Cryptocurrency investors often wonder how they can acquire digital currency aside from buying on an exchange. There are 3 main methods available to you if you want to acquire cryptocurrencies: buying through brokers or cryptocurrency exchanges, mining and staking. In this article we’ll focus on the two latter ways- mining and staking cryptocurrencies, to you give you an overview of what they entail.
Mining Vs. Staking – What’s The Difference?
In essence, mining cryptocurrency is the act of creating/finding new cryptocurrency in the same way that miners would mine gold or silver. Staking on the other hand is being rewarded (in crypto) for supporting a cryptocurrency network by leaving your assets locked up, somewhat similar to a savings account in a bank where interest is accrued on your deposit. Now, let’s dive a bit deeper into both.
Cryptocurrency Miners: Crypto miners earn coins for completing ‘blocks’ of verified transactions via computational processing. Most miners rely on a CPU, GPU (graphics processing unit) or an ASIC (application-specific integrated circuit) as part of mining architecture. Infrastructure involves computational power, stable electric access, and electronic cooling infrastructure (for large operations). Overall, small-scale crypto mining has lessened in popularity due to rising costs and diminishing returns. However, options still exist for those interested in pursuing mining.
Cryptocurrency Staking: Staking comes into play with coins based on the Proof of Stake (PoS) algorithm. The process involves then holding them in a wallet for a certain amount of time. Coin holders are rewarded with more cryptocurrency by the network but coins need to be locked up for a certain period of time. Ultimately, those who stake their coins get rewarded for their long term commitment and focus to the cryptocurrency.
How To Stake Cryptocurrency
Those interested in staking cryptocurrency need to download the appropriate software wallet for the particular coin. Most staking schemes require 24/7 access to the network. Some choose to set up a desktop computer or Raspberry Pi to ensure uninterrupted access to the Internet. Others opt to run a virtual private server (VPS) on the cloud to stake. This eliminates concerns about high electricity costs associated with running hardware.
Crypto professionals who are looking for the easiest way to begin staking should turn to an exchange. Popular exchanges like Binance, Kraken, Coinbase and KuCoin offer users the ability to purchase staking-enabled cryptocurrencies. Rewards are automatically paid to accounts.
The Specifics of Mining Crypto
If you’ve decided that you want to mine crypto then it’s time to decide how you’re going to mine it. One of the most common methods to mine cryptocurrencies is with a GPU. This setup relies on graphics cards in computers to mine and is known for its efficiency and price competitiveness. ASIC and CPU mining are other options for miners interested in arranging their own setups. ASIC mining is controversial because the equipment produces large amounts of cryptocurrency, leading some to argue the arrangement robs other miners. CPU mining relies on computer processing power to mine. This option has become less viable as years pass because of high electricity costs and the slow mining rate.
Mining Cryptocurrency in the Cloud & Virtually
People interested in easier ways to mine often turn to cloud mining. With this process, a user pays money to rent out a mining rig (hosted mining). Profits (minus applicable fees and maintenance costs), are paid to crypto wallets. Cloud mining is popular since it opens up mining to people without the funds to own their own rig. Virtual hosted mining is another form of cloud mining available for people not interested in renting physical equipment. Users simply create a virtual private server and then install software to mine. Others choose to lease an amount of hashing power and forego managing a physical or virtual computer. This option remains the most popular mining style. Many cloud mining companies operate on a monthly subscription model where prices hinge on has rate speeds and the particular cryptocurrency to be mined.
The Many Options To Mine And Stake Cryptocurrencies
Cryptocurrency users and professionals eager to mine or stake have a variety of options available. Those uninterested in purchasing physical hardware and managing the running of said hardware can turn to digital alternatives. Users interested in setting up infrastructure have a few different options, based on their budget and the amount of maintenance work they would like to put into their rigs.
Mining, Staking & Tracking Cryptocurrency
Regardless of whether you choose to mine, stake or purchase crypto it is vital that you have the tools in place to measure your cryptocurrency portfolio accurately. Our crypto tracking tool is already used by countless cryptocurrency professionals and you can can give it a try for free and start to manage your crypto like the pros.
