Earn passive income by staking cryptocurrency

Passive income has become a popular topic on the internet, especially today when most of us are working from home, and our bosses can’t monitor what we’re doing in front of the screen. So we have more free time to explore and learn new things and possibly increase our cash flow. In this article, I am going to share with you how staking works and how you can earn from it.

Key Takeaways

• Staking is a way of generating passive income for holding certain cryptocurrencies that offers a better return than many alternatives.
• Beware of the risk associated with staking as cryptocurrencies are very volatile and could potentially price plunge.
• Stablecoin is the most viable option for folks who wish to generate stable income without exposing higher risk to cryptocurrency's renowned volatility.
• Staking cryptocurrency can be extremely profitable if you truly believe in what you invested in and play the long game.

How does staking works?

Crypto staking is simply holding your coin for a certain period of time. During this period, the locked coin in the blockchain network will be randomly selected to perform various tasks like helping to validate blockchain transactions In exchange for rewards, typically in a form of more coins or tokens.

The risk of staking

when you stake a coin, there is something called a locking period. during this period your coin will be moved into a locked state for a certain amount of time this ranges from a month to a year. That means, you can’t send them or you can’t cash them out even if the market price plunge. Staking definitely carries some degree of risk. That is why we will look into stablecoins.

Stable Coins

Cryptocurrency is notorious for its own volatility. On the contrary, a stablecoin holds true to its name. They are tied to another currency. For example the Binance USD(BUSD) coin, this coin is pegged to the U.S. dollar founded by Binance and Paxos. Every stablecoin is a 1:1 ratio to its pegged currency which minimizes volatility and offers stability which is why it’s greatly recommended for staking your funds.

How to maximize your returns?

Low-risk investments generally offer low returns. So to maximize your earning potential, I would recommend investing in a coin that you truly believe in and has the potential to be a future bagger, so that you can hold it for years and play the long game. As a general rule of thumb DYOR(Do your own research) before investing in any security, especially in cryptocurrency as pumps and dumps are very common in this market. A good coin or token has a purpose, a competitive and transparent team working on the project, and a whitepaper that makes sense, anything more than a 5% transaction fee signals as suspicious.

That is all for this article. Thanks for reading this article! Leave a comment below if you have any questions, and make sure to follow me here on medium :) https://medium.com/@algerwrites