(NewsNation) — The cryptocurrency industry has a language of its own. What is crypto staking?
It’s the process of locking digital tokens to a blockchain network to earn rewards, according to Britannica.
A blockchain in cryptocurrency is a shared digital ledger that records all transactions that the public can see but can’t alter.
The rewards are usually a percentage of the number of tokens staked. For example, if the blockchain network offers a 5% reward for a period on the 100 tokens you have, you will earn five additional tokens as a reward.
Crypto staking can be active or passive. Both involve locking your tokens to a network.
Crypto staking is used to validate transactions on the blockchain in exchange for a reward, according to Fidelity Investments.
“Blockchain is the what and crypto staking is the how,” Fidelity said online. “Crypto staking is crucial for the security and efficiency of some blockchains. It’s how some cryptocurrencies, like Ethereum, validate transactions and circulate new coins into the market.”
Another way to validate transactions is crypto mining.
