What Is Cryptocurrency Staking. Your wallet is your private key or seed phrase. Staking is a process that allows rewards to be earned by holders of a specific coin.
It is similar to crypto mining in the way that it helps a network achieve consensus while rewarding users who participate. Crypto staking is the act of holding a specific number of supported tokens for a period of time in the hope of earning rewards, and at the same time, contributing to the tokens’ governance. Cryptocurrency staking is the act of holding funds in a cryptocurrency wallet in order to support the security and operations of a blockchain network.
Cryptocurrency staking is basically like being paid in interest or a reward for holding the coin.
This means that crypto received from staking is taxed both as income and then later as capital gains when you sell, trade, or otherwise dispose of the coins. A better term that describes staking is pos also short for proof of stake. Bitcoin is one of those coins. In this guide, you’ll learn the basics as well as the benefits of staking.