In November last year, I made a video about the different ways to make money using cryptocurrencies, and one of the methods on that list was Staking. For this video, we are doing a deeper dive into the concept of staking and then, we’ll get to the different ways staking can earn you money on the Binance app.
What is Staking?
If you have always heard about staking but always wondered what it actually is, well, there is a simple explanation. It is the concept that allows cryptocurrencies to confirm transactions on their network. Staking is also one way you can let your cryptocurrencies work for you and earn passive income.
With staking, you allocate your cryptocurrency to supporting a blockchain network and in return you get interest on the tokens that you have staked depending on how long you choose to stake them for. However, you should know that the interest that you get for staking your coins is completely up to the particular cryptocurrency that you are staking.
Proof-of-Work vs. Proof-of-Stake: Key Differences
Speaking of the cryptocurrency that you decide to stake, about making money with cryptocurrency, I briefly mentioned something about proof-of-work and proof-of-stake, and these two play an important role in your ability to stake. In the simplest terms, I can think proof-of-stake and proof-of-work are simply consensus systems that certain cryptocurrency tokens run on.
Understanding Consensus Systems in Cryptocurrency
A consensus system is simply a fault-tolerant mechanism used in blockchain systems to achieve the necessary agreement on a single data value is of the network among distributed or multi-agent systems like cryptocurrencies. Bitcoin, for example, runs on the proof-of-work consensus system, which involves heavy computers and lots of energy to mine a coin. The proof-of-stake consensus system, on the other hand, is designed to be faster, more secure, and more efficient.
Choosing the Right Cryptocurrency for Staking
- Now, the crypto token that you decide to hold or buy is an important part of staking because staking can only be performed with cryptocurrencies that run on the proof-of-stake consensus.
- So, be sure to have all of these checked before you move on.
- Now that we are all caught up on the basics of staking, let us get into an overview of how you can turn your crypto tokens into a passive income stream for you.
Exploring Binance Earn: An Overview
Binance Earn is a feature on the Binance platform that offers a wide range of options and products that allow its users to make money by staking their coins. Depending on your risk tolerance and how long you are willing to wait, these options give you flexible terms that can fit almost anyone.
How to Access Binance Earn and Start Staking
To access Binance Earn, log in to your Binance account for the web and click on the Earn tab on the menu bar at the top of your computer screen. On clicking this tab, a drop-down list will appear. You’ll then see a list of items or products related to Binance Earn, Staking, and others. Clicking on Binance Earn takes you to a new page.
Investment Options on Binance Earn: Guaranteed, High Yield, and Auto Invest
| Option | Description |
|---|---|
| Guaranteed | Investments in stable coins that bring predictable returns. |
| High Yield | Exploration of high-yield staking coins that come with much higher gains and risk to match. |
| Auto Invest | A strategy similar to Dollar Cost Averaging. Choose a cryptocurrency to buy on a regular basis, and the purchased crypto will be automatically deposited into your account to earn passive income. |
Starting Your Crypto Investment Journey with Binance Earn
For mobile, though, the options are the same, except for the Auto Invest option, but you’ve got the Guaranteed and High Yield. Now, if you are a beginner at investing in crypto, then, the best place to start is, of course, the low-risk guaranteed section that has relatively stable yields. With guaranteed staking, you can also get back your principal after the locking period.