Let’s go on a little crypto-adventure together. I am going to share with you some high-level thoughts on staking cryptocurrencies without too many boring details or even attempting to be technically correct lol. Crypto staking is the equivalent of a GIC in fiat. There, I said it. Read on to understand why I think this way and if it might be something for you to consider.
For those of you with a room temperature IQ and wondering what a GIC is, allow me to explain. GIC = Guaranteed Investment Certificates (GICs). If you are more familiar with the American equivalent then think of CDs. A place people toss and lock up their money for some time to have it returned plus interest at a later date.
OK, I get that, but WTF is staking and how do I do this?
Allow me to explain my experience and exploration so far.
The first step is to buy a cryptocurrency that offers staking. Without getting into the technical jargon this means Bitcoin and some other currencies are not eligible. In this example, I decided to use #SOL aka Solana. You need to have some Solana first, so I bought …errr… converted fiat to this cryptocurrency first lol.
Now that I bought some SOL via my WS account I was ready to do some streaking… I mean staking. Here is how we can define staking:
Think of pledging your crypto as lending your fiat as you would with a GIC. Now that my funds are locked up I should expect to get something in return right?
So think of this reward as you would interest rates for a GIC. As hinted at above, you can only collect this reward on certain cryptocurrencies.
Much like the bank won’t allow you to accrue interest on your Canadian Tire dollars, only some cryptocurrencies will allow you to stake.
So what are the drawbacks aside from my selected cryptocurrency going to zero in a Ponzi scheme ( cough cough LUNA cough cough)
Similar to a GIC, you can expect to set it and forget it for a little while. But for how long?
Every 3 days seems much easier to digest than the typical years when compared to a GIC, albeit the certainty of the rate seems questionable but potentially more rewarding. Let’s be honest though, if you are entertaining cryptocurrencies chances are you have at least some level of risk tolerance. Let’s sell our soul and see what happens. Sorry, I mean stake our SOL and see what happens 🙂
I staked all the SOL I had bought in this example. Here is what I am expecting out of this aside from this cryptocurrency going up (hopefully) or down (risk it for the biscuit) :
4.8% is the expected yield which doesn’t seem too shabby considering I just have to click a few buttons and given it is a bit higher than the interest rates on GICs from most of the major banks atm unless I wanted to lock in for a decade (thanks but no thanks)
Now that you have an idea of what staking is and how it’s basically the GIC equivalent in the fiat world (or maybe you are more confused now than ever – you’re welcome)… perhaps you want to give it a shot too. If you decide to give this a whirl keep me posted on your thoughts and findings. Consider using WS and getting some free stuff with my promo code if you’d like.
Disclaimer: I am not a certified comedian – please consult a comedian before having a laugh – same applies to any financial advice you might take away from my posts. If you can donate that would mean a lot to me and help to fuel me to keep going. Also, feel free to give me any feedback. Good, bad, or ugly. Thanks.