{"id":228,"date":"2022-12-31T19:47:59","date_gmt":"2023-01-01T00:47:59","guid":{"rendered":"https:\/\/www.stakepark.xyz\/?p=228"},"modified":"2023-01-01T18:08:58","modified_gmt":"2023-01-01T23:08:58","slug":"why-should-you-stake","status":"publish","type":"post","link":"https:\/\/www.stakepark.xyz\/why-should-you-stake\/","title":{"rendered":"Why should you stake?"},"content":{"rendered":"\n
Staking cryptocurrency is a comparatively new way of participating in a crypto network. Previously, participation was primarily limited to those who could contribute hardware, electricity or computational power via Proof-of-Work mining to ensure network security while earning rewards, but now it\u2019s open to all thanks to Proof-of-Stake blockchains. All you need is the cryptocurrency itself.<\/p>\n\n\n\n
Let\u2019s first understand the fundamentals of staking and why it is needed.<\/p>\n<\/div>\n\n\n\n
Staking is the process of effectively locking or freezing your cryptocurrency funds. In return, you get staking rewards on the amount you staked. Why is this needed? To understand that, we have to take a deep dive in how blockchain systems work and run.<\/p>\n\n\n\n
A network needs to have a consensus among participating nodes. Historically, it\u2019s been done the Proof-of-Work way through mining. In the process of \u201cmining\u201d a new block on a blockchain (such as Bitcoin), you\u2019re verifying transactions that happen on the network. This is important because if a lot of people are not actively verifying transactions on a network, bad actors can get away with rewriting the blockchain itself.<\/p>\n\n\n\n
The downside is that mining requires upfront and ongoing costs \u2013 such as high-end graphics cards (GPUs) or specialized ASIC machines (specialized mining rids). It also uses a lot of energy, as all this hardware uses a lot and must run 24\/7.<\/p>\n\n\n\n
Proof-of-Stake is a fairly new concept. In this system, consensus happens by nodes without the need to mine. Transaction verification is still vital \u2013 and it is done by giving participants the power to verify transactions without having to solve any redundant or impractical mathematical algorithm. The amount staked increases the amount of verification influence.<\/p>\n\n\n\n
But of course, these networks cannot trust just anyone who joins! For example, imagine someone has a huge influence or enough resources to train other people to perform repetitive tasks or acquire a large portion of the network\u2019s validating power. This person or organization can, in theory, use this power to take control over the network, known as a 51% attack.<\/p>\n\n\n\n
This is not ideal, of course.<\/p>\n\n\n\n
The power to verify transactions via staking is given to those who hold a particular cryptocurrency (simply the network\u2019s own coin) and are willing to stake or freeze it. This ensures that they have skin in the game. Now, they are more likely to work toward the common goals of the network and see it succeed than trying to game the system for any individual profit.<\/p>\n\n\n\n
This process of buying and holding a particular cryptocurrency and putting it into a staking contract it is called staking.<\/p>\n<\/div>\n\n\n\n