Would you like to earn cryptocurrency without much effort? While some users buy video cards and ASIC devices to do mining, while others invest in crypto purchases and hit trading, there is a simpler alternative. This option is called stacking (in English, cryptocurrency staking), characterized in that you practically do not need to do anything. What kind of miracle is this, we will now tell.
How does cryptocurrency stacking work?
The name “stacking” itself comes from Proof-of-Stake - a cryptocurrency mining algorithm . We already talked about it in more detail in the article “ What is PoW and PoS Mining? " In short, this is proof of stake, that is, for mining you need to possess not a certain amount of power (as in PoW), but a certain amount of coins. Hence the strategy of stacking is to acquire a crypt and then store it in your wallet.
To do stacking, you do not need any special knowledge and skills, it all comes down to a few simple steps:
Types of cryptocurrency stacking
There are two options for stacking. They are divided according to the number of participants.
The first type is stacking in a pool. Users combine their savings to get a larger total, and therefore more income. Profit is divided among all depending on the invested funds. Most often, this method is preferred by beginners to save up and go to the solo stacking.
Hence the second (and main) view is solo. Here, everything depends on only one user, who can only rely on his own accumulations and strengths. “Work” is carried out purely alone and it is not necessary to share profit with anyone.
Popular cryptocurrencies for stacking
All currencies based on the PoS algorithm are suitable for stacking . Among the most popular are Dash (profit of about 7.5-8.4%), NEO (profit of 4-6%), PIVX (4.8-5.5%), Zcoin (up to 17%), VeChain (about 2%), Lisk (from 6.25%). Among the less popular are KuCoin Shares, Decred, Rads, SysCoin, Cosmos, Shift, BNB, Tezos, Ark and others.
Some sites pay more, others less, the deposit mechanism may also slightly differ, but the essence of stacking remains the same everywhere: passively earn coins.
Before deciding whether to do stacking or not, it is important to look at all its advantages and disadvantages.
Among the positive aspects, the following can be noted. Firstly, unlike mining , you do not need to worry about buying powerful expensive equipment that consumes a huge amount of electricity and generates no less heat, which requires a separate room. That is, save both money and energy.
Secondly, this is of course a minimum of effort. They got a wallet, invested, forgot, after a while you make a profit.
Thirdly, when compared with classic mining and bank deposits, then stacking is much safer than them. Cryptocurrency on PoS is practically not exposed to the threat of 51% attack . And due to the fact that everything works within the blockchain , banks are left behind because of their centralization and not only.
Well, the last advantage I want to call accessibility. Any newcomer to the cryptosphere can do stacking, because there is no need to understand complex devices and the cryptocurrency market, and, in principle, nothing really needs to be learned. Stacking opens the door to the crypt for everyone.
Among the shortcomings, the first one to pay attention to is the size of the profit. You won’t make a fortune like that, income directly depends on investments: the more you make a contribution, the more you will receive. Yes, of course, if you invest millions, then the earnings will be appropriate, but, in reality, the earnings will be small, rather this is a small bonus to the main income.
Hence the following drawback - often currencies set a rather high entry threshold. However, stacking in the pool comes to the rescue here, where users can “chip in” funds and earn money together. And when enough funds accumulate, you can go to solo mining.
Cryptocurrency stacking is one of the most convenient and safe options for passive earnings. For him, he does not need to purchase expensive mining equipment and, in principle, spend money, because the existing savings will work for themselves. The resulting income can be used to purchase other coins, which can also be earned by storing them in a wallet.
At the moment, a huge selection of cryptocurrencies based on the PoS algorithm is provided for users, this makes it possible not only to select an investment object individually for each, but also to invest in several coins at once.
A big event for stacking will be the transition of the Ethereum currency to Proof-of-Stake. This will open up many new opportunities that will attract the attention of potential investors in stacking. The date of such an “update” is constantly being postponed, until recently it was planned to launch this year, but now the beginning of 2020 appears as the deadline. In any case, this can only be a little wait.