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How to save and grow assets using cryptocurrency in 2022

Current events show that keeping money "under the mattress" is not a good idea for saving money. Inflation of the global dollar currency was 7% in 2021, a record since 1982. Stocks, gold and real estate which have generally more stable and positive dynamics protect against inflation, but do not have high returns. There is a need for new financial instruments.

Cryptocurrencies are an alternative investment option that can not only save but also increase funds. For a visual argument you should look at the graph of the cryptocurrency market capitalization over the past 2 years.


Total market capitalization of cryptocurrencies

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Judging by the graph we can state a stable increase in the total capitalization of the cryptocurrency. The main growth is based on digital assets included in the TOP-20. The leading roles here are occupied by Bitcoin (BTC) and Ethereum (ETH). The share of BTC is 40-50% of the total cryptocurrency market.

Social significance and state regulation

Many examples in life prove the social importance of cryptocurrencies in the world. Previously a large number of people were cut off from banking services due to various circumstances. Now, for example, a user who is located in a remote village in India but who has the opportunity to access the Internet at least occasionally can use cryptocurrency without any restrictions. And this increases the coverage of the population with cryptocurrency technology and strengthens the position of digital finance.

In response to the high social significance of virtual money the government does not stand still starting to adopt various bills regulating the activities of cryptocurrency which contributes to its promotion to the masses. Developed countries create a favorable tax climate for owners of digital assets and develop infrastructure. These actions allow you to declare your income and make cryptocurrency a completely legal means of saving and paying. These countries include the USA, Canada, Japan, South Korea and others.

Prospects for growth in value and reliability of digital assets

The main factors confirming the growth of digital assets are:

Limited offer of coins included in the TOP. Unlike ordinary money and digital shitcoins popular cryptocurrencies are limited in supply, and as demand grows, supply decreases. This process causes an increase in demand and, accordingly, the price of a crypto asset.

Decentralization. Digital money belongs only to the owner of the wallet password. No one has the right to limit the use or freeze funds.

Low commissions. Unlike the traditional banking system, digital money does not require the maintenance of intermediaries thereby reducing the cost of transfers between users.

Mining and staking. They allow you to increase profitability for investors and participants who support the operation of the network.

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How to make money on cryptocurrency

Among the available ways to earn cryptocurrency two directions can be noted: active and passive. The first option is trading which requires certain knowledge and experience comparable to high risks. The passive option does not require active participation and taking large risks but it is possible to receive a stable income, although not as large as with trading. Among the popular options for earning on a crypto asset are:

HODL - implies a "buy and hold" strategy. The easiest way to earn money is by increasing the value of a coin in relation to fiat funds over a certain period of time. An example of this is Bitcoin which increased its initial value thousands of times.

Mining - the process of earning is to receive income in cryptocurrency for participating in the network. When a block is found, miners are rewarded. In order to take part in mining you need to spend money on the purchase of specialized equipment or the construction of a mining farm. An alternative option may be "cloud" mining where no equipment is required, and the participant himself buys a share in the production of coins. In the "cloud option" there is a high risk of fraud.

Staking is a passive way of earning cryptocurrency that does not require significant financial costs for the purchase of equipment.

The popularity of staking among cryptocurrency investors is due to the availability, high profitability and environmental friendliness. The principle of operation of staking is based on the usual storage of coins in your cryptocurrency wallet which allows you to maintain the network and thus provide good liquidity. The standard staking method uses the Proof-of-Stake (PoS) algorithm (based on proof of stake). The reward for participation in staking can be fixed or adjusted according to the number of blocks issued taking into account various factors.