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- Proof-of-Stake coins (also called PoS coins) reward digital currency holders with passive income for simply holding coins and/or operating a full node on the blockchain
- When holding a PoS coin you can earn cryptocurrency by helping facilitate on-chain transaction processing by simply having a “stake”, in other words keeping coins in a wallet connected to the blockchain
- By contrast, bitcoin and many other altcoins use a method called Proof-of-Work (PoW), in which you are rewarded in crypto in exchange for your computer’s resources being used to solve complex math problems (this process is called mining)
- In some cases, ‘staking’ can see people receive rewards for merely holding coins and not even participating in the blockchain directly
What are Proof-of-Stake (PoS) Coins?
Proof-of-Stake (POS) is a cryptocurrency consensus algorithm used by blockchains such as NEO and Decred.
With PoW coins like bitcoin, miners who contribute computational resources to the BTC blockchain receive rewards. Conversely, with PoS coins, transaction processing is undertaken solely by holders of large volumes of tokens. Network integrity is, therefore, guaranteed by the fact that people holding coins have a ‘stake’ in preserving the integrity of the blockchain.
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So, if you plan to HODL a coin for the long-term, you can stake it and let it accumulate interest for you, rather than just wait for the value to appreciate. If the value appreciates and you earn interest in the form of more cryptocurrency then it’s a double bonus!
Is Investing in Proof-of-Stake Coins Profitable?
The answer is yes, if you invest in the right coins.
Investing in Proof-of-Stake coins is definitely very profitable in many cases. However, with some coins, you have to run a full node, meaning it will take up a lot of space on your computer and/or use much of its resources, potentially slowing down your computer.
Running a full node isn’t always practical, depending on the performance and power of your computer.
- Running a full node requires downloading and continuously updating a full copy of a cryptocurrency blockchain
- Full node operators need to strive for the 24/7 uptime of any hardware running a full node
- Some internet service providers may throttle network bandwidth if they suspect that a full node is in operation
Given the limitations associated with running a full node, many investors look to stake coins which don’t require you to operate a full node. Staking is often preferable, as staking does not require direct participation in the blockchain.
Here we take a look at the best Proof-of-Stake coins for earning easy passive income.
5 Best Proof-of-Stake Coins for Easy Passive Income in 2018
When people mention PoS cryptocurrencies, NEO is usually at the top of the list.
NEO is a blockchain which allows users to tokenize assets and exchange these using the equivalent of smart contracts. The NEO blockchain aims to create a “smart economy” where physical goods can be tokenize (represented by cryptocurrency) and traded. NEO is often compared to Ethereum and is often even referred to as the “Ethereum of China”.
The NEO blockchain contains two coins: NEO and GAS. Staking NEO allows you to generate GAS tokens. Holding NEO tokens gives you voting rights on the blockchain, whereas GAS tokens are used to pay service fees on the network.
While NEO is not the most profitable of the PoS cryptocurrencies listed here, it is one of the easiest to set up and use, primarily because unlike most other PoS coins, you don’t need to keep your wallet constantly connected and online.
This makes NEO a great first coin to stake because you don’t really need to learn how to stake NEO, you simply hold them in a proper wallet.
It is important to note, however, that not all NEO wallets support the staking and if you choose the wrong wallet, you will not receive your passive income of GAS. In order to ensure you receive your GAS, store your NEO tokens in one of the best NEO wallets.
- Symbol: NEO
- Annual Profit: 4 – 5.5%
- Staking Wallet: Choose one of these NEO wallets
- Profitability Calculator: neotogas.com
- Official Website: neo.org
While NEO is a profitable PoS currency, there are others in 2018 which are proving to be even more profitable and exciting.
Decred (DCR) is an open-source autonomous digital currency in which stakeholders of the currency make the rules. Decred uses a consensus protocol called Proof-of-Activity (PoA) which is essentially means it uses both PoW and PoS.
Proof-of-Stake mining on Decred is very profitable, but somewhat more involved and complex.
- Setting up an official wallet with DCR tokens in it
- Maintaining a constant and always on connection to the internet 24/7 (in order to be called for voting at any time)
- To actually earn, you’ll then need to purchase voting tickets
While this is a somewhat more complicated process, the upside is that Decred currently yields an excellent return.
- Symbol: DCR
- Annual Profit: 30%
- Wallet Info & Learn How to Stake: https://docs.decred.org/mining/how-to-stake/
- Official Website: decred.org
- Useful Info: dcrstats.com
DCR is definitely one of the best PoS coins to stake.
PIVX, which stands for Private Instant Verified Transaction, is a cryptocurrency which focuses on being a privacy coin with fast and low-fee transactions.
Originally forked from the privacy coin DASH (see section on other coins below) and turned into a PoS coin, PIVX is another great staking opportunity. Also, if you have enough PIVX coins in your wallet (10,000 PIVX) you can run a masternode, though there is no minimum number of coins required to earn income on your staking.
- Symbol: PIVX
- Annual Profit: 4 – 5%
- Staking Wallet: pivx.org/wallet
- Profitability Calculator: pivx.cryptonode.co
- Official Website: pivx.org
- Guide: PIVX Staking Guide
VeChain (VET – previously VEN and now officially called VeChain Thor) is definitely one of the most exciting staking coins of 2018.
The VeChain Thor blockchain allows businesses to track inventory and physical assets in real-time. Real assets are tokenized and the equivalent of Ethereum’s or NEO’s GAS is paid whenever new transactions take place. The VeChain Thor blockchain is already being used to build enterprise cryptocurrencies and platforms, such as MustangChain, built for the equine industry.
Like the NEO blockchain, VeChain uses two coins: VET and VTHO. The VET and VTHO function similarly as the NEO and GAS tokens. Staking VET will generate VTHO tokens.
VET coin holders earn VTHO tokens, by merely staking coins on the network (meaning coin holders do not need to run a full node).
If staking VeChain is of interest to you, this video will provide you with some must-know information.
But what makes this an exciting currency is that in addition to an incredible return of 20 – 30%, it is still possible to purchase thousands of VET for less than $100, and holding $100 worth of VET will provide you with over 1000 VTHO per year (about $23 at the time of writing), for free.
Even more exciting is how easy it just became to stake VET. Binance recently announced that it will support VET staking and VTHO distributions. This means all you really need to do to earn a 20 – 30 % return is to hold VET tokens inside Binance.
Reddcoin aims to be the tipping currency of the internet. If you read an article or watched a video that you really enjoyed, you can send the creator some Reddcoin.
Since Reddcoin has zero transaction fees, their vision could one day become a reality. With increased adoption of this PoS coin, the value should increase as well.
In addition, holding Reddcoin is quite simple and provides a nice return. This is why Reddcoin is usually included in lists of the best PoS coins to stake.
Simply download the Reddcoin core wallet, wait for it to sync up and add some RDD coin to it. After a few hours your wallet will begin to stake.
The main obstacles with Reddcoin are that it can sometimes take hours for the wallet to synchronize completely with the blockchain and you must keep your wallet constantly on-line and connected. But if you do so, you’ll earn a handsome return with little effort.
- Symbol: RDD
- Annual Profit: 5%
- Staking Wallet: Reddcoin Core
- Profitability Calculator & Useful Info: Reddcoin Calculator
- Official Website: reddcoin.com
- Useful Information: VeChain Thor Wallet Manual
Other Top Proof of Stake Coins
There are other PoS coins that can be profitable, some of which are simple and others which are a bit more complicated or require a larger investment. While the 5 mentioned above are our current favorites, some may be interested in the following other cryptocurrencies available for staking.
DASH is one of the most widespread and popular privacy coins. While technically not a PoS coin, you can earn passive income by running a masternode of the DASH blockchain.
Running a masternode on the DASH network essentially allows you to get paid in more DASH coins in exchange for providing services such as hosting and updating the blockchain and keeping track of governance.
However, unlike the coins listed above, DASH can only be “staked” by placing coins in a wallet and running a full blockchain node. Thankfully, running a DASH full node is relatively simple and can be automated using a dedicated DASH stakebox.
There’s one big caveat though: staking DASH currently requires a minimum balance of 1,000 DASH coins (priced at over $200 as of the time of writing), making this a large up-front investment.
However, investors who do stake can expect returns of about 7 – 7.5% per year.
NAV was forked from Bitcoin in 2014 and is also open source. In order to stake NAV coin you need to download the official NAV core wallet and set it to staking mode.
For maximum returns, you should leave your wallet on-line all the time. Since it is a relatively light wallet, you could simply leave it on an unused laptop or Raspberry Pi and let it run.
Historically, staking NAV has returned about a 5% profit. For a more precise return, see this NAV staking calculator.
OKCoin used to be one of the best cryptocurrencies to stake yielding a 10% annual return, however that has been cut in half to 5% and will be further cut in half to 2.5% in 2019, continuing to decrease in the future.
In order to stake OKCash, you need to use the official core wallet and keep it always connected to the internet. For more information, visit OKCash.
ARK aims to be the spiderweb that connects all other blockchains together and also make it relatively easy to create your own blockchain.
ARK uses a consensus algorithm called Delegated Proof-of-Stake (DPoS) in which holders of the currency vote for the delegates who process the transactions.
Though the voting adds some complexity for beginners, expected returns are currently about 9 – 12 %. In addition, you do not need to keep your ARK wallet constantly online and connected to the blockchain to earn passive income. You can even store ARK on and directly vote from a Ledger Nano S hardware wallet.
Buying Proof of Stake Coins Early to Maximize Returns
Staking coins like VET and DASH are often most profitable for investors who buy coins early. This is generally because, when buying early, the coins have greater upside potential so that you not only earn passive income, but appreciation in the value of your coins.
Investors need to remember is that many Proof-of-Stake cryptocurrencies won’t generate returns when held in online exchange wallets or kept offline. Make sure you understand the staking process in advance.
While there are many more PoS coins than those listed here, we purposefully excluded those that are excessively complicated or have very low profitability.
Feel free to include your experiences and thoughts in the comments section below.
Richard has developed and ran multiple online websites and communities with tens of millions of monthly visitors. He first discovered bitcoin and blockchain in 2012 and has been helping to educate others on its potential since then. Richard is very passionate about the crypto community. Read his inspiring story into cryptocurrency here.