Africa’s foremost blockchain/crptocurrency platform, Bitfxt, has added staking options to the array of its services.
Cryptocurrency staking has become an alternative way for crypto investors to make money from the market. Staking of cryptocurrencies is usually possible by digital currencies using the proof of stake (PoS) and the delegated proof of stake (DPoS) consensus mechanisms.
This move means that for users to make more profit, direct trading won’t be the only option. Only top cryptocurrency exchanges in the world like Binance has achieved this milestone and Bitfxt is the first to bring it to Africa.
According to Bitfxt’s announcement, staking options will only be “limited to Bitcoin (BTC), Ethereum, (ETH), Bitfxt Token (BXT), Steem (STEEM), EOS (EOS), Dash (DASH) and Bluekey.”
This feature is in line with Bitfxt’s upward march as their native coin, BXT was recently listed on CoinMarketCap and in quick succession, their crypto exchange followed.
What is Staking?
Cryptocurrency staking is the act of hodling crypto in your wallet for a specific period, then earning interest as a result of that. Users receive rewards by hodling the cryptocurrencies, and the earnings differ depending on the length of time an investor hodl the cryptocurrency in their wallet. The longer the staking duration, the higher return an investor gets.
Staking is used as a way of validating transactions on a blockchain, similar to what mining represents in the proof of work (PoW) protocol. In a PoS blockchain, the higher the coins a user holds in his/her account, the higher the chances that they would take part in a transaction validation process.
The next validator in a PoS system is usually chosen in a random process which is heavily influenced by the number of coins a user is holding at that particular time or in some cases, the length of time the user has been keeping the cryptocurrency.
How does it work?
Crypto staking works in a similar fashion to traditional fixed deposit investment accounts, the longer your staking time, the higher the reward you would earn at the end of the tenure. Staking coins differ from one cryptocurrency to another, but the underlying principle behind then remains the same. If you want to stake coins on most PoS and DPoS networks, you would be required to operate a node or masternode, or you can join one of them.
Unlike Proof of Work (PoW) blockchains that rely on mining to verify and validate new blocks, PoS chains produce and validate new blocks through staking. This allows for blocks to be produced without relying on mining hardware (ASICs). So, instead of competing for the next block with heavy computation work, PoS validators are selected based on the number of coins they are committing to stake.
Typically, users that stake larger amounts of coins have a higher chance of being chosen as the next block validator. While ASICs mining requires a significant investment in hardware, staking requires a direct investment (and commitment) in the cryptocurrency.