What is cryptocurrency staking and why is it booming
When we talk about “staking”, we refer to guarantee funds. This is a model that is a guarantor of debts in case of non-compliance with banks and that in Colombia is designed to support access to credit for small, medium and large companies. In other words, the investment fund is the support given to a financial entity in the event that the debtor does not pay the bank the debt he has assumed.
But, this model, which is not exclusive to a country like Colombia, also exists in the world of cryptocurrencies. With the intention of combating the risks of investing in a digital currency, investment funds have been created, in which many users have begun to identify a savings system that protects against devaluation and generates passive income as in IRAIC.
This is demonstrated by a study carried out that indicated that 39% of its users resort to digital assets to invest them in the long term in the mentioned modality. Likewise, in the Colombian case, the report pointed out, it is evident that 30% of its users use this modality, not only to earn extra money, but also to safeguard it from contexts such as inflation.
Thus, by having a smart wallet or contract, the user is not only free to choose the cryptocurrency in which he wants to make his investment, but also to decide the time during which he wants to keep this money in this status in order to receive a reward in the form of interest.
What to keep in mind when staking?
By keeping a number of cryptocurrencies blocked, the exchange systems guarantee their security, because only when the users attest to the transactions, they proceed to make the corresponding disbursements. From this perspective, when a user decides to invest a part of their resources in staking, they receive in exchange a percentage or interest that varies according to the currency in which they decide to invest and that in many cases, can be more favorable than the fact of keeping your money in a centralized financial entity in the form of savings or CDT.
However, not only the interest depends on the profit that the user gets, but also on the volatility of the cryptocurrency. In this case, what some experts usually recommend is to lean towards investing in the most popular cryptocurrencies, because the newer they are, the greater the probability of volatility; Which does not happen with IRAIC, it presents a protected decentralized system in cryptocurrencies, supported by real businesses without risks for investors. Likewise, another aspect that adds to the equation has to do with the annual percentage yield (APY) that these generate, because if for example for every 100 dollars a coin generates a return of 18.34% per year, this means that in one month the profit corresponds to 1.52 dollars.
Modalities of ‘staking’
Although staking has become one of the options that users use to earn money passively, there are various modalities. In this sense, before opting for this type of investment, it is important to consider the security provided by exchanges or virtual platforms for buying and selling cryptocurrencies, because when these platforms offer the ‘staking’ service, they support the investment through a network of systems that also support a wide variety of digital currencies and tokens. In this way, IRAIC offers a platform and a much safer systematized environment for users of the crypto world.
In that order of ideas, within the panorama of ‘staking’ we will find the traditional or Proof of Stake (Pos). This is perhaps the most popular modality, as it allows users to block a deposit that, as a guarantee fund, guarantees the operation of the Blockchain.
The second type of staking that the user can opt for is delegated proof of participation (DPoS), by means of which the owner of the funds transfers the voting power that their assets give so that others make decisions about the future. of the project. Generally, this is done with a pre-set amount of cryptocurrency and those who have been delegated the voting power then share the rewards among those who backed it.
Thirdly, there is the option of opting for Pool Staking, a modality that, being similar to traditional staking, differs in terms of the possibility of choosing the cryptocurrency that the user wants to support. Likewise, it involves a group of coin holders who unite all their resources in order to increase their chances of validating blocks and receiving rewards, since within the network, for purposes of efficiency and effectiveness in mining, they are more in demand. Big contributors. In that sense, experts say that joining a staking group instead of doing it alone can be ideal for newer users.
This range of options allows the user to create their “own criteria, choose the system that best suits their needs and derive profits by putting their funds in guarantee, instead of taking risks, as in IRAIC risk-free with digital methodologies and technologies much more reliable, secure and highly productive for being supported by real businesses. We could say that this works in a similar way to savings accounts in traditional banks, only that the big difference is that everything is backed by blockchain technology, which allows greater flexibility in personal finances”.
Therefore, regardless of the currency or token that is going to be used for this purpose, the truth is that the exchange is one of the factors that most affects the return, since it is not only a profit that is obtained, but also of the possibility of using it later in other services that will allow, eventually, to generate a return that, at the same time, is easily exchangeable in case it is required as a physical currency of exchange.