Bitfinex guide to cryptocurrency stickers

Bitfinex guide to cryptocurrency stickers

Bitfinex launched its cryptocurrency staking service on 7th April 2020. If you’re unfamiliar with how cryptocurrency staking works, we’ve created this quick guide to help give you a better idea about staking crypto, the technology and ‘ the philosophy behind it.

Proof of Work versus Proof of Stake

Before getting into cryptocurrency, first, we need to understand the basic concept that enables it. In blockchain, there are various consensus mechanisms, or more commonly known as consensus algorithms. A. consensus algorithm is a set of rules governing how nodes validate transactions that will be added to the blockchain. Every blockchain network has its consensus algorithm, which is decisive in its creation.

The consensus algorithm is essential in blockchain as it creates a way for parties who do not know each other to unanimously agree on something, in this case, whether to add a block of transactions to the blockchain network.

There are several known consensus algorithms in crypto, but these two – Proof of Work (PoW) and Proof of Stake (PoS) – are known as the oldest and most commonly used.

What is Proof of Work in blockchain? PoW is the first consensus algorithm created, used by many reputable cryptocurrencies, such as Bitcoin, Litecoin, Ethereum, Monero and Dogecoin. In the Proof of Work consensus algorithm, the process to generate a new block is called the blockchain network mining. To do so, a miner must compete with the other miners to solve complex cryptographic problems as quickly as possible. The successful miner will then be rewarded with a sum of cryptocurrency or called block prize for their efforts; in the bitcoin network, for example, the reward is 12.5 Bitcoin for each new block successfully created.

The process to solve the difficult mathematical puzzle requires a lot of computational power, so implementing a PoW-based blockchain network is very energy-intensive.

PoS was created as an alternative to PoW. The PoS mechanism is a bit like standard practices in a business entity, where shareholders have the privilege to make decisions and the more shares, the greater the influence.

In PoS, new blocks are generated by a verifier, also known as forger or minter, which is selected according to specific criteria. How many common criteria are the number of tickets / coins held a a coin or how long a forger has held the tokens / coins.

In a Proof of Stake consensus mechanism, a participant who owns a large number of tickets for a long period of time is more likely to be selected as a forger. Furthermore, the number of new blocks mined cannot exceed the number of tokens that the forger has.

The award comes for adding blocks of accrued transaction processing fees. Verifier will receive the forgery of a prize and get its tickets stacked back only after the block it validates has been approved by the other nodes in the network. In a case where the block is judged to be fraudulent by the nodes in the network, the validator will not be rewarded. It will also test slash, which means that the validator loses all or part of their stacked tickets. Furthermore, the algorithm will mark it as a “bad” goal.

In essence, the Stake Proof consensus encourages and empowers occupiers to participate so that new network blocks can be formed. Therefore, some consider PoS to be “safer” than PoW since the threat of Attacks 51% is reduced in a PoS system. Someone with 51% hash power in a PoS token network would not want the ticket value to fall. So, in theory, they wouldn’t attack the network, even though they had the power to do it.

It is from the PoS consensus algorithm that cryptocurrency staking emerges.

Staking explains cryptocurrency

So, what is crypto staring at? Crypto stocking is the act of holding a certain number of supported tickets for a period of time in the hope of winning prizes, while at the same time contributing to the governance of the tokens. As the term implies, it only applies to tokens using the PoS consensus algorithm, such as EOS, Tezos, Cosmos and VSYS.

Why is crypto staring?

Cryptocurrency sticking is one of the many ways to increase someone’s crypto holdings. However, the most appealing thing about it is probably the fact that it allows you to grow your holdings passively (once you decide where to get involved to manage your risk of a breach).

What’s more, staking crypto has many other benefits to offer, such as:

  • No special machines are needed

Unlike mining that requires specific equipment, such as ASIC, crypto staking only requires keeping your tickets in wallets or platforms that are always synced to the ticket network.

No specific equipment means no excessive expenditure on electric power.

You earn your rewards for using your tickets to help with the governance and implementation of the protocol on which the ticket operates. You do not need to trade.

Despite the sophisticated technology and concept underlying cryptocurrency panning, in practice, it is quite simple. Here are how to get involved in a few simple steps:

Each PoS ticket has its own staking rewards scheme, terms and conditions, as well as having the staking service provider have its fee structure, reputation, and rules. However, sometimes some ill-intentioned tickets offer a cliché to motivate consumers to buy their coin as they dump on the markets. So, make sure you are well informed before making any decisions.

On the Bitfinex platform, you can use the crypto staking calculator to find out about the possible rewards you could win for all staking-supported tickets.

Crypto Staking Calculator
  • Select the service provider

There are several options as to where you can keep your tickets stacked and be rewarded. From digital wallets, crypto exchanges to crypto stickers. Whatever crypto hacking services you choose, make sure you follow the instructions given and clearly understand how it works as each staking provider has its own set of features and offers.

Bitfinex, for example, offers extra layers of security for your stacked tickets. We use a variety of methods, such as insurance funds and a highly trusted network of nodes to reduce the risks of backlash and to ensure that withdrawal claims can be accommodated.

  • Select the tickets of your choice

Now that you have done your research, you can select the PoS tokens of your choice and start waiting. You can buy them first or use your existing tickets. If you are interested in Bitfinex’s staking service, you can learn more here and get involved with us if the ticket you are interested in is on Bitfinex’s staking ticket list.

Cryptocurrency Stock: There’s more to it than that

Apart from the financial benefits, retaining cryptocurrency also means participating in the governance and operation of cryptocurrency. Token holders who participate in their tickets not only receive stunning prizes but also gain the power to vote for the decisions that affect the future of the ticket.

PoS token holders participating in their tokens have played their part in promoting devolution, which is the essence of cryptocurrency and the way of the future.