Cryptocurrency Staking

How Staking Works

An Insight To Staking Cryptocurrency

Staking Cryptocurrency

Time4VPS.EU - VPS hosting in Europe

Like any other network, blockchain networks need infrastructure to operate securely and efficiently.

What differs, though, is how that infrastructure is created.

Whereas companies and governments may independently build and control their infrastructure, many blockchain networks depend on users of the network to provide resources for infrastructure and maintenance. Because of this, blockchain networks have consensus mechanisms, or incentive systems that both encourage participation in maintaining the network and keep everyone playing fair.

Staking and mining are two such incentive systems.

How Does Staking Work?

In a Proof of Stake (PoS) blockchain network, each node that helps maintain the network must stake, or prove ownership of, a certain amount of cryptocurrency. This staked amount proves that the node owners are invested in the network, and allows them to participate in new block creation (validation) and receive any associated block creation rewards, such as newly minted cryptocurrency or transaction fees for transactions in the new block.

For example, if you bought 50 PIVX and set up a node that helps maintain the PIVX PoS blockchain network, you would automatically qualify to validate new blocks and receive block validation rewards.

In addition to providing a financial incentive to help build the infrastructure of a blockchain network, staking plays an important role in keeping nodes honest. Different PoS networks have different rules, but in general, if any node tries to include a fraudulent transaction in a block they are validating, other nodes in the network will reject that block and the malicious node will no longer be allowed to validate new blocks and receive the accompanied rewards. Moreover, in many PoS networks, a node that tries to broadcast fraudulent transactions will lose any cryptocurrency it has staked.

To further enhance network security, block validators are also chosen at random, with high-stake nodes validating blocks more frequently than those with a lower stake. Random selection of node validators highly discourages any attempt to attack the network.

Staking Pools

Some PoS networks require large amounts of staked cryptocurrency in order to be eligible to validate new blocks. In these cases, network users are often able to pool their crypto together, and block validation rewards are split up proportionately to pool members.

Each PoS network has different rules on how pools operate, and some of the more interesting ones have also incorporated voting systems. In these systems, the number of nodes that can validate new blocks is limited, which further incentivizes block validators to act in the network’s best interest.

How Can I Begin Staking Cryptocurrency & Earning Rewards?

Each PoS network has its own rules for staking. With some networks, like PIVX, all you need to do is buy cryptocurrency, install a wallet application on your desktop, and keep the application open. However, with PIVX and similar networks you must download a copy of the entire blockchain, which takes up a good chunk of hard drive space.

Other networks, like ARK, don’t require you to keep the wallet program open or download a copy of the entire blockchain, but do require you to vote on a delegate if you want to earn staking rewards. The process is actually quite simple and is one of the easiest ways to earn crypto via staking.

Still other networks require large amounts of staked crypto, investment in expensive computer hardware, and/or a great deal of technical know-how to participate in the staking process.

Return To The Learning Lab.

Industry Insights

Analysis and insights from the cryptocurrency world

October 23, 2019
What is a bitcoin halving?

A bitcoin halving (sometimes ‘halvening’) is an event where the reward for mining new blocks

September 19, 2019
Psychology of a market cycle

Meet the 10 stages of a market cycle Stage 1: Hope ‘Hope’ is

August 1, 2019
Master the Ledger Nano S: Private One-On-One Course

Crypto Connect provides an easier and safer cryptocurrency experience through a range of

July 19, 2019
Australia’s largest over-the-counter (OTC) cryptocurrency and precious metals bullion dealer

Ainslie Wealth is Australia’s largest over-the-counter (OTC) cryptocurrency and precious metals bullion dealer.

June 2, 2019
History Of Blockchain Technology

When Satoshi Nakamoto, whose true identity is still unknown, released the whitepaper Bitcoin:

May 2, 2019
The Original Ethereum Whitepaper

The Ethereum whitepaper is the best way to get to know Ethereum in

April 2, 2019
The Original Bitcoin Whitepaper

Satoshi Nakamoto's original paper is still recommended reading for anyone studying how Bitcoin

March 28, 2019
Mainnet Launches

A mainnet is the main blockchain network for a project to run on after rounds

February 3, 2019
4 Key Bitcoin Dates To Watch For In 2019

With 2018 finally over, the focus now is on what lies ahead for

January 10, 2019
Ethereum Hard Forks Jan’19.

There are 3 Ethereum hard forks lined up for this month of January.

December 18, 2018
Helpful Online Cryptocurrency Resources and Influencers

Learning about cryptocurrency and blockchain technology is a never-ending pursuit. You never really

November 3, 2018
Business and Professional Development Crypto Training

Business and Professional training on Cryptocurrency, Blockchain and all aspects of the crypto-technology

October 3, 2018
Master the Trezor – Private One-On-One Training Course

Crypto Connect provides an easier and safer cryptocurrency experience through a range of

September 25, 2018
The Periodic Table Of Cryptocurrencies

It’s getting more difficult by the day to keep up with the changes

August 1, 2018
Seminar at the AIA National Investors Conference 2018

We were delighted to present at the Australian Investors Association National Investors Conference

July 11, 2018
Staking Cryptocurrency

Like any other network, blockchain networks need infrastructure to operate securely and efficiently.

June 19, 2018
Where to Safely Store Your Bitcoins & Alt Coins

Protecting your digital currency is arguably one of the most important aspects of

May 17, 2018
Top 2018 Cryptocurrency Exchanges for Australian Crypto Traders

Purchasing cryptocurrency is now relatively simple, with many brokers making it possible to buy

April 26, 2018
Australian Cryptocurrency Buying Guide: Where to Buy Cryptocurrency

The rapidly growing cryptocurrency market has exploded in value and popularity over the

March 13, 2018
Exchanges Training Seminar

Thursday, 15th of March 2018, The Paddington Tavern, 186 Given Terrace, Paddington 4064 6.30pm to

February 20, 2018
New To Cryptocurrency – What you need to know.

New to Cryptocurrency, How to Buy your First Cryptocurrency Coins If you are

February 14, 2018
Cryptocurrency Private & Public Training Sessions and Crypto-technology Support

  At Crypto Connect, we provide a range of cryptocurrency private training sessions

February 1, 2018
Ledger Nano S: secure multi-currency hardware wallet

Ledger Nano S is a Bitcoin, Ethereum and Altcoins hardware wallet, based on

December 28, 2017
Crypto Training Seminars

Thursday, 18th of January 2018, The Paddington Tavern, 186 Given Terrace, Paddington 4064 6.00pm to

December 27, 2017
10 Best Blogs about Cryptocurrencies for 2018

While 20 years ago it was hard to find any blog because there

Contact Us

Please get in touch to ask a question or have a complimentary chat about cryptocurrencies that are right for you.
We look forward to hearing from you!


0402 992 599

4/1404 Logan Rd, Mount Gravatt, Brisbane, QLD, 4122

Opening Hours: 8am to 8pm, Monday to Saturday