What is Staking? Top 5 cryptocurrencies to stake in 2020
When Satoshi Nakamoto introduced the global blockchain network Bitcoin In 2008, everyone was amazed at this peer-to-peer electronic cash system. Bitcoins are created as a reward for mining, the process using the Proof of Work (PoW) consensus algorithm. On January 3, 2009, Satoshi Nakamoto mined the first block in the Bitcoin blockchain called the genesis block.
After that day, many people and companies established their infrastructure to start mining Bitcoin. But they soon realized that Proof of Work (PoW) consensus algorithms for mining new Bitcoins required a lot of power.
According to an estimate, at that time, maintaining the Bitcoin network costs an average of $ 150,000 per day.
To solve the problem of high energy consumption of Bitcoin mining, in 2012, Sunny King and Scott Nadal introduced the consensus algorithm of Proof of Stake (PoS) for blockchain to create new coins on a blockchain network. This is how the Staking came about.
What is Staking with cryptocurrencies?
Staking is the process of actively participating in transaction validation on a proof of stake (PoS) blockchain. Anyone with a minimum required balance of a specific cryptocurrency can validate transactions and earn rewards for their participation.
In simple words, Staking out is the process of buying and holding a cryptocurrency in a wallet to support the operations of a blockchain network.
Shortly after its introduction in 2012, cryptocurrency trading for those seeking to profit from cryptocurrency mining but without the risk or high cost of entry, became a popular alternative to mining.
Stake is considered the easiest way to earn money with cryptocurrencies, but What are the best coins to stake in 2020?
Let's take a look at the top five currencies in 2020. The ranking is based not only on annual returns, but also on the risk factor, complexity of the process, and liquidity of assets during the stakeout period.
1. Tezos (XTZ)
Staking Rewards, the leading data provider for stakeout, lists Tezos (XTZ) as the main stakeout asset, although it is not the currency that pays the most interest.
The current annual return on Tezos is around 6%, minus the fees of a validator. The best feature is that the staked XTZs are always liquid. Interested parties can freely move their tokens as there are no freeze or unlimited periods.
The Tezos blockchain uses a Liquid Stake Proof (LPoS) consensus mechanism where, unlike Delegated PoS networks, token holders delegate their entire accounts to a validator called baker, who will be responsible for securing the network on your behalf.
XTZ holders who don't want to delegate their tokens to a validator can "bake" it for themselves by setting up a node and having at least 8,000 XTZ, also called a roll. Baking rewards are also higher than delegation rewards.
With current performance, an XTZ holder can earn $ 153.77 in rewards by betting 1,000 XTZ.
2. Cosmos (ATOM)
He ATOM of Cosmos It ranks second on this list. The current annual return on Cosmos is around 8-10%, minus validator fees.
ATOM holders can gamble by delegating their assets to one of the network validators. They can also run their validator node. The rewards for running a validator are higher but contain a high risk factor.
There is a 21-day blocking period. During this period, an interested party will not receive any reward, and the locked tokens will not be transferable until the period is completed.
3. Algorand (SOMETHING)
According to Stakingrewards.com, Algorand (ALGO) is the third best currency to stake in 2020. ALGO's current annual return is 5.78%. Users can start betting with Algorand with just 1 SOMETHING.
To bet SOMETHING, users only need to have SOMETHING in wallets like Exodus or Atomic Wallet.
Algorand (ALGO) does not currently offer delegation. Instead, anyone can run a share node just Algorand. Since not all users have the technical capacity to participate in the consensus protocol, Algorand offers an offline mode. When a user declares himself offline, the participation of his account is not taken into account.
4. Decred (DCR)
Decred try to get the best results using both the Proof of Participation and Proof of Work in an innovative hybrid blockchain.
The PoS Consensus Mechanism is used to validate PoW mining work and approve or reject the proposed changes to the Consensus Protocol Rules. Decred holders bet on DCR to get voting tickets. DCR Block Rewards are divided in such a way that miners get 60% of the rewards, while DCR POS ticket holders get 30%.
Actually, DCR's annual reward for participation is 7.42%. The minimum required for stakeout is 138 DCR. There is also a 28 day lockout period.
For more information on Decred, visit this article.
5. Merger (FSN)
Fusion (FSN) It is by far the asset with the most interest in the Top 5 list. The current annual return on FSN is 23.55%.
The FSN holder can delegate their token to a group of stakeout providers. All they need is to send a minimum of 100 FSN with a time limit to the group and they will do the rest. They can start earning in minutes while improving the security of the Fusion network at the same time.
If an FSN holder has more than 5,000 FSN, they can run their own node. Setting up a node is easy but requires some technical knowledge to operate it.
This article is not an investment advice from the author. Investing in cryptocurrencies is risky. Do it in your evaluation.