Staking & Mining in simple terms
06 July 2023
What is Cryptocurrency staking
Cryptocurrency staking is a process in which a person holds or "stakes" a certain amount of cryptocurrency in a wallet or on a cryptocurrency exchange and earns rewards for helping to secure the network.
This process is similar to cryptocurrency mining, but instead of solving complex mathematical problems, the miner (now called a "validator") is responsible for validating transactions and adding them to the blockchain.
In a proof-of-stake (PoS) system, the validator's chance of being chosen to add a new block to the blockchain is proportional to the amount of cryptocurrency they are staking.
For example, if a validator is staking 1% of the total amount of cryptocurrency in the network, they have a 1% chance of being chosen to validate a block.
To participate in staking, a person typically needs to have a certain amount of cryptocurrency and a wallet that supports staking. They can then choose to "delegate" their staked cryptocurrency to a staking pool, which is a group of validators who work together to validate blocks and share the rewards.
Staking can provide a passive income for cryptocurrency holders and can also help to secure the network by ensuring that there are enough validators to validate transactions and add new blocks to the blockchain.
