Staking has become one of the most popular aspects of the cryptocurrency market in recent years because the process allows users to easily earn returns on their holdings with little to no risk.
While bitcoin runs on a mining process known as proof-of-work (PoW), there are a variety of other cryptocurrencies out there that have implemented different ways to reach consensus on their respective networks. Proof-of-stake (PoS) is one such example of their alternative consensus systems, and the ability to earn returns simply by holding coins in a particular wallet has proven attractive to those exploring the crypto ecosystem for the first time.
For security reasons, hardware wallets developed by Ledger have become a key element of the staking process. While crypto hardware wallets have been around for a relatively long time, the possibility of using them in the process of staking is somewhat new. Let’s take a closer look at how the Ledger wallet can be used to get involved in staking safely and securely.
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What is Proof of Bet?
Before attempting to target your first cryptocurrency with a Ledger wallet, it’s important to have a better understanding of what’s happening in the background with this process. It is usually best to try to understand PoS through a comparison with PoW. As many crypto enthusiasts know, the PoW mining process works by having a large number of different computers competing for the right to mine the next block of transactions to be confirmed on the network. The winning miner is rewarded for computing power spent through a block reward that can consist of newly issued coin supply, transaction fees, or both. A miner who has more computing power has a better chance of finding the next block, as he will have a larger share of the total amount of computing power pointed at the network.
The best way to understand PoS is to replace the computing power used in PoW with held coins. This means that someone who has a larger share of the total coin supply will have a better chance of finding the next block of transactions and being rewarded for locking their coins into the staking process. It should be noted that there are a number of potential security and centralization issues that persist to this day when it comes to the PoS process, as it has not been tested on a large scale for a long period of time. PoS is likely to be better understood once Ethereum switches from PoW to PoS; However, it is generally accepted that there are some trends towards centralization involved in the process that may not end up being resolved.
How to bet with a Ledger hardware wallet
There are two different options when it comes to betting with a Ledger hardware wallet. Users can use the first-party Ledger Live wallet or opt for a third-party wallet that has enabled support for Ledger’s hardware devices. If you’re not already using a wallet that supports hardware wallets, Ledger Live will be the best option for you.
To get started with staking via Ledger Live and your associated hardware wallet (you should buy Ledger wallets directly from Ledger), the first thing you’ll need to do is install the application for the particular coin or coins you want to bet from the hardware device. To get started, you’ll need to download the Ledger Live app on your computer and create an account.
You can then click on the Ledger Live Wallet Manager section with the device connected and select the apps you want to install on the device for staking purposes. Once you have an account on Ledger Live and the relevant app installed, you can transfer the cryptocurrency you want to bet via your hardware wallet to the Ledger Live wallet.
It should be noted that you can also download pooled staking apps through Ledger’s app store. For example, if you want to bet ETH, you might be interested in using the Lido app for decentralized and pooled staking. The specific process for staking will vary depending on the coin and the specific app used for the staking process; However, the overall process is that you will be presented with a screen that allows you to choose the amount of your crypto holdings you wish to bet and your rewards for doing so before sending a transaction that initializes the staking.
It is also important to remember that you can also target ether and other cryptocurrencies via third-party wallets, which will be the only possible option in some situations. For example, those who want to bet Solana should try to download the Phantom wallet and then protect it with a Ledger device.
Which cryptocurrencies can be wagered with Ledger Wallet?
While there are hundreds of different cryptocurrencies operating on PoS these days, it’s important to note that the Ledger Live wallet only has native support for five different crypto assets. These five coins are:
- Tezos
- Tron
- cosmos
- Algorand
- Polkadot
That said, there are ways to target other cryptocurrencies via a Ledger hardware wallet. In some cases, you’ll simply need to download a specific app to your Ledger Live wallet to enable support for staking. For example, you can download the Lido app to enable staking on the Ethereum beacon chain today. In addition, some coins, such as Solana, will require the use of a third-party wallet to bet with a Ledger hardware device.
Other ways to earn returns on your cryptocurrency with Ledger Wallet
One last thing to remember when it comes to staking is that this consensus mechanism isn’t the only way to earn a return on your crypto holdings.
With the development of decentralized finance (DeFi), there are several ways you can earn passive income on your crypto holdings. You can also earn a return on your stablecoin holdings directly from the Ledger Live app.
With DeFi apps like Aave and Compound, you can lend your crypto holdings to other users who need access to crypto liquidity. Another example of how you can put your coins to work in DeFi is through a process known as farming where you can earn newly created tokens through a PoS-like process. Cash mining is another popular option for earning passive income in cryptocurrency; However, it is important to understand all the risks associated with these types of alternative investment opportunities before you begin.
Best ledger for staking: Ledger Nano X
Right now the best hardware wallet for staking is the Ledger Nano X. The Nano X is the most expensive Ledger wallet, but there’s a good chance you’ll want to try betting more cryptocurrencies.
The cheaper Nano S only has room for about three different cryptocurrency apps, which severely limits its staking functionality. You can still get away with using a Nano S, but it means you’ll spend a lot of time installing and uninstalling apps.
If you’re serious about picketing, the Ledger Nano X is probably the best option in the long run.
