Crypto staking has become a common way for investors to earn passive income using their idle crypto assets. This is particularly suitable for those simply buying and holding assets without engaging in active trading.
Rather than keep your assets idle and not doing anything but waiting for the price to go up, you can stake them on an exchange and earn rewards on them. These rewards vary from platform to platform, but are usually worth it as you have nothing to lose, only gains.
It is common knowledge that staking is a feature of the proof-of-stake (PoS) consensus algorithm and so works on the networks of PoS cryptocurrencies. But did you know that you can also stake Bitcoin?
This is not done in the traditional sense of trying to secure a network though. Rather, you stake it on an exchange and get rewarded for it. In this guide, we’ll show you how to stake Bitcoin on Kraken.
What Is Kraken?
For those not familiar with it, Kraken is one of the leading crypto exchanges in the U.S, and also a leading global exchange. It is used by people from hundreds of countries worldwide, and has millions of users from these countries.
Kraken is famous for its unmatched security. It is one of the oldest crypto exchanges but has never been breached in anyway. This has earned the platform the reputation of a highly secure place to do all things crypto, staking being at the top of the list.
Kraken offers 25% APY for staking assets, including Bitcoin and anyone who has Bitcoin can participate in this passive income stream unless their jurisdiction specifically forbids the use of crypto or staking.
The good thing about the staking exercise is that you can unstake your assets at any time and then withdraw your earnings with them.
How to Stake Bitcoin
The staking process is easy, and anyone can do it even if you’re just starting your crypto journey today. The following are the steps to follow to start immediately.
- Sign up on Kraken if you don’t have an account with the exchange. This is also easy, all you need is an email address and password.
- Next, verify your account by completing KYC. This process is required for you to participate in staking or any other serious activities on the platform.
- Fund your account. You can do this by buying Bitcoin on the exchange or by transferring funds from another wallet to your verified account.
- Now that you have Bitcoin in your wallet, go to the Earn section and select Bitcoin as the asset you wish to stake.
- Enter the amount of Bitcoin you wish to stake and click Continue.
- Next, Enter your Two-Factor Authentication code. You’ll need to confirm the transfer by entering your 2-factor authentication code. The code helps to protect your account against any unauthorized access, so it is absolutely necessary to set up one.
- Once this is done, your staking is confirmed and you can see your staked Bitcoin in the staked section.
Pros of Bitcoin Staking
Staking your Bitcoin on Kraken has a number of advantages to it, and the following are some of those advantages you should know of.
- Earn passive income with no work on your part rather than allowing your assets to lie fallow.
- Staking of assets is absolutely free, so it costs nothing but rather yields rewards on your assets.
- Contribute to providing liquidity for Bitcoin traders on the crypto exchange. This is a great service you’re doing to the entire crypto industry.
Cons of Staking Bitcoin
Staking Bitcoin is an easy way to earn rewards, but it also has some disadvantages. The following are some of them.
- Your staked assets are unprotected since Kraken isn’t a regulated platform.
- Assets on exchanges are generally at greater risk than assets stored in a personal wallet. Therefore you’re taking risks.
