Staking vs crypto earn is mostly a tough choice for people who want to passively earn profits from their cryptocurrency investment. While staking is pretty common to the average crypto investor, the concept of crypto earn is one many people are not yet used to. So staking vs crypto earn; what are the differences and which one is more suitable for you as an investor? Use this guide to find out everything you should know about these two ways of earning passively through cryptocurrency.
What is staking in cryptocurrency?
Staking simply involves locking up your crypto assets to partake and help sustain the security of that specific network’s blockchain. In exchange for participating in staking by locking up your crypto assets and partaking in the network validation, validators earn rewards in the form of that cryptocurrency, which is known as staking rewards. You qualify to stake your assets for rewards if you hold a cryptocurrency that utilizes a proof of stake blockchain.
Examples are Polkadot (DOT), Cosmos (ATOM), Tezos (XTZ), Cardano (ADA), Ethereum (ETH), and Polygon (MATIC). These cryptos use proof of stake blockchain and are therefore eligible for staking.
Depending on the cryptocurrency there may be times when you earn no payout. Also, some of them have sealing periods where you can’t access your stake for a specific amount of time. This is because it is being used on the blockchain network. A good example of a cryptocurrency with a locking period is Cosmos, which has a lock-up period of 21 days before you can get access to your tokens again.
Usually, you entrust your stake to a crypto validator. When you delegate your crypto stake to a validator, it does not mean that you are giving up your crypto. It just means that you are simply giving them the authority to use the tokens to do things like validate transactions or vote on proposals.
Bitmama offers a staking feature for those looking to stake and receive profit on their asset without going through the technicalities. Essentially, when you stake on Bitmama, you get rewards for retaining your resources in a pre-determined agreement with a payout that is liable to some variables, such as the length of the term, your stake amount, and the actual asset.
Generally, the longer you stake, the higher the interest you earn.
How long do I have to stake my crypto?
You can decide to stake your crypto for as long as you want. However, it typically takes a specific period of time before you can un-stake it. While some cryptocurrencies just take minutes, others can take days or even weeks to unstake. It just depends on the token.
Bitmama for example, allows you to lock your asset for up to 12 months.
What is crypto earn?
Crypto Earn simply refers to the general term for earning crypto. It could involve referrals, airdrops, and even staking. Different platforms offer varying programs through which users can earn crypto from. For example, Bitmama allows you to earn through referrals – when you refer a friend.
The major difference between locking up your crypto asset into a lending service like earn and just staking them is that when you lock up your assets into a lending program, they utilize your assets like a traditional bank does. The program does this to generate more gains, and subsequently, the program rewards you with a portion, just like a regular bank does with interest.
The amount of interest you can receive with Crypto Earn is entirely dependent on the token you lock up on the program. Generally, stablecoins like Tether (USDT) propose higher interest rates than Bitcoin or other altcoins do.
Is crypto earn legit?
Crypto earn is 100% legit, however, you should know there is a risk involved. It’s just like how banks will take the money you put into your savings account and invest it to get profit. This is known as fractional banking and there are risks involved.
However, it is worth noting that Crypto platforms that offer earn have been incredibly reliable so far.
How much can I make using crypto earn?
The amount of money you can make from crypto earn depends on how much money you put into your Crypto Earn account. The specific yield offered by the platform also plays a role. If you put $100,000 worth of USDT into an account that offers you 4% APY (what Bitmama offers), then your earnings will be $4,000 worth of USDT per annum.
Nonetheless, note that most cryptocurrencies are extremely volatile so you can’t be too sure how much your asset will be worth at the end of your lock-up duration.
Staking vs crypto earn – What is the difference?
With Earn, your token is loaned to third parties to invest with it and make a profit or simply participate in a challenge like referring friends and receiving a profit. The resulting yields will then be distributed as rewards for participating in the program. However, with staking, you receive rewards for validating crypto transactions on a Proof of Stake blockchain. This means that with staking, your crypto is not loaned out and stays completely in your possession.
Crypto Earn does what regular banks do in the sense that they utilize your assets to create more revenue. They then reward you with the profit. However, staking just rewards you for making your coins available for staking. The primary difference between crypto staking rewards and crypto earn is just that with Earn, you can receive interest on assets that are otherwise not very valuable with stake because they don’t use proof of stake blockchain.
Can you lose money staking?
It is possible to lose money staking but it’s uncommon. Most crypto enthusiasts will be staking their tokens with bigger validators. Those validators may be hit with punishments if they are incapable of validating a block. Fortunately, the penalties that validators get will affect your rewards and not your principal.
One very important positive aspect of crypto staking is that you never have to give up your private keys. This means that you will still retain control of your cryptocurrency, even if the validator goes down.
Is crypto staking the same as crypto earn?
No, crypto staking is not the same as crypto earn. Basically, when you make use of a Crypto Earn program you are simply loaning out your crypto to a third party to invest with it and earn a profit or participating in a program that offers crypto rewards like referrals. However, when you stake your cryptocurrency you are simply helping secure its crypto network (while still possessing your private keys).
Although Crypto staking and Crypto Earn are two separate terms, any of them can generate passive income for you.
Either of them may offer you better rewards depending on the cryptocurrency you use and the platform in question. So you have to weigh out both options before choosing the best one for you. Lastly, it is important for you to proceed with caution and don’t risk an amount of money that you can’t afford to lose.