In the world of cryptocurrencies, staking cryptocurrency is a means to make money online in Nigeria with Bitcoin. Which is comparable to receiving interest or dividends while retaining the underlying asset. And it is usually one of the best strategies for beginners new to crypto.
By utilising your current holdings to validate transactions on the underlying blockchain network, or “staking,” you can get paid in cryptocurrency. Although it may seem difficult, regular users may frequently do this action directly from their digital wallet. Additionally, you can employ cryptocurrency exchanges’ services to handle the technical aspects of revenue reductions.
Staking cryptocurrency typically delivers profits that go above and beyond what a savings account may offer. Staking, however, carries some risk. You might have to put your cryptocurrency on hold for a while. Additionally, you can be penalised by losing some of your cryptocurrency bets if the system does not function as expected.
Staking is also a more energy-efficient manner of running crypto networks than the mining process employed by items like Bitcoin. Crypto staking in Nigeria is also a way to expand your cryptocurrency portfolio with assets you wish to hang onto for a while.
What Cryptocurrencies Allow Crypto Staking In Nigeria?
A key component of the technology underlying some cryptocurrencies in Nigeria is crypto staking. It’s crucial to remember that not all cryptocurrency networks use crypto staking, though.
The so-called “proof-of-stake” cryptocurrencies are likely to support crypto staking in Nigeria. Here are a few cryptos that allow crypto staking:
- Ethereum (which recently moved from proof-of-work) (which recently shifted from proof-of-work)
- Cardano
- Solana
- Inu Shiba
Cryptocurrencies that use proof-of-work rely on mining, which may consume a lot of electricity and require pricey computers. In general, they oppose staking. Coins with proof-of-work that supports staking include:
- Bitcoin
- Litecoin
How Does Crypto Staking Work In Nigeria?
It helps to have a fundamental understanding of what blockchain networks perform in order to comprehend staking. The information you need is provided below.
Bitcoin is decentralised. As a result, there are no middlemen, such as banks, and new activity is verified to ensure that it matches prior records kept by computers throughout the network. Users instead gather “chunks” of recent transactions and submit them for inclusion in historical records that cannot be changed. Users that have their blocks accepted are compensated with cryptocurrency transaction fees. To make money online in Nigeria with crypto staking is a method of avoiding fraud and mistakes during the procedure. Users risk part of their own cryptocurrency when they submit new blocks or vote to accept suggested blocks, providing an incentive to follow the rules.
Users are generally more likely to receive transaction fee rewards the greater the stakes. However, a procedure known as “slashing” could result in the user losing some of their wagers if a user-suggested block turns out to contain false information.
How Do You Stake Cryptocurrency
Depending on your technical, economic, and research commitments, there are various ways to make money online in Nigeria with crypto staking.
Your first choice is whether to “assign” your cryptocurrency to another person or to utilise your own computer to validate transactions.
By making their tokens available for other users to use as transaction validators, networks that offer crypto staking often enable token holders to share in the profits.
1. Use Crypto Exchanges That Supports Staking
Utilising an internet provider to stake your tokens for you is the simplest approach. You can use fiat money to buy cryptocurrencies on several well-known exchanges, and they offer staking in exchange for a commission.
Three of the crypto exchanges examined by Breet—Binance, Coinbase, and eToro—offer crypto staking for at least some crypto assets. Others provide rewards schemes that allow users to earn extra cryptocurrency in a manner akin to staking.
2. Join a Pool
You can join a “staking pool” run by another user if you don’t want to trust an exchange to decide your staking for you or if you can’t locate one that supports the token you want to stake.
To connect your tokens with the validator’s pool, you’ll probably need to know how to use a cryptocurrency wallet.
Many proof-of-stake blockchains’ official websites provide links to information regarding validators’ workings as well as instructions on how to investigate them.
Some publicly available data can show you whether a pool operator has ever faced penalties for errors or wrongdoing, and some detail their protocols for safeguarding token delegators. The degree of fees or commissions is another aspect you might examine.
Choose a reputable pool, albeit you may not want to select the largest one. There is a case for preventing any one party from amassing too much power because blockchains are meant to be decentralised.
To strengthen an ecosystem’s decentralisation, people frequently delegate to validators who have fewer voting rights.
3. Become a Validator
It can be challenging to create your own staking infrastructure. It is necessary to download a copy of the whole blockchain transaction history together with the necessary computer hardware and software. Entry fees can sometimes be expensive.
For instance, the Ethereum network mandates that you start with at least 32 ETH, which on December 09, 2022, will be valued at almost $40,730. Such rules are not imposed when staking through pools or online platforms.
[READ ALSO: How To Make Money With Bitcoin In Ghana 2023]
Is Crypto Staking the Right Option For You?
Some people might not be good at stake. Before deciding whether to stake your cryptocurrency, you need to consider a few factors.
Graphic denoting crypto staking
1. Will You Need To Use The Cryptocurrency You Staked?
In order to stake cryptocurrency, you may need to commit your assets for a predetermined amount of time, during which you may not be able to sell or exchange them. Before staking your cryptocurrency, take sure to carefully review the terms if you anticipate moving it at short notice.
It’s critical to keep in mind that cryptocurrencies are volatile assets. While bitcoin staking might offer some certainty in investment returns, the benefits you’re receiving might not seem as appealing if, for example, the market value of your cryptocurrency declines by 20% while you’re staking it.
2. Do You Believe In Crypto Staking?
The decision to stake your bitcoin may ultimately depend on how convinced you are in its long-term value as an investment.
For example, if you think the Ethereum network is valuable, you might not be influenced by daily price fluctuations in your decision to sell. Staking is one method you might use to increase the value of a cryptocurrency investment you intend to hang onto over the near term.
3. Have You Looked At Other Passive Income Options?
After an initial investment, making money online in Nigeria with crypto staking is one technique to generate passive revenue that doesn’t require daily work. And while some bitcoin owners may find that staking is a viable option, there are many other ways to get passive money. Some of those alternatives might be worth checking out as well.
Dividends from stock holdings, bond interest, and rental income are some additional common sources of passive income. Additionally, there are non-staking ways to profit from your cryptocurrency, like Bitcoin mining, lending platforms and decentralised finance (DeFi) software.
