With more and more people beginning their cryptocurrency journey, many are interested in alternative ways to make an income.
March 03, 2021 · 4 min read
With more and more people beginning their cryptocurrency journey, many are interested in alternative ways to make an income. Staking offers the potential for investors to earn cryptocurrency by becoming a validator of the network. You may be wondering if cryptocurrency staking has long-term viability. In this blog, we’re talking about the future of staking and whether or not it remains a viable investment.
Firstly, people are often concerned with the volatility of the market. Like any speculative investment, price swings are common. Staking provides investors with the opportunity to soften these large swings and make investing more palatable. However, the market is an essential factor in assessing the sustainability of staking as an investment. Some of the best staking crypto assets doubled or tripled their value in 2020, which shows just how popular staking has become.
Secondary, people rightly ask, is staking crypto safe? The crypto-space is littered with stories of people losing their crypto, and asset loss is a big hurdle for the space to overcome. If you’re worried about the risks associated with staking or need best practice help staking crypto, we’ve got you.
When you become more comfortable navigating the crypto market and the crypto-space (which can be difficult for newcomers), then staking becomes much more palatable!
If you googled ‘how to stake crypto,’ you’ll be inundated and overwhelmed with long and barely digestible Reddit threads. So let’s keep it simple. Stakers help validate transactions and maintain blockchain security. In other articles, we have described the blockchain as a spreadsheet, and the stakers are like editors or bookkeepers, working collaboratively to ensure the accuracy of the document. Stakers must allocate their ‘stake’ in the currency that they are working to secure. If you are staking 5% of the coins on a network, you can validate 5% of transactions. As stakers do this, they receive rewards in the currency they are securing. If you’re still wondering what staking crypto is, there’s more information in our introduction to staking blog.
So what does this have to do with its viability as a long-term investment? To answer that, we need to understand better what makes distributed consensus so special and how it helps the everyday investor.
Our current financial systems rely on centralized entities to prove the validity of transactions. With this comes many negatives. Firstly, they become the objective truth. Whatever they say goes. Secondly, since they hold all the validating power, they receive all the rewards for it. Banks represent a highly centralized model of consensus. In a distributed system, everyone who uses the network is responsible for its validation, and everyone is rewarded based on their share of the network.
The Divi Project is creating crypto accessibility for everyone
There’s a reason we love staking and decentralized currencies in general. They provide an excellent option for smaller players to secure the network and earn rewards simultaneously. Cryptocurrency represents a tangible shift in global financial systems, and staking seeks to play a significant role. With the increasing centralization of proof of work currencies, staking remains more accessible to smaller investors. There is a definite movement toward reclaiming our economic systems, and cryptocurrencies will play a critical role.
To understand the sustainability of cryptocurrency staking, we must understand global financial dynamics and how this places decentralized coins in the power position.
Whether or not crypto staking is sustainable long term, only time will tell. However, if we look at the market growth over the past decade, it’s clear that crypto is here to stay. The emergence of alternative currencies comes when institutional investment companies are under the microscope, as people begin to seek out fairer and more inclusive financial systems.
The average person is beginning to see how the current system favors wall street, corporations, remittance companies, and the global elite.
If cryptocurrencies can mature, we should not underestimate their transformative effect on the global economy. There is significant potential to create a fairer and more inclusive economy for all, and staking can underpin this monumental shift.
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March 03, 2021 · 4 min read