Earn Hbars Proxy Staking
Introduction: User rewards in cryptocurrency are a major driver for early adoption of a new platform for crypto enthusiasts and investors. Receiving a digital currency for investing time and research into a developing decentralized network helps the user stay invested in the project and contributed to the community.
PoW Rewards: Since the advent of Bitcoin and the blockchain miner’s reward incentive program, an explosion in hosting nodes have populated the globe. This effective incentive to pay users for joining and assisting the network is a strong motivation for a globe of users. However, due to the Proof-of-Work (PoW) mechanism of blockchain, nodes with the fastest computers have a strategic advantage in earning the rewards.In fact the majority of Bitcoin awards are by massive mining pools with the latest supercomputers. The average user is nearly excluded from this unequal system of miners. In fact, it has become a common fact that the high concentration of the largest mining pools, positioned in the most cost-effective geographies for electricity and with the largest CPU purchasing power have no longer made Bitcoin mining profitable for the majority of general users hosting nodes.
PoS Rewards: In Proof-of-Stake (PoS) consensus networks like Hedera Hashgraph, average users can earn hbars or other cryptocurrencies, by simply assigning their coins, or ‘stake’ to a node. This can easily be done through a wallet feature for the owner and will allow users to earn hbars for helping with the voting-based algorithm. This is called ‘proxy’ staking, which means that a user may not be running a full node, but can still earn hbar tokens for helping the ‘nearest’ node.
Hosting a main node has a cost barrier, but is no way near the cost of current blockchain mining equipment. What’s more is that there is no advantage for having a supercomputer in PoS, since the consensus is based on voting, not PoW which uses complex math problems to solve. Therefore, the playing field is made much more even in PoS in order to earn coins.
PoS Bond Staking: Although there are other PoS crypto platforms that offer staking, the majority do not offer proxy staking. In PoS systems apart from Hashgraph, users are able to earn fees by staking, but have certain requirements such as time-dependent bonding. This means that when a user stakes coins to a node, the individual is no longer able to spend those coins while ‘bonded’. This may even last for days, weeks or months. This is a risk for the user that may anticipate a change in the market and will not be able to sell their coins if a major downturn occurs during the bonding period.
PoS Proxy Staking: The Hedera Hashgraph network allows wallet owners to earn hbar coins by simply opening an account, using their tokens to proxy stake to a full node and collect fees for contributing to consensus. The process of proxy staking hbars allows the network to remain distributed and secure through the use of voting during transactions on the Hedera network. Each time a transaction is submitted to a full node, 3 fees are incurred, one of those is shared with the hbar proxy stake user. At a later time, the network will expand to Phase 2 and Phase 3 when many thousands or more nodes will enter the network, be able to host a full node and earn hbars greater than they did when proxy staking coins.
The ability to earn cryptocurrency while the coin also experiences network growth and increase token value, allows a user to have a twofold investment. Earning hbars while also accruing unrealized gains from hbar marketcap increase is equivalent in investment to certificates of deposit, dividend-bearing stocks and bonds as well as simple interest-bearing savings accounts.
The chance to own hbars, stake them and earn from them is a financial innovation that could accelerate in the cryptocurrency market due to this dynamic. Exchanges such as Coinbase have been investing in this offering as well to its users due to its perceived benefits. Finally, the greatest advantage of earning hbars in the Hedera Hashgraph network is the unique feature of being able to spend them at will without penalty or bonding. All a user has to do is keep their hbars in their wallet for 24 hours and they will collect more coins. This could become the new digital asset class of choice for cryptocurrency enthusiasts and investors.