the best platforms for staking crypto?

You can stake your coins on many platforms Ethereum, Cardano, and Polkadot, and exchanges like Binance, ByBit, Kraken, Kucoin, and Gemini If you want to stake your crypto then you must make sure that the coin that you want to stake follows the proof of stake model because staking doesn’t work for all type of cryptocurrencies it only work with the coins that follow the proof of stake model.

How does staking work?

Crypto staking works on the Proof Of Stake model -The proof Of Stake model is a way of validating transactions on the blockchain, the nodes must verify and agree that the transaction is valid on the blockchain.

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Pros and Cons of Crypto Staking

Pros of crypto staking	Con’s of crypto staking
Easy way to earn rewards and profits on your crypto holdings	Crypto prices are volatile and You can face losses on your holdings sometime
Less energy is required as compared to mining	You can not un stake before the locking time period, if you un-stake before the time frame then you may not get rewards for it
Earn rewards while you sleep	Not every coin can be staked
Environmental friendly system
Helps blockchain to improvement

How to stake Crypto?

Staking can be done by anyone who holds the crypto that follows the proof of stake model, You need to do some investments and research on the staking coin and then you have to participate in the staking pool to be chosen for the validator

Most people follow the easiest way of staking which can be done directly through crypto exchanges, it doesn’t require too much technical knowledge.

7 Best Crypto Coins For Staking in 2023

Best crypto staking platforms list

You can stake your crypto on various platforms including some crypto exchanges given below-

• Ethereum
• Cardano
• Polkadot
• Binance
• ByBit
• Kraken
• Kucoin
• Coinbase
• Vauld
• Gemini

When you should not stake your crypto?

If you are planning to sell or trade with the crypto you are holding then you need to check the time required for un-staking that coin, once you put your coins on the stake you can not un-stake and trade on the coin for that given time frame.

Are crypto staking rewards taxable?

Yes, you have to pay taxes on crypto staking rewards when you un-stake, sell or trade with rewards, because you gained profits on your investments.

Conclusion

Crypto staking can be a great option to create a passive income on your holding and help blockchain with its processes which is helpful for blockchain and investors. We hope you understand the process of crypto staking, how it works, and the advantages and disadvantages of staking crypto.

FAQ: Crypto Staking