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Introducing Staking: learn how to make your assets work for you.

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Introducing Staking: learn how to make your assets work for you.

With the launch of SaitaPro we must be prepared to make the most of all its utilities, the word Staking is the one we have heard the most in recent months but, what is Staking? How can we get passive income from Staking?
Let’s understand how the Proof of Stake, a consensus mechanism, works in order to answer these questions.

It starts back in 2008 with the birth of Bitcoin, which came with two of these consensus mechanisms: Proof of Work (PoW) and Proof of Staking (PoS).

But first: what is a consensus mechanism?

One of the most important principles in the nature of cryptocurrencies is consensus. Consensus is just the acceptance by all members of the blockchain network that the information in it is real and truthful. In this way, everyone in the network accepts that the information does not have manipulations, erroneous or duplicated data.

What is the Proof of Work (PoW) consensus mechanism?

The term, proof of work, should actually be very familiar to most, as this was the first consensus algorithm that came to us in 2008, with the birth of Bitcoin.

Proof of Work is the method used to verify transactions and generate new blocks in a blockchain network, confirming the veracity of each transaction and recording them in the ledger or chain ledger.

Through the Proof of Work (PoW) protocol, miners have to solve complex mathematical problems in order to verify transactions and add blocks to the chain.

This procedure involves the use of processing units and special electronic circuits since the more computing power you have or mining power, the more advantage you will have in mining to solve complex mathematical problems, resulting in considerable investment, high energy consumption, and a certain amount of time to be able to make the investment profitable.

What is the Proof of Stake (PoS) consensus mechanism?

Proof of Stake is another common consensus mechanism, but instead of using the power of mining machines, it uses the currencies of users posted in Staking pools to verify transactions.

What is Staking and how does it work?

Briefly speaking, the staking process consists of blocking our cryptoassets in a protocol to receive rewards in exchange for blocking our currencies.

These rewards are generated thanks to our currencies will be used to ensure the proper functioning and add new blocks to the associated blockchain and also supporting the security of this.

It can be said that we would be doing a kind of mining of our cryptoassets but without having to make a big investment in mining hardware or high electricity costs.

It should also be borne in mind that the greater the cryptoassets that a participant puts into staking, the higher the rewards received. And that the whole rewards process is completely automatic and the staking is a passive activity.

In summary, the Staking is a way to increase the amount of cryptoassets an investor possesses, without having to do anything specific. By putting cryptocurrencies into staking within a project users not only receive rewards, but also contribute to increasing the security and efficiency of the Blockchain, based on a consensus mechanism called Proof Of Stake.
We have already reviewed the most important concepts to understand what is Staking.

To finish, this image has a comparison of Proof of Work (PoW) and Proof of Stake (PoS) to make it even easier for you to compare.

We hope this introduction to the Staking and major blockchain consensus mechanisms has helped you to understand a little better what this is all about and that you will use it to put your assets to work for you.

See you soon!

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