Benefit from compound interest with Proof of Stake (PoS) cryptocurrencies

 Before we dive into proof of stake, Let me introduce you to birdchain.

Most people today struggle with cryptocurrencies especially beginners.

Birdchain is a free cryptocurrency earn app to pays birdchain tokens for viewing ads, watching short videos, playing video games, completing small tasks on websites

Also Birdchain is available on several exchange platforms. Once you have gathered enough bitcoin from in the app, there is a direct to wallet withdrawal process for you to drop birdchain tokens in an exchange.

you can then trade birdchain for other cryptocurrencies like bitcoin, ethereum etc 

If you want to earn free cryptocurrency then you should install Birdchain Now using the link below

https://play.google.com/store/apps/details?id=io.birdchainapp.app

Now lets talk about proof of stake

If the Hodl strategy didn't work for you, here's a short tutorial explaining how to compound your crypto-currency portfolio and generate interest through staking!

So it's possible to hold and earn interest at the same time, so hopefully this will help your wallets!

What is compound interest in the world of crypto-currencies?

The idea of compound interest in crypto-currency is very simple. But before we explain what compound interest in crypto-currency is, let's already recall the definition in the world of traditional finance.

It is a usual thing in traditional financial markets because the volatility is low compared to assets like crypto-currencies.

Compound interest is the process by which you reinvest the income from your asset to generate additional income over time.

Let's say you invest $10,000 in The Super Startup (TSS). In the first year, the stock rises by 25%. Your investment is now worth $12,500. Happy with this good performance, you keep the stock. In the second year, the stock appreciates another 25%. As a result, your $12,500 increases to $15,625. Rather than appreciating $2,500 more than your stock did in the first year, it appreciates $3,125 more because the $2,500 you earned in the first year also increased by 25%.

But with the bear market and falling prices, people tend to forget about this opportunity on crypto-currencies.

In fact, crypto-currencies allow users to generate additional income even if the price drops.

In the world of cryptos, it is possible to generate extra income in many ways, for example, forks, loans, contests, mining, bounty program, etc., but in this article, we will focus on how PoS crypto-currencies can provide you with a second income, even when the price drops.

With proof of participation(PoS) and other variants (DPoS / LPoS), you can now earn rewards based on the number of crypto-currencies you hold. So, to start earning interest on these cryptos you just need to reinvest these rewards so that your holdings grow faster and faster over the years.

For example, several companies, like PoS Bakerz provide delegation services for Tezos. A blockchain with an annual inflation rate of about 6% (for now). Every cycle that you don't delegate or commit, you lose out on that inflation. However, if you individually bake your ꜩ for 1 year, you will get an annual inflation rate of 8.7%. If you individually invest your assets for 5 consecutive years, you will get a 52% compound return over the period. If you had 1,000, your total assets would now be 1,520ꜩ!

What is Proof of Stake (PoS) and how does it work?

Most crypto-currencies, including Bitcoin, use a mechanism called Proof of Work (PoW). Under PoW, miners use special software to solve certain complex mathematical problems. And in exchange for this, they receive a certain number of bitcoins. The main idea is to create a new block that will be added to the existing blockchain...

Over the years, Proof of Work (PoW) has proven to be extremely robust against security threats, but also extremely energy intensive.

It is estimated that the Bitcoin network alone consumes more energy than some developed countries.

An alternative to PoW is called proof of stake or proof of participation (PoS). In PoS, participants are not chosen based on their computing power, but based on the stake they hold in the crypto-currency.

For example, if John has 10% of the tokens, he will have a 0.10 probability of being selected as a participant in the next block.

On the plus side, proof of stake or proof of participation is a consensus mechanism that is both natural and frugal while being less expensive overall, although it has been widely criticized for its "get richer" formula.

Most importantly, it allows participants to earn rewards on its crypto-currency holdings.

With which crypto-currencies can you expect rewards?

There are many crypto-currencies that pay daily rewards.

For example, we can mention Neo, Ontology, Waves, Cosmos, Livekeeper, Polkadot, Decred, Lisk... And soon we can even add Ethereum, after Casper's update, or Cardano on this list.

According to Coindesk, the PoS crypto-currency market would reach $18.8 billion. That's still less than a third of Bitcoin's $64 billion total valuation.

Nevertheless, these current and future PoS crypto-currency market valuations cannot be ignored.

We need to think seriously about crypto-currencies taking an increasingly important place in the evolution of a crypto-based financial system.

Will the Proof of Stake lead the crypto banking revolution?

We have seen a very positive start in 2019 with an explosion of investments in blockchain companies in the capital markets. One example we can point to is Staked, a startup that provides institutional investors with the technical infrastructure for custodial services without a depository, which raised USD 4.5 million from 

Pantera Capital

Tyler Winklevoss and 

Cameron Winklevoss

from 

Fabric Ventures

 or other players such as Coinbase Ventures, Digital Currency Group or Blocktree Capital...

Staking as a service is clearly growing. With recent moves by major protocols such as Ethereum, which is expected to move from PoW to PoS in Q4 2019, it could even replace PoW one day, which could lead to a new layer of intermediation of crypto assets.

This new growth in proof-of-stake (PoS) and deposit intermediation could lead to some drawbacks, among them counterparty risk and an incentive for leverage.

Crypto-custodians, who manage private keys on behalf of clients, could become a new banking player in this ecosystem, itself created to increase disintermediation and decentralization.

Staking is very similar to what we can find in traditional financial markets. The keepers, whether they are custodians or not, must maintain a bet ratio on certain protocols - which can be compared to the capital requirements of banks. Then they pay a reward to their customers based on their deposits and the rate of inflation, not unlike a savings account paying an interest rate.

When token holders understand that they should receive some sort of interest from their crypto currency accounts at depositories or exchanges, we will see a new ecosystem of staking providers emerge.

If Coinbase offers 2.5% while Binance or HitBTC offer 6% staking rewards (or vice versa), the consumer choice becomes clearer.

This is exactly what banks are competing on to attract deposits. On some platforms, users can already choose to stage their tokens and earn interest based on inflation, or get an interest rate on their crypto for a loan of up to about 7-15% depending on the token.