One of the main ways cryptocurrency investors can see a profit from their investment is to sell their digital currencies when the market value increases. However, there are other ways in which investors can make money from crypto, like staking. Staking allows crypto holders to earn passive income by letting their digital assets do the work.

Staking can be compared to depositing money into a high-yield savings account, where banks lend out the funds you deposited, and you earn interest. That is where the analogy ends, though, as staking is unique to cryptocurrencies.

In short, staking involves locking your crypto assets for a set period, which helps to support the operation of the blockchain. As a kind of “thank you” for staking, you earn cryptocurrency. The crypto earned is typically a percentage of the digital tokens that are staked.

Here’s an example of staking: A blockchain network offers a 5% reward for tokens that are staked for a month. Someone who locks and stakes 100 tokens for that month, will be able to access their tokens as well as an additional 5 tokens after the month is completed.

The use of cryptocurrency has expanded beyond investments, with many people now using digital assets for everyday transactions. Crypto has found its place in various sectors, like e-commerce, retail, and entertainment.

For example, many non-Gamstop casinos accept cryptocurrency as a payment method. As Nick Pappas points out, these casinos operate offshore, so don’t need to adhere to UK gambling laws regarding crypto or the Gamstop self-exclusion scheme. These platforms cater specifically to gamblers seeking alternatives to traditional payment systems, and crypto provides a fast, secure and anonymous option for users. And those wishing to add to their crypto casino winnings can also consider staking for passive income.

Crypto is also now a preferred means of sending money abroad, owing to its low fees and instantaneous processing times.

This widespread crypto usage has increased the number of people investing and staking it.

There are two main types of crypto staking:

Active staking

This staking method involves locking your tokens into a blockchain network with the purpose of participating in the network. You can validate your transactions and also create blocks which will earn you rewards.

Passive staking

This is the preferred choice for most investors looking for passive income. The tokens are locked to a network to help with operation, but there is no active participation. The reward is typically less than for active staking.

Although these are the two main types of staking, staking can take many other forms, including delegated staking (delegating your staking power to someone else and sharing the rewards), pool staking (a group combine their tokens for more rewards which are then shared), exchange staking (stake cryptocurrency assets on an exchange), and liquid staking (receive representative tokens which can be used or traded when staking crypto).

Investors can also decide whether they want to opt for custodial or non-custodial staking. Custodial staking means investors completely transfer their tokens, while non-custodial staking allows holders to keep all staked tokens in their own digital wallets.

So, how does one get involved with staking? Here are some basic steps to get you started:

  1. Choose a cryptocurrency that supports staking, like those that use a proof of stake mechanism.
  2. Purchase your selected cryptocurrency by using a crypto exchange.
  3. Select your preferred staking platform. This is the most important step of the process as it will determine which type of staking process is followed, as well as whether it is custodial or non-custodial.
  4. Stake your crypto following the platform’s protocols. Your tokens will then be locked to the blockchain for the agreed-upon period.
  5. You will then start earning rewards in the form of a percentage of your crypto staked.
  6. There are many advantages to crypto staking. It allows investors to earn passive income, improves the stability and operation of the blockchain network, and investors can choose to actively participate in the network.


However, as with all investments, there are also downsides. Due to the volatile nature of digital assets, rewards earned can suddenly lose value. Your assets will also not have any real value or liquidity while it is locked to the network. And, if you violate network protocols, your cryptocurrency may be partly confiscated.

Another key consideration is the regulatory landscape in the UK and abroad. Worldwide, governments are starting to adopt regulations regarding cryptocurrencies and their uses, including staking. While these regulations are created to protect consumers, they can also limit access to some platforms. Despite this, decentralisation and the privacy benefits of cryptocurrencies continue to appeal to people who want to avoid traditional financial systems.

Staking cryptocurrency can be highly rewarding when done right, but it can also be a risky undertaking. Staking is becoming more popular with investors thanks to staking platforms making it much more accessible, as well as more blockchains adopting proof of stake mechanisms.

And remember the cardinal rule of investment: never invest more than you can afford to lose.