🪙 Cryptocurrency Stacking | Part I
Stacking is a way of earning passive income from cryptocurrencies based on the Proof-of-Stake (PoS) consensus algorithm and its variants.
The essence of stacking is to block a certain amount of coins in a wallet in order to get the right to participate directly or through intermediaries in the maintenance of the blockchain of a given asset and receive remuneration for it.
Stacking appears to be a profitable alternative to simply holding cryptocurrencies in a wallet, being analogous to a bank deposit in the crypto industry.
What is Proof-of-Stake (PoS) and how does it relate to steaking?
Proof-of-Stake is a consensus mechanism in which the right to generate new blocks, verify transactions, and include them in the blockchain according to a certain algorithm is played out between computing nodes (nodes) based on how much of a given blockchain’s coins they own.
In a basic scenario, a node that owns 1% of all coins in circulation receives the right to process 1% of the blocks, and for its work it receives 1% of all rewards of the network. However, many cryptocurrencies also take into account the tenure of coins and other factors.
Stacking is about getting that very reward for producing new blocks and verifying data with your share.
If suddenly the exchange does not provide an opportunity to purchase crypto (for RF) there are P2P markets where you can buy an asset, then send it to the exchange’s custodial wallet.
