The first known digital coins the world know were developed based on the Proof-of-Work mechanism. For instance, Bitcoin is built on the PoW protocol. This coin is mined. Another way to produce digital assets that was opened relatively recently is crypto staking. Crypto assets based on the Proof-of-Stake mechanism are received through staking, not mining. Let’s see the difference.
To produce coins, miners use highly technological equipment. Miners (powerful computers) are placed all around the world. They perform math computations that allow to generate every next block in a blockchain. All the transactions in the network are fixed, and thus, a ledger is created.
Over time, mining is becoming more complex, and it requires bigger expenses. When Bitcoin appeared, it was possible to mine it even on a home PC. Now it can only be done on powerful equipment and at huge electricity costs.
To receive crypto coins through staking, there is no need to buy costly and advanced computers and bear huge electricity expenses. Instead, they just need a connection to the internet. Stakers hold their digital coins on the network and, in return, get rewards. Bonuses come in the form of new coins. At the same time, staked crypto provides operability and liquidity to the network where coins are stored and helps to support operations in it. The bigger the amount of cryptocurrency staked, the bigger the chances that their owner will create a new block in a blockchain.
Wrapping up, the main advantages of staking:
- Staking provides cheaper and faster transactions
- Staking does not require morning equipment
- Staking is environmentally friendly
- Staking is available for anybody and does not require in-depth knowledge of technical issues connected with blockchain.
If you want to stake crypto, feel free to use the WhiteBIT crypto exchange. It offers popular staking coins and 40 plans varying by the term and number of coins staked.