Guide for traders

As we have seen in a previous section, digital coins are divided into two main categories. In one of these categories belong the coins that use the POS (Proof of Stake) algorithm, where the coin holders are rewarded according to the quantity they hold. There are two ways for receiving these rewards:

• By having the appropriate wallet installed on a computer which should be constantly connected to the network, or

• By keeping these coins in an online platform that provides this service, which in exchange, will withhold a small percentage from the total amount of the coins we hold. BTCPOP is one of the platforms where we can maintain a POS coin and get these rewards regularly.

Each POS coin has different reward times, and a different reward amount. For example, for an “x” coin the yield time can be 1 unit per day, while for a “y” coin it could be 15 units per 7 days. Also, rewards often depend not only on the quantity we have, but also on the quantity the users of the platform hold in total. Thus, yields vary and are not entirely stable.

It should be noted that the higher the reward a coin gives, does not mean that it is the right choice for investing in it. Coins that give large rewards tend to lose their value over time. If this is the case, then we should do an investigation before making such an investment and see if the reward rate is lower or higher than its decline of its price. If the reward rate is higher than the rate of the decline of its price, then it may be worth investing in this coin.

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