What after getting bitcoin? Now you definitely want to save it, or at best invest it. Although there are no banks that offer cryptocurrency investment pools, there are plenty of activities (with varying levels of risk) to which you can distribute your cryptocurrency. For example, you can use bitcoin to bet on online casino games and get winnings with the same currency you deposited. You can also use Strike! Ever heard of strike? That is simply holding crypto coins for an indefinite period, for which you receive interest as a reward. You can therefore compare a strike with the interest you used to receive on your savings account. It is also a way to passively earn money with crypto. What exactly is strike? How does it work? What are the pros and cons? And is it an alternative to saving? Let’s dive into the concept.
What Is Strike?
Most people invest in cryptocurrencies because they expect it to increase in value in the future. But there is another way to make money with crypto: by staking coins.
So, staking crypto is nothing more or less than buying a coin or token and then holding it. As a reward for this, you receive interest, just like you used to receive interest on your money if you left it in a saving bank account.
How much interest you receive depends on the crypto currency and the exchange. But to give you an idea: staking Cardano via Bitvavo will yield you an interest of about 5 percent per year, Tether more than 6 percent. A lot better than the 0.0 percent you get on your savings account, so.
But why do you get a reward when you hold coins? By staking crypto you support the security and operations of the blockchain network. Because investors strike, the blockchain remains up-to-date and transactions can be sent and received over the network.
How Does Strike Work?
Above you briefly read why you are rewarded for staking, but how exactly does it work?
You have probably heard of mining. Proof-of-Work cryptocurrencies such as Bitcoin require mining to verify new blocks. This process uses the computing power of computers to verify new blocks. You can see the warehouse spaces full of computers (mining farms) in front of you.
With Proof-of-Stake crypto coins, blocks are not verified on the basis of that computing power of computers, but on the basis of crypto held by investors. In short, that’s the difference between mining and staking. If you need a more technical explanation about staking, we recommend this article from Binance Academy.
Can You Strike Any Cryptocurrency?
As you probably understand by now, you can’t just stake any cryptocurrency. The coin must use the Proof-of-Stake concept. However, there are also exchanges that offer staking for other cryptocurrencies. Then you actually get interest as a reward, because you use that exchange.
Which Crypto Coins Can You Stake?
Below you will find a number of crypto coins that you can stake via Bitvavo (a user-friendly app, which in theory even allows your mother to invest and stake) and the interest you receive per year. This can change and isn’t the same with every exchange, but it’s more to give you an idea:
ICON (ICX): 7.50%
Dai (DAI): 6.10%
Tether (USDT): 6.10%
USD Coin (USDC): 6.10%
Waves (WAVES): 5.50%
Cardano (ADA): 5.00%
Ark (ARK): 1.07%
Litecoin (LTC): 1.04%
Tron (TRX): 1.03%
Bitcoin Cash (BCH): 1.02%
Ethereum (ETH): 1.01%
Bitcoin (BTC): 0.77%
Can You Lose Money in a Strike?
That strike sounds good, right? Why wouldn’t you want to passively earn money with crypto? But as is always the case with investing, there are risks associated with staking.
For example, can you lose your money? We can be brief about that: yes. If the coin becomes worth less than what you bought it for, you could lose money. If you decide to go on strike, it is therefore important to read carefully.
How Can You Reduce the Risks of Discontinuation?
What is good to know is that you can also strike flexibly. This is possible, for example, with the aforementioned Bitvavo. You do not lock your crypto for a certain fixed period, but you can always choose to sell your crypto. This way you don’t have to watch with your hands behind your back if a coin suddenly decreases 50 percent in value, for example.
Another way to limit the risk of staking is to choose a stablecoin like USD Coin and Tether. These coins follow the exchange rate of the dollar, so the volatility is low. Best of all, the interest rate you receive is high too.
Is Strike an Alternative to Saving?
Now that you no longer receive or even have to pay interest on your savings, options such as staking are of course becoming increasingly attractive. But is it really an alternative to saving?
Due to the risks that we have just discussed, we always recommend that you have a financial buffer on hand in your savings account. You can read here how high your financial buffer should be.
The Pros & Cons of Strike
Finally, we list the pros and cons.
The advantages
It’s incredibly passive. You buy the coins and hold them. If a coin increases in value, you actually have double profit.
If you compare it to mining, staking is much easier and you don’t have to buy expensive equipment.
While you do need to do your research, you don’t need high technical knowledge to strike anyone can do it.
The cons
You may lose money.
You have to hold your coins and can therefore respond less to what the market is doing.
Sometimes there are additional conditions such as a minimum amount that you must have invested and a minimum strike period.
To really have a nice pocket money left, you should make an investment.
Where Can You Stake Crypto?
You’ve heard Bitvavo come up a few times now, but where else can you strike? Some examples:
Binance
Bitfinex
bit stamp
BlockFi
Coinbase
Crack
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