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Staking is not as new as you think

Staking is not as new as you think

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Staking is the new mining – but it’s been around a looooong time.

 

‘When PoS?’ ‘Is this a masternode coin?’ ‘What’s the best masternode coin?’ These are all questions you’re likely to encounter sooner or later on the Discords of the crypto world.

 

Profitable mining is now out of reach of all but the best-funded and most technically savvy. And so the crypto community, with unrivalled sense of entitlement and belief in their right to something-for-nothing, have moved on to the next best thing: staking.

 

Proof-of-work is a costly consensus mechanism, requiring dedicated hardware and large amounts of electricity. Proof of Stake (PoS) uses coin balance, and not hashrate, as the scarce resource that helps determine the next block. In short, if you have coins, you can earn more coins.

 

There are different variations on PoS. There’s vanilla PoS, where anyone can stake any amount of coins, and a user’s chances of ‘mining’ the next block are in proportion to their balance. There are systems where a minimum balance is required, or where a limited number of stakers are voted in – delegated PoS or DPoS (like BitShares and others). There are systems where users can lease their tokens to a staking node (LPoS), like Waves. And there are masternode systems, like Dash, where large nodes play an integral but supplementary role in the network, facilitating specific operations like instant transactions and mixing, and receive large rewards from each block.

 

The rewards of PoS can vary significantly, then, with regular PoS systems often needing additional incentives to get people to stake. But for all that PoS is popular right now – especially Masternodes – it’s been around a long time.

 

The first coin to implement PoS was Peercoin, which used a hybrid PoS/PoW system. Launched in August 2012, Peercoin has fallen from favour, but it’s still around – crypto is hard to kill. Nxt was the first platform to use PoS alone. It launched at the end of 2013. Again, it’s still around – kind of – but it has evolved considerably since then. Newer systems like Waves use variations on Nxt’s PoS, and even Ethereum will ultimately implement PoS with Casper.

 

But it’s the Masternode coins that are really proving popular, since if you get in early enough you are on the gravy train forever. HODL, stake, and gain significant passive income from block rewards. It’s like mining without the hardware costs.

 

Staking is to 2019 what mining was to 2012. And, just like mining, the space is getting crowded and competition is rising. Get in while you still can.

Red hot news, scorching wit and searing opinion pieces from Crypto Inferno.

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