MODULE – III
Crypto Staking & Crypto Mining
Module 3 Insight
In this module, you will learn the following aspects of cryptocurrency:
- Crypto Staking
- How Staking Works?
- Pros & Cons of Crypto Staking
- Top Staking Coins 2021
- How to Start Staking?
- Crypto Mining
- Yield Farming
- The Process of Crypto Mining
For your convenience, we have divided this module into the following steps:
Step 1: Crypto Staking
Step 2: Top Staking Coins 2021
Step 3: How to Start Staking?
Step 4: Crypto Mining
Step 5: Mining Rig
Step 6: Exodus Wallet
Step 7: TrustWallet
Step 8: 12 Words Seed Phrase
Step 9: How to Set Up MetaMask
Step 10: The Process of Mining
Step 11: Types of Mining
Step 12: Top Coins to Mine in 2021
Step 13: Yield Farming
Step 14: How to Setup BlockFi
Step 15: How to Setup Crypto.com
Step 16: Exodus Wallet Staking
Step 17: How to Mine BTC Via Mining Machine & Computers?
Step 18: A Quick Quiz
Step – 1
Crypto staking is a reward-based mechanism of validating proof-of-stake blockchain transactions. Unlike mining, it entails storing currencies in a crypto wallet, which requires less processing power and yields more predictable percentage returns.
If you’re still unsure what crypto staking is, keep reading. We’ll go over the definition of crypto staking as well as a step-by-step explanation on how to stake and manage your crypto currencies in this video.
Crypto staking is a mechanism for validating proof-of-stake (PoS) blockchain transactions rather than proof-of-work (PoW) blockchain transactions, which are done through mining. Understanding the distinction between PoS and PoW is crucial to grasping the fundamentals of crypto staking.
Proof-Of-Work Vs Proof-Of-Stake
Each block in a Proof-of-Work blockchain, such as Bitcoin and Bitcoin Gold, must be independently confirmed. Miners do this by using their computing power to solve difficult algorithms in exchange for blockchain incentives. While all miners are attempting to solve the algorithm, only the first miner to do so will be awarded the prize.
PoS was created in reaction to PoW’s high computational resource requirements and element of luck. With PoS, a staker’s chances of creating the next block are determined by how much they’ve staked – or how many coins they’ve saved for the blockchain they’re confirming.
When staking, coins are locked up in a crypto wallet, which means they can’t trade them in the traditional way during this time. Stakers, on the other hand, can increase the value of their wallet over time by obtaining a percentage return on their staking efforts. BitGreen is a proof-of-work blockchain that was created as a more energy-efficient alternative to Bitcoin.
Crypto Staking Bonuses
Crypto staking is a kind of passive income for certain people, similar to receiving interest on money held in a bank account. Stakers can compare the top staking rates using data from several sources. Using the staking term and reward rates – also known as yearly percentage return – online staking calculators may also be used to anticipate compound interest (APY).
Liquidity Mining vs. Crypto Staking
Liquidity mining (also known as yield farming), which is the concept of depositing coins to provide liquidity to decentralised exchanges, is not the same as crypto staking. This allows other persons in the exchange pool to use, exchange, or lend the currencies. It is less secure than crypto staking since it is more vulnerable to smart contract failures and can result in a temporary loss. When the value of an asset changes after it has been deposited, it can result in a permanent loss when the coins are withdrawn. Crypto staking, on the other hand, requires a larger initial commitment.
How Crypto Staking Works? (Step By Step Guide)
Let’s take a closer look at how crypto staking works now that we’ve covered crypto staking.
The probability of verifying the next block during crypto staking is related to the quantity of coins staked. If there are ten of the same cryptocurrency type in circulation, a staker with one coin stored in their wallet has a 10% chance of verifying the following block. As a result, the returns are calculated as a percentage of the coins staked. However, the minimum staking requirements for some altcoins might be exceedingly high, making them unavailable to the majority of consumers. Staking pools are an excellent answer to this problem.
- Pools for Staking
Staking pools allow players to pool their stakes and split the profits, allowing them to participate even if the minimum deposit criteria aren’t reached. Individuals do not need to worry about managing their own crypto wallet because the blockchain is stored in a central wallet and controlled by a pool manager. Pools, on the other hand, may be subject to fees, resulting in lesser overall revenues.
- Countries and Taxes
Staking cryptocurrency is legal in many jurisdictions, however it is frequently taxed. In the United Kingdom, for example, the HMRC clearly states that crypto staking income is taxable as miscellaneous income for individuals. Similarly, the IRS and ATO in the United States and Australia indicate that crypto money is recognised as regular income. The laws are different in Singapore, which does not charge capital gains tax on long-term investments. Businesses may be taxed differently for crypto staking, so make sure to verify individual legislation.
- Ethereum 2.0
ETH 2.0 is currently one of the most well-known staking cryptos. Ethereum 2.0 is a set of changes to the Ethereum network that will include a transfer from the present PoW mechanism to a staking approach, as well as enhancing the network’s scalability. So, when is Ethereum 2.0 going to happen? The first Ethereum update occurred in 2020, and the second is scheduled for 2021. Ethereum has been tight-lipped about its official launch date, while recent rumours say it will be around 2022.
How to Start Staking?
Look no further if you want to learn how to start staking cryptocurrency. We present a step-by-step tutorial for crypto staking newbies, whether they wish to lock in XRP, 1 INCH, CRO, USDT, or Quant.
- Choose a Coin
Choose the altcoin you want to stake first. Consider the staking criteria, possible yield, lock-up time, and frequency of reward payments. There are a number of excellent comparison websites that offer crypto staking lists and rate coins based on these criteria. It’s also a good idea to look into altcoin news to make sure you’re not storing a currency that will lose value quickly. Check the value of your cryptocurrency and use a tracker to see historical price data.
- Keep track of your coins.
After that, you’ll need a place to keep track of your cryptos for staking. This can be done using a cryptocurrency exchange, a cryptocurrency wallet, or a platform that offers Staking-as-a-Service.
Staking-as-a-Service (also known as DeFi, or Decentralised Finance staking) platforms are dedicated to crypto staking, with the goal of removing the worry of exchange fees. This is in contrast to crypto wallets and exchange services, which also provide additional services.
- Develop a Strategy
Having a strategy in place is essential once everything is in place. Create a crypto staking strategy that specifies how much and for how long you want to stake. Do you want a fixed or a variable return? There are a variety of crypto staking alternatives available, all of which are dependent on your risk tolerance.
Programming a Raspberry Pi computer (for example, by running an Ethereum node), developing a Docker software, or making a Discord bot are all options for automating crypto staking. YouTube is an excellent resource for learning how to create these apps.
Staking cryptocurrency is the process of purchasing and putting aside a particular amount of tokens in order to become a network active validating node. The buyer becomes a crucial piece of the network’s security infrastructure by merely keeping these coins and is compensated correspondingly.
Interest is provided to the stakeholder as a type of staking income, and rates vary from one network to the next depending on a variety of factors such as supply and demand dynamics.
Group staking, also known as staking providers, staking pools, and cold staking, has emerged as a new method to stake crypto as the number of POS-based networks keeps growing.
These efforts attempt to give retail investors with a limited number of tokens on a certain block chain easier access to staking opportunities.
How Staking Works?
Staking begins with the purchase of a fixed amount of tokens in the network. It’s worth noting that staking is only possible on a network that uses the POS protocol. After the purchase has been made, the user must now lock his or her holdings by following the instructions provided by the network’s developers. A staking transaction may usually be completed in a few minutes by following the instructions on your wallet.
Cryptocurrency exchanges, on the other hand, have made the act of staking tokens easier by offering tools like staking pools. These try to enhance the payout received by staking a network’s tokens by increasing the quantity of coins staked at any given time.
In most circumstances, the bigger the number of staked coins, the more transactions a given node will be tasked with validating. In most cases, nodes are sorted according to the number of tokens they have.
As a result, the nodes with the most tokens will typically earn larger remuneration, which is why staking pools have been so popular in recent years.
Fixed staking, on the other hand, allows a user to stake tokens for a set length of time. Some providers also provide the option of establishing a more flexible plan, known as flexible staking, in which the user can withdraw their tokens at any time.
Fixed staking offers greater interest rates to the holder due to its rigid character, whereas flexible staking offers less appealing terms.
Advantages & Disadvantages of Crypto Staking
Due to the significant returns that crypto holders earn from this activity, crypto staking has recently surged in popularity. At the time of writing, staking interest rates range from 6% per year for well-known networks like Ethereum (ETH) and Cardano (ADA) to 100% for smaller networks such as Pancake Swap (CAKE) and Kava (KAVA).
These high crypto staking returns, however, are not without risk, since a variety of factors can impair the performance and security of your staked coins.
The first danger to mention is the likelihood of a cyber-attack that results in the loss of tokens housed on an exchange or in an online wallet. To counteract this risk, some cryptocurrency investors have turned to cold staking, which is holding your tokens on a piece of hardware such as a hard drive.
Because the device will not be linked to the internet, cold storing your crypto assets protects your holdings against a cyber-assault. When employing this method of staking, however, the risk of losing or damaging the hardware exists.
Another danger of staking is the possibility of price drops in the crypto asset during the staking period. Because staking works by locking your coins, you will be unable to liquidate your holdings if the market goes sideways, putting you at danger of losing a portion of your investment without the ability to mitigate those losses by selling your coins.
Finally, the validity of the validator node that holds your staked tokens is subject to risk. In most circumstances, networks penalize a validator if its ability to process transactions is harmed, which means that any downtime in the validator’s uptime could reduce your staking income.
How to create a Staking Node?
Buying dividend income from stocks and shares is as straightforward as creating yield with cryptocurrencies today. That is what has propelled cryptocurrency investing adoption among the general public, both retail and institutional.
Consider investing in the top FTSE 100 stocks in the United Kingdom. Companies like this rarely offer consistent yields of more than 3% year after year. Assume I have a net worth of a few million dollars and $150,000 in liquid funds to invest. Do you know how much you may earn in compound interest if you use 12% instead of 3% every year? It’s a substantial amount. Take my $150,000 and put it to work earning 3 percent reinvested dividend income for ten years. My initial investment will be worth $201,587 in ten years.
At 12%, what do you think? A ten-year investment of the identical initial sum would be worth $465,877.
The new Proof of Stake Ethereum 2.0 chain essentially substitutes miners with “validators,” who stake or gamble their currencies to validate transaction blocks.
Validators receive benefits in the form of passive revenue when they validate blocks. Furthermore, running your own validator node for Ethereum’s new chain is entirely possible. So, what are the requirements?
Running a Node
A 365-day lockup and a minimum amount of 32ETH, worth about $20,000 at today’s rates, are required to run a validator node for ETH. The procedure is rather complex, carries a number of hazards, and would take significantly more time to properly explain than we have in this essay.
In a nutshell, you’ll need a super-fast computer that’s always online. You risk losing your staked deposit if your internet connection goes down. If your validator is available and chosen, you will receive a reward in the form of ETH. However, if your validator is unavailable at the moment you are picked, you will be penalised.
You’ll also need enough hard disc space to accommodate the chain’s expansion. “At the time of writing, the blockchain for Geth is 467GB, while it is 304GB for Parity to run a full node,” Durk says. As the popularity of ETH2 develops and the chain’s size expands, room will become scarce.
In just six months in 2017, crypto saw its first breakout bull market, with the Ethereum blockchain’s size tripling from 10GB to 31GB, according to Durk. Then, during a two-year bull market, it grew in size by a factor of five.
Step – 2
Top Staking Coins of 2021
The process of selecting the optimal coins to stake should not be only based on the network’s rewards. The token’s lockup time and liquidity are also important elements to consider.
Low-cap currencies, in order to generate more demand, tend to pay bigger rewards than more established protocols like Ethereum (ETH). However, if the coin is particularly illiquid – meaning that daily trading volumes are low – it may be difficult to sell your acquired tokens.
Large lockup periods, on the other hand, subject you to market risks, which means you could lose a significant percentage of your principle if you are unable to sell your coins during a downturn to mitigate your losses.
Given the present low interest rate environment, earning a 6 percent to 20% APR on your holdings is enticing, and some well-known networks such as Ethereum (ETH), CARDANO (ADA) and Polkadot (DOT) are now offering such rewards.
Other tokens like algorand, kusama, polygon, and solana, on the other hand, offer even larger and hence more appealing returns, and their trading volume is high enough to allow you to swap your rewards without difficulties.
Step – 3
How to Start Crypto Staking?
Way of Starting Staking Crypto
An investor must first pick where and what they want to stake before they can begin crypto staking. To get started, follow these four basic actions.
- Select a cryptocurrency or coin to stake.
- Select and download a digital wallet to store your staking coins in. This could entail going straight to the cryptocurrency’s primary website and downloading the associated wallet.
- Purchase at least the minimum quantity of coins required. To participate in some networks, stakers must have a certain number of coins (for example, Ethereum holders must have 32).
- Ensure that you have sufficient computing power and a stable internet connection.
Staking cryptocurrencies has become a popular option for investors looking to generate income from their cryptocurrency holdings, similar to how a bond or high-dividend stock would work.
The lucrative APRs offered by some tokens today have attracted billions of dollars to this activity, and the POS protocol has also eased some networks of environmental worries caused by the traditional POW protocol’s energy-intensive nature.
Crypto staking, like any other type of investing, carries dangers, such as the loss of coins held in your online wallet in the event of a cybersecurity breach or a loss of principal due to a rapid drop in the price of the token during the lockup period.
As a result, you should consider the risk/reward ratio of staking depending on market conditions, network reliability, and the rewards granted by the block chain for putting your coins away to ensure that you are sufficiently paid for the risks you are taking.
Step – 4
The process of verifying and adding transactions between users to the block chain public ledger is known as cryptocurrency mining. Mining is also responsible for adding new coins to the existing circulating supply, and it is one of the main components that allows cryptocurrencies to function as a peer-to-peer decentralized network without the need for a central authority.
Although Bitcoin is the most well-known and well-established example of a mineable cryptocurrency, not all cryptocurrencies are mineable. Bitcoin mining is based on the Proof of Work (POW) consensus algorithm.
In a word, bitcoin mining is the process of collecting cryptocurrency as a kind of payment for work completed. (When it comes to mining Bitcoins, this is referred to as Bitcoin mining.) But why do individuals mine cryptocurrency? Some people are seeking for a second source of income. Others want more financial freedom without the interference of governments or banks. Cryptocurrencies are a burgeoning topic of interest for investors, technophiles, and cybercriminals alike, for whatever reason.
The term “crypto mining” refers to the process of obtaining cryptocurrency through the use of computers to solve cryptographic equations. Validating data blocks and adding transaction information to a public record (ledger) known as a block chain is part of this procedure.
Cryptocurrency mining, in a more technical sense, is a transactional process that uses computers and cryptographic methods to solve difficult problems and record data to a block chain. In reality, there are entire networks of devices that participate in crypto mining and use block chains to store shared data.
It’s critical to recognize that the cryptocurrency market is a viable alternative to the world’s traditional banking system. To properly comprehend how crypto mining works, you must first comprehend the distinction between centralized and decentralized systems.
Crypto Use Centralized Systems or Decentralized Systems?
Crypto uses decentralized systems known as Block Chain. In traditional banking, a centralized record is controlled, maintained, and updated by a single authority (ledger). This means that each and every transaction must pass via the central banking system, where it will be recorded and validated. It’s also a limited system just a few businesses (banks) are permitted to connect directly to the centralized banking system.
There is no central authority or centralized ledger with cryptocurrencies. That’s because cryptocurrencies employ a decentralized system called block chain, which is a distributed ledger (more on that later). Unlike traditional banking, the Bitcoin “system” can be directly connected to and participated in by everyone. Payments can be sent and received without the use of a central bank. It’s called decentralized digital currency for a reason.
However, cryptocurrency is both a decentralized and a distributed system. This means that all transactions’ records (ledgers) are publicly accessible and stored on a variety of machines. This is in contrast to the centralized structures of traditional banks, which we discussed before.
But how are transactions confirmed before being entered to the ledger in the absence of a central bank? Instead than relying on a central banking institution to authenticate transactions (such as ensuring that the sender has sufficient funds to complete the transaction), cryptocurrency relies on cryptographic techniques.
This is where bitcoin miners come into play. It takes a lot of computational power to do the cryptographic calculations for each transaction. The cryptographic work necessary to add new transactions to the ledger is performed by miners using their computers. They receive a tiny amount of cryptocurrency as an appreciation.
Step – 5
The “rig” is just a personal computer that has been configured. It has all of the standard PC components, such as a CPU, motherboard, RAM, and storage. When it comes to graphics cards, things get a little out of hand. When it comes to cryptocurrency mining, it’s the GPU, not the CPU, that does the heavy lifting. For mining, you’ll need a fairly strong GPU, and you’ll almost certainly need more than one.
In fact, a mining rig can be thought of as a low-cost PC with one or more high-performance GPUs attached. Multiple graphics cards must be connected to a single system, which necessitates the use of a motherboard. If you’re going to push things to their limits, you’ll need more than one power supply unit (PSU).
Building a Mining Rig
When constructing a mining rig, keep the following points in mind:
- It isn’t going to be inexpensive!
- Power consumption should be factored into your mining equation because it might cut into your profits.
- Because you’re not creating a standard PC, getting things to work might be a trial and error process involving a lot of tweaking with drivers. Wait patiently!
You’ll need to build your own mining setup to mine ether. CNBC joined up with Jordan Leigh, a full-stack software developer and long-time miner, to understand how to do this.
A power supply, a motherboard, an operating system to operate on your motherboard, computer memory, and a GPU, or graphics processing unit, are the basic components of any mining equipment.
“An ethereum mining rig is similar to any other computer you might build on your own, only instead of having a casing where all the components live, it’s in an open area,” Leigh stated. “You need to do this because the GPUs become really hot when they’re running, and you need a lot of air circulation.”
With just one graphics card, this machine can process almost 27 million math equations per second. That seems like a lot, doesn’t it?
However, there are 600 trillion math operations taking on every second on the Ethereum network right now. That is why people participate in a mining pool. A pool allows a single miner to pool his or her hashing power with that of thousands of other miners across the world.
Step – 6
Exodus is a cryptocurrency digital wallet. This means that only crypto-currencies are accepted. It has an internal exchange system that may be used to easily convert crypto-currencies. Exodus, on the other hand, does not accept fiat money (euros, dollars) or allow you to convert crypto-currencies into fiat. You’ll need to use a specific Exchange platform for this.
Part 1: Install Exodus
Follow this link to the Exodus download page, whether you’re using a computer or a smartphone. To avoid fraudulent sites or applications, it is critical to click on this URL. REMEMBER. FOR ALL OF YOUR CRYPTOS, YOU ONLY NEED ONE APPLICATION.
1. On the left side of the download page, you’ll notice a “DESKTOP” section with a link underneath it, as seen in the image below. When you download the app, the version (here 19.9.12) will almost certainly be different, but that’s okay.
2. Select your platform by clicking on the link (Mac, Windows, Linux).
3. After you’ve downloaded the file, install it on your computer like any other programme.
4. Launch the application. There is no need to establish an account, enter a username, or create a password.
Part 2: Start Receiving Cryptos
1. On the left, click the “Wallet” tab.
2. Choose the coin for which you wish to receive a payment from the list that appears, and thus the address for which you want to know. Consider the case of Bitcoin. Scroll to the bottom of the page if your cryptocurrency isn’t listed. The “+ Add More” button will appear after that. On the new screen, click it and add the missing crypto.
3. After you’ve discovered and clicked on your crypto, you’ll see the number of Bitcoins you have, as well as the equivalent dollar value and the “Send” and “Receive” buttons.
4. Select “Receive” from the drop-down menu. There will be a line with a lot of characters. For the coin in question, this is your address (or public key). This is similar to how an IBAN number for a traditional bank account works. A huge QR code, which is a flashable representation of your address, is also present. You don’t have to be concerned about it. If you want to accept payments in this cryptocurrency (in this case, Bitcoin), you must give the person sending you the cryptocurrency your address. We require this address to send you the mined funds in the case of Summit Mining. You can send it to us via email or text message (Telegram, WhatsApp, etc.).
5. Copy and paste this address into an email to the individual who want to send you money. To copy your address, simply click on it. This eliminates the need to use the keyboard shortcut Ctrl + V. 6. Simply copy and paste the address where it is required. 7. Repeat these steps for each cryptocurrency for which you need to be paid.
Part 3: Sending Cryptos
1. On the left, click the “Wallet” tab.
2. Choose a cryptocurrency from the list to transfer a payment with. Consider the case of Bitcoin. Scroll to the bottom of the page if your cryptocurrency isn’t listed. The “+ Add More” button will be visible. On the new screen, click it and add the missing crypto.
3. After you’ve discovered and clicked on your crypto, you’ll see the number of Bitcoins you have, as well as the equivalent dollar value and the “Send” and “Receive” buttons.
4. Press the “Send” button.
5. Type the destination address in the top field (the one of the person to whom you want to send funds). It’s never a good idea to type it by hand! Always use the copy and paste method.
6. Type the amount to transfer in the box below, or select “Half” to send half of all funds available for this crypto, or “All” to send everything.
7. Click the “Send” button. Well done, the payment has been received.
Step – 7
How to Set up a TrustWallet?
- First download the TrustWallet App from the play store and launch it. When you initially open the app, you’ll get the screen below, which allows you to either “Create a New Wallet” or “Import” an existing one. In this guide, we’ll choose Create a New Wallet.
- You must accept the Terms of Service in order to proceed. Simply check the box and then press the Continue button. There’s no going back now.
- Save your Recovery Phrase. This is the most crucial step in your cryptocurrency journey. You should keep track of your recovery seed phrases. The keys to your crypto wallet are your recovery phrases. As a result, keep them in a secure location. To continue, tap Continue.
- Make sure your Recovery Phrase is correct. This will be a breeze if you follow Step 3 and backed up your recovery phrase. Select the words in the correct order to complete the verification process. When you’re finished, click Continue.
- You will be taken to the main wallet interface after completing the backup and verification process. You’ll be presented with a first list of coins that you can fund straight immediately. Congratulations!
Step – 8
12 Words Seed Phrase
Your 12-word phrase is made up of words chosen at random from a dictionary and allocated to a number. The seed phrase can be translated to a number, which is then used as the seed integer in a deterministic wallet to produce all of the public and private keys.
A recovery phrase, also known as a seed phrase or recovery phrase, is a collection of 12 to 24 words that your crypto wallet generates. This word is used to locate your wallet in the case that it is misplaced, damaged, stolen, or otherwise unavailable.
A recovery phrase is a human-readable representation of your wallet’s private key, which is used to sign transactions and claim ownership of your wallet addresses.
Your recovery phrase, like your bank account login or email passwords, should be maintained in a secure, hidden location. You must write it on paper (or engrave it in metal) and make sure that the words are written in the correct order.
For a long time, seed phrases have been used to back up crypto wallets. Most popular wallets, including Trust Wallet, make use of them.
Recovery phrases aren’t designed to be passed around. If someone else discovers your recovery phrase, they will be able to enter your wallet and steal all of your crypto.
Step – 9
How to Setup MetaMask?
MetaMask is a simple Ethereum wallet and browser. Without running a full Ethereum node, it communicates with Ethereum Dapps and Smart Contracts. Chrome, Firefox, Opera, and the new Brave browser all support the MetaMask add-on. You can also use it to store ERC20 tokens.
Let’s start by setting MetaMask in Chrome. Launch the Chrome browser in a new tab.
After installing MetaMask, go to the upper right corner of your Chrome browser and click on the MetaMask symbol. It will launch the MediMask UI, where you can scroll all the way down and accept MetaMask’s terms of service by clicking Accept.
Then, create a new Ethereum account, enter a password, confirm the password, and then click Create. This account allows you to send and receive Ether as well as ERC20 tokens, as well as deploy Smart Contracts.
MetaMask will now display a 12-word recovery key to you (Seed).
If you forget your MetaMask password, you can only restore your account using these 12 words. It should be maintained in a secure area, such as a notebook or USB flash drive kept in a safe. Then select ‘I’VE COPIED IT SOMEWHERE SAFE’ from the drop-down menu.
That’s all, MetaMask has just produced a new Ethereum address for you! By clicking on the three little black dots and selecting “Copy Address to Clipboard,” you can find your address.
Now let’s discuss setting up MetaMask to Binance smart chain.
How to Setup MetaMask to Binance Chain?
MetaMask is available for download on Chrome and Firefox, as well as iOS and Android for mobile users. For the purposes of this article, we’ll utilize the Firefox version, although the procedures should be similar across platforms.
You’ll want to start by going to the MetaMask Download page. Select whichever platform you’re using and follow the on-screen instructions to install it on your device.
Then, as directed by the app, complete the setup. Create a wallet by clicking the Create a Wallet button. Make a private note of the backup seed phrase (preferably not on an Internet-connected device). If your gadget is broken or lost, you won’t be able to reclaim your funds without this phrase. On the next page, double-check that you’ve written them down.
That’s all there is to it! You should now be able to send and receive money from your wallet.
Setting up the Wallet
You may have noticed that we’re still working with an Ethereum wallet. This will not work with Binance Smart Chain DApps at best. At worst, you risk losing money by transferring money to addresses that aren’t valid.
Let’s make a change. We need to get into the Settings to tell the wallet to connect to Binance Smart Chain nodes.
We’re looking for the Networks option on the Settings page.
We’ll need to manually add the Binance Smart Chain network, which isn’t included with MetaMask, by clicking Add Network in the top-right corner. It’s vital to realise that we can use either the testnet or the mainnet in this situation. The parameters to put in for each are listed below.
Network Name: Smart Chain
New RPC URL: https://bsc-dataseed.binance.org/
Network Name: Smart Chain – Testnet
In this lesson, we’ll use the testnet, although you’ll probably want to utilise the mainnet. If you want to utilise MetaMask to transmit BNB or Binance Smart Chain tokens, you should add both.
When you return to the main page after saving the network, you’ll see two things: the network has been automatically set to the one you just entered, and the units are no longer denominated in ETH but in BNB.
MetaMask has long been the preferred method of entering the Ethereum ecosystem. Anyone may, however, configure it to point to Binance Smart Chain with no effort. This allows them to benefit from years of development that have gone into making MetaMask a must-have tool for anyone working with decentralized applications.
Step – 10
The Process of Mining
In a nutshell, crypto miners verify the legality of transactions in order to receive bitcoins as a reward for their efforts. To comprehend how most bitcoin mining works from a technical standpoint, you must first comprehend the technology and procedures involved. Understanding what block chain is and how it operates is part of this.
The first thing to understand about block chain is that it is based on two concepts: public key encryption and math. While I adore the first, I have to admit that the latter isn’t my strong suit. However, like burgers and beer, public key cryptography (also known as public key encryption or asymmetric encryption) and arithmetic go together on block chains.
Traditional cryptocurrencies, such as Bitcoin, rely on the block chain, a decentralized ledger. A block chain is a collection of linked data blocks that include important information such as cryptographic hashes. The blocks that make up a block chain are collections of data transactions that are added to the ledger’s end. This not only adds a degree of transparency, but it also boosts people’s egos by allowing them to see their transactions added (chained) to the block chain. Even though their names aren’t listed on it, it often elicits feelings of pride and enthusiasm.
The building of a block chain involves numerous fundamental components and processes. For the purposes of this explanation, we’ll use Bitcoin as an example:
- Nodes: Individuals and devices that make up the block chain are known as nodes (such as your computer and the computers of other cryptocurrency miners).
- Miners are nodes whose role it is to verify (or “solve”) unconfirmed blocks in the block chain by comparing hashes. The confirmed block is uploaded to the block chain once a miner verifies a block. A cryptocurrency is awarded to the first miner who notifies the rest of the nodes that they have solved the hash.
- Transaction: The thing that starts this party — I mean, the bitcoin mining process — is a transaction. A transaction is simply the exchange of cryptocurrency between two parties. Each transaction is combined with others to make a list, which is then added to an unconfirmed block. The miner nodes must then verify each data block.
- Hashes: Nodes can check the legitimacy of bitcoin mining transactions thanks to these one-way cryptographic functions. Every block in the block chain has a hash as a key component. The header data from the preceding block chain block is combined with a nonce to create a hash.
- Nonce: A nonce is a term used in cryptography to indicate a number that is only used once. A nonce is defined by NIST as “a random or non-repeating value.” The nonce is the number that the miners are solving for in crypto mining, and it is added to the hash in each block of the block chain.
- Consensus Algorithm: This is a block chain protocol that allows different notes in a distributed network to agree on how to validate data. The “proof of work,” or POW, method is regarded to be the first sort of consensus algorithm.
- Blocks: These are the individual components that make up each block chain. A list of completed transactions is kept in each block. Blocks can’t be changed once they’ve been confirmed. Making changes to old blocks implies that the hash of the modified block — as well as the hashes of every subsequent block added to the block chain since the original — must be acknowledged by all other nodes in the peer-to-peer network. Simply put, modifying ancient blocks is nearly impossible.
- Block-Chain: The block chain is made up of a sequence of blocks that are arranged chronologically. This gives a measure of transparency because previously published blocks can’t be changed or updated after they’ve been uploaded to the block chain. After all, the transactions are visible to everyone.
Cryptocurrency mining is a fascinating alternative to the centralized systems that are now in use around the world. However, it is extremely resource intensive in terms of computer and power resources, and as a result, it is out of reach for many consumers.
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Types of Crypto Mining
The following are some types of Crypto mining. You can choose any of them based on your interest:
- GPU Mining
It’s a mining method that relies on video cards. It is, in essence, your computer’s video card, which is essential for gaming. GPU miners are versatile, with the ability to mine a variety of coins. In the event that the market turns bearish or bullish, you can flip between cryptocurrencies. It also has a number of benefits, particularly in the areas of gaming, video editing, and streaming.
The main disadvantage of GPU mining is that it uses a lot of electricity when compared to ASIC mining. Furthermore, it necessitates extensive computation. You may also need to be patient, as recouping your initial investment may take some time.
- ASIC Mining
ASIC mining is based on certain algorithms. It is done using specialised equipment with the intention of mining Cryptocurrency. It is mostly a computer component designed for a specific use. It is, however, superior to both CPU and GPU in terms of performance, as it can run at up to 14 TH/s hash rate, which is far quicker than both. As a result, overall profits are increased.
- CPU Mining
CPU mining refers to mining that takes place on a computer’s cpu. The nice aspect about CPU mining is that you can practise it by purchasing a CPU and learning how to mine with it. You can try CPU mining before investing in GPU and ASIC mining.
However, this method of mining is no longer in use. There are numerous causes for this, including:
- It’s quite slow.
- 0.7MH/Sec is the average hash rate.
- Power consumption is high.
ASIC and GPU mining are far superior to CPU mining. It’s also possible that you won’t be able to validate transactions with it.
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Top Coins to Mine in 2021
Bitcoin is the strongest and oldest Cryptocurrency in the world. It is not, however, the finest Cryptocurrency to mine. You may be wondering which coin is the best to mine. Or, alternatively, what are the best cryptocurrencies to mine for high returns?
Our team has conducted extensive research to determine which coins are the most profitable to mine. So have a look at some of the most exciting cryptocurrencies to mine, where you can more than double your money in a matter of months. The best coins to mine in 2021 are mentioned below:
Litecoin is a free and open-source software project that is licenced under the MIT/X11 licence. It was founded in October 2011 as a peer-to-peer cryptocurrency. It is technically equivalent to Bitcoin.
Mining Litecoin is never a bad idea because it is a reliable cryptocurrency that is used by a wide range of people. Furthermore, it employs the SCRYPT protocol, which eliminates the requirement for ASIC devices and allows for GPU mining. It’s also less volatile than other altcoins, making it easy to trade across a variety of platforms. It is also a fast-moving coin with cheap transaction costs.
- 743.42% return on investment since debut
- Proof-of-Work Algorithm
- Price as of May 20, 2021: $359.08
- Scrypt Block Mining Hashing Function 12.5 LTC as a reward
Ethereum Classic (ETC)
Ethereum Classic is a cryptocurrency that aims to keep the Ethereum blockchain intact. This amazing crypto platform debuted in July of 2016. It has a market capitalization of more than $13 billion at the moment. The supply of coins in this cryptocurrency was just capped at 210 million.
It is ranked 16th among the world’s top cryptocurrencies. Ethereum Classic, often known as EtcHash, is a modified version of Ethereum’s Ethash mining algorithm that supports DApps and Smart Contracts.
It is relatively easy to begin mining this Cryptocurrency simply by purchasing a wallet and a graphics card that supports this Cryptocurrency. Furthermore, this crypto’s block time is less than that of another crypto, which is roughly 13 seconds.
- Since debut, the ROI has been 525.52 percent.
- Proof-of-concept algorithm
- Work’s current price is $292.10 as of May 2021.
- Ethash Block Mining Reward: 3.2 ETC Hashing Function
Unlike Bitcoin, grin has an unlimited supply, making it appealing to miners. It has a market capitalization of $66.87 million and circulating supply of 72.54 million. In 2019, the grin was created, allowing crypto users to mine without making big investments. Furthermore, in order to be ASIC-resistant, this Cryptocurrency has chosen to mine using the Cuckoo cycle.
Grid’s procedure prevents any residual transaction information from being stored on the network, ensuring its privacy in the long run. Grin is a protocol-agnostic implementation that attempts to be more scalable and less storage-intensive than other privacy coins.
- Since debut, the ROI has been -95.43 percent.
- Proof-of-concept algorithm
- Price as of May 20, 2021: $8.70
Bitcoin Gold (BTG)
Without mentioning Bitcoin Gold, GPU mining would be incomplete. It is one of the best cryptocurrencies to mine with a GPU, as it was created to eliminate the need for ASICs. Aside from driving out ASIC miners, it also requires very little investment, compared to other altcoins.
The fundamental goal of this crypto was to reduce the miner’s risk. The goal of Bitcoin Gold’s inventors was to reduce risk so that investors wouldn’t have to throw away their BTG Antminer even if the cryptocurrency’s price plummeted. The nicest feature is that you may use your hash power to mine any coin.
Bitcoin Gold’s goal of converting thermodynamic energy into digital assets will be realised. So, if you’re thinking about launching a bitcoin mining business, go for it!
- Since debut, the ROI has been -96.93 percent.
- Proof-of-Work Algorithm
- Price as of May 20, 2021: $118.7
- Zhash Block Mining Reward: 12.5 BTG Hashing Function
Dogecoin is a cryptocurrency created by Billy Markus with the symbol of a dog as its logo. This Cryptocurrency is far ahead of the alt coin boom, which has shattered numerous records and shows no signs of slowing down.
It is, first and foremost, a fully working cryptocurrency that can be used to store value and make transactions. Its price soared to $0.558 in May 2021, up from 0.00026 in December 2020. This coin’s daily trading volumes have surged, and its market value has reached a high of 93.38 billion dollars. Unbelievable!
Because there is no supply cap on the coin, it cannot be used as an inflation hedge.
It employs the Scrypt system, which is comparable to Litecoin in that it does not allow you to add doge to your portfolio by purchasing expensive computers. This does not, however, imply that you should mine this coin on your computer or laptop. You can use a GPU/CPU to ensure its efficient performance and make mining more fluid.
CudaMiner, Cgminer, and GUIminer are some of the best applications for mining dogecoin with a GPU. Use the CPUminer if you’re mining this coin with your computer’s CPU.
- 216.51 percent return on investment since debut
- Current Price: $0.558 Algorithm: Proof-of-Work
- Scrypt Block Mining (Hashing Function) 10,000 DOGE is the reward.
Dash is a word that combines the words digital and currency. Xcoin was the name given to the coin when it was first issued in January 2014. It changed its name to Dark coin after a few days before being rebranded ‘Dash’ in March 2015.
Dash is an open-source cryptocurrency that allows users to spend their money wherever they want and move it whenever they want. The main goal of this coin is to ensure that money transfer transactions via PrivateSend and InstaSend are easy and secure all over the world. This coin was forked from Litecoin, and the Bitcoin system was forked from Litecoin. This cryptocurrency is also a decentralised autonomous organisation governed by master nodes (a subset of its users). So far, Bitmain’s Antminer A3 has been regarded as the greatest Dash ASIC miner.
Mining this coin in 2021 might be quite rewarding, as it is one of the most profitable coins to mine. However, it is critical to check your mining device’s hash rate, electricity costs, and network range at your location, as mining profitability is highly dependent on these aspects.
- Return on investment (ROI) since launch: >9000%
- Proof-of-Work Hashing Function: X11 Algorithm
- $422.38 is the current price.
- 3.11 DASH for each block mined
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What is Yield Farming?
Yield farming, also known as liquidity mining, is a method of earning money from bitcoin assets. In simple terms, it entails securing cryptocurrency and reaping the benefits.
In some ways, yield farming and staking are similar. However, there is a great deal of complexity going on behind the scenes. It frequently collaborates with liquidity providers (LPs), who contribute funds to liquidity pools.
What is the definition of a liquidity pool?
It’s essentially a smart contract with funds. LPs are compensated for supplying liquidity to the pool. This incentive could come from the underlying DeFi platform’s fees or from another source.
Some liquidity pools payout in a variety of coins. These reward tokens can then be put into other liquidity pools to receive additional prizes, and so on. You can see how extremely complicated methods might evolve very fast. However, the essential concept is that a liquidity provider puts funds into a liquidity pool in exchange for rewards.
Yield farming is usually done on Ethereum with ERC-20 tokens, and the rewards are usually also ERC-20 tokens. However, this could change in the future. Why? Much of this activity is currently taking place in the Ethereum ecosystem.
Cross-chain bridges and other such improvements, on the other hand, may one day allow DeFi apps to be blockchain agnostic. As a result, they might run on other blockchains that enable smart contract functionality. In order to achieve high yields, yield farmers will often shift their finances around a lot between different techniques. As a result, DeFi platforms may offer additional financial incentives in order to entice more capital to their platform. Liquidity tends to attract more liquidity, just as it does on centralised exchanges.
How does it work?
Yield farming is intimately linked to an automated market maker concept (AMM). Liquidity providers (LPs) and liquidity pools are usually involved. Let’s have a look at how it works.
Funds are deposited into a liquidity pool by liquidity suppliers. This pool is used to fuel a marketplace where users can lend, borrow, and trade tokens. Fees are charged for using these platforms, which are subsequently distributed to liquidity providers in proportion to their part of the liquidity pool. This is the foundation of an AMM’s operation. However, because this is a novel technology, the implementations can be substantially diverse. There’s no doubt that new ways will emerge that will improve on current implementations.
Aside from fees, the distribution of a new token could provide a further incentive to add funds to a liquidity pool. For example, a token may only be available for purchase in tiny amounts on the open market. It can be accumulated, on the other hand, by supplying liquidity to a certain pool.
Risks Involved in Yield Farming
Farming for yield isn’t easy. The most profitable yield farming tactics are quite complex and should only be attempted by experienced farmers. Furthermore, yield farming is better suited to individuals with a lot of money to invest (i.e., whales).
Yield farming isn’t as simple as it appears, and you’ll most certainly lose money if you don’t know what you’re doing. We just went over how to liquidate your collateral. But what other dangers should you be aware of?
Smart contracts are an obvious risk of yield farming. Many protocols are established and developed by small teams with limited budgets due to the nature of DeFi. This raises the possibility of smart contract bugs.
Vulnerabilities and flaws are discovered all the time, even in larger protocols that are certified by respectable auditing organisations. This can result in the loss of user funds due to the unchangeable nature of blockchain. When locking your funds in a smart contract, you must keep this in mind. Furthermore, one of DeFi’s greatest benefits is also one of its greatest threats. It’s the concept of reusability. Let’s have a look at how it affects yield farming.
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How to Setup BlockFi?
To get started with BlockFi, we’ll head over to their website.
To begin registration, click on either of the “Get Started” buttons
If this works, the next prompt will question whether this is a business or individual account. Select the right user account. The process of opening a business account is substantially more involved.
If you select an individual, the next screen will ask about your location (only country and zip code). One of the changes I like about this procedure is that there is a drop down menu labelled “Why do we need this information?” for each step of the data collection process. This is a really welcome clarification for those who are hesitant to give up any personal identity information.
- The user is then asked for their address information.
- The user is then asked for their phone number.
- The user is next asked for their date of birth.
- The user is then asked to choose an option for the account’s funding source.
Then there’s the dreaded question about your social security account. This is just like any other investment website. The reasons for why this information is required are, once again, helpful.
The next step is to “verify your identity.” Because the prompts ask for information that has already been submitted, this step may appear repetitive. However, a look at the data forms reveals that they are provided by Persona (link). Persona is an identity verification and KYC (Know Your Customer) solution.
The app will then display the standard BlockFi user home screen assuming registration was successful.
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How to Setup Crypto.com?
To get started with Crypto.com, we’ll head over to their website. Then everything is explained in steps below.
- Click the Sign Up button (upper right-hand corner).
- Follow the on-screen prompts and supply us with the information we require. Your email address will be used to send you a confirmation link, and your date of birth and country of residency will help us determine whether or not you are qualified. Users must be at least 18 years old to use the service.
- Continue by pressing the Continue button. Your registered email will receive an email verification with a one-time password (OTP). To confirm your registration, look in your inbox.
- On the Exchange website, enter the OTP.
- Make a password for the Exchange and submit it.
- The final step is to double-check your phone number. Using the menu, select your country’s area code, then enter your phone number (without the area code). An SMS verification code will be issued to you to input. Select Submit after entering the code you received into the field.
- You’ve completed the task! The Exchange landing page will be redirected to you.
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Exodus Wallet Staking
People get paid in cryptocurrency to secure their networks. Bitcoin (BTC) is the most well-known example of a Proof of Work (POW) mining algorithm. Mining, on the other hand, has drawbacks such as high energy consumption and technological difficulties (buying and setting up ASICs requires some technical knowledge). Both of these problems can deter would-be cryptocurrency miners.
Explanation of Staking
Staking is a consensus technique (a method of verifying and securing transactions) that allows users to secure crypto networks with little energy and setup.
Staking is when you buy a cryptocurrency with the intention of locking it up (staking) in a smart contract. You vote to approve transactions once your stake is locked up (in many circumstances, you don’t actually have to vote – it happens automatically). The staker’s and blockchain network’s “agreement” is actually quite simple.
This is a lot easier than mining and, as a result, it’s a terrific “passive income” prospect for those who want to contribute to crypto networks while making money that they don’t have to do anything with.
While staking is a potential crypto development, keep in mind that it isn’t as old as mining, which has been there since Bitcoin’s debut in 2009. That is to say, the technology is still in its early stages (but it is promising).
Checking StakingRewards.com to see which coins can be staked profitably is simple. You can find out what a coin’s staking return is, what proportion of coins are staked, and a lot more useful information.
Easy Staking With Exodus Wallet
Tezos (XTZ) is one of the most popular staking cryptos, and we’ll show you how simple it is to get started with it in this example.
While there are a variety of ways to stake Tezos, Exodus makes it incredibly simple with only a few clicks or taps.
In the cryptocurrency ecosystem, the Proof of Stake consensus technique is gaining popularity. It’s more environmentally friendly than Proof of Work, doesn’t require a large upfront investment in equipment, and the stake rewards are frequently more than traditional investments!
If you want to start staking, make sure you’re aware of all the risks involved, as this is a new technology. Once you’ve mastered the fundamentals, you can begin staking with a little amount of cryptocurrency and work your way up. Best of luck, and have fun generating passive income!
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How to Mine BTC Via Mining Machine & Computers?
Bitcoin mining is not just the process of putting new bitcoins into circulation, but it is also an important part of the blockchain ledger’s upkeep and development. It is carried out with the assistance of highly advanced computers that answer incredibly difficult computational math problems.
Get a BTC (Bitcoin) Mining Rig
You’ll need a mining setup to get started mining in the first place. Although miners in the early days of Bitcoin used regular home computers and later graphics cards, you will not be able to obtain Bitcoin using these machines today (or more precisely you may gain something, but it will be a really small amount in a very long period of time).
Bitcoins are now mined using specialised technology designed specifically for mining Bitcoins or other currencies using the same algorithm. It’s known as ASIC (Application-Specific Integrated Circuit chips), and it utilises less energy while mining Bitcoins. This device is costly and time-consuming to manufacture, but has astonishing speed.
If you’re thinking about getting into mining, pay attention to the following factors when making your decision: performance (hash rate), electric power consumption, and pricing. The hash rate reflects how many attempts per second the system can make to solve a block.
We recommend that you read through the reviews of several miners and then pick the one that appears to be the most beneficial to you. Focus on the whole proportion of price, performance, and consumption rather than just the price. To put it another way, the best miner is the most efficient.
What is the best location for your machine?
Bitcoin mining requires not only a large amount of electricity, but also a specific location for a machine, as mining rigs are noisy and produce a lot of heat. The service miner housing solves this problem by allowing you to store your machine in a professional data centre and eliminate all of your worries. You will benefit from cheaper energy costs, a chilled environment, regular monitoring, and the absence of noise.
How to Mine BTC Via Computers?
The process of creating valid blocks that add transaction data to Bitcoin’s (BTC) public ledger, known as a blockchain, is referred to as mining. It solves the so-called “double-spend problem,” which is a critical component of the Bitcoin network.
The difficulty of needing to reach an agreement on a transaction history is known as the double-spend dilemma. Bitcoin ownership can be mathematically confirmed using public key cryptography, which is currently unbreakable. Cryptography, on the other hand, cannot guarantee that a coin hasn’t already been given to someone else. To create a common history of transactions, an agreed-upon ordering must be established, which could be based on the time each transaction was created, for example. External input, on the other hand, might be controlled by whoever supplies it, necessitating participants’ trust in that third party.
Mining (and blockchain in general) makes use of economic incentives to establish a secure and reliable method of data ordering. Third parties who order transactions are decentralized, and they are compensated for good behaviour.
This result is obtained in Bitcoin mining by constructing a series of blocks that can be mathematically demonstrated to have been stacked in the correct sequence with a specific amount of resource commitment. The method is based on the mathematical features of a cryptographic hash, which is a standardised method of encoding data.
Because hashes are one-way encryption tools, decrypting them to their input data is nearly hard until every possible combination is examined until the result matches the specified hash.
Bitcoin miners do something similar: they cycle through trillions of hashes per second until they discover one that meets a criterion known as “difficulty.” Because both the difficulty and the hash are huge integers expressed in bits, the condition simply states that the hash must be less than the difficulty. Every 2016 Bitcoin blocks — or about two weeks — the difficulty is re-adjusted to keep a constant block time, which refers to how long it takes to find each new block while mining.
The hash created by miners is utilised as a unique identifier for each block and is made up of data from the block header. The Merkle root — another aggregated hash that incorporates the signatures of all transactions in that block — and the prior block’s unique hash are the most crucial parts of the hash.
This means that changing even the slightest component of a block will change its predicted hash — as well as the hash of every subsequent block. This wrong version of the blockchain would be immediately rejected by nodes, protecting the network from tampering.
The approach ensures that Bitcoin miners put in real labour — the time and electricity spent hashing through all of the available combinations — by imposing a difficulty requirement. To separate itself from other forms of block-creation methods, Bitcoin’s consensus system is dubbed “proof-of-work.” Malicious actors have no choice but to recreate the network’s complete mining power in order to attack it. That would cost billions of dollars in Bitcoin.
How to Mine Other Tokens?
TOKENS are digital assets based on a blockchain and specified by a project or smart contract.
UTILITY TOKENS and SECURITY TOKENS are two types of tokens. Consumer or incentive tokens are other names for utility tokens. UTILITY TOKENS can be utilised as part of a network or project, such as loyalty programmes, and are sold as part of a fund development. SECURITY TOKENS are classified as investment contracts and are regulated by the Securities and Exchange Commission (SEC) in the United States. To determine if a token is an SECURITY TOKEN, the Howey Test is used.
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A Quick Quiz
What is crypto staking?
How to stake a crypto coin?
Which are the top crypto coins to stake in 2021?
How would you define crypto mining?
Name the processes involved in crypto mining?
How to relate crypto mining and staking?
What would you prefer, mining or staking?