One of the most lucrative ways that cryptocurrency investors use in order to make profit is the crypto staking process.
Although the possibility of getting rewarded from it is high, there are still some people who flinch to take action due to safety (or other) issues.
In this post we are discussing the risks of staking and how safe staking is when someone chooses to do it and whether those risks are enough to stay away from it or the exact opposite.
So let’s dive right away into the topic and answer the hot question:
Is staking crypto safe?
Yes. Crypto staking offers safety and profitability to investors, because the cryptocurrencies that use the Proof-of-Stake consensus algorithm are not able to run without it.
Of course this doesn’t mean that staking offers a magic button that you just press and start earning money because it’s important first to learn what are the problems that you might encounter in order to avoid the traps and make the most profit out of it.
Let’s take a thorough look at those risks.
Potential price drops
The biggest risk you are going to face while staking your crypto is that the price might go down.
For example, if you bought 100 Polygon (MATIC) with a value of 2 dollars and suddenly MATIC’s price falls to 1$ then you are going to lose money.
And that is because when staking Polygon you can earn up to 12% of your initial investment (which is of course very good return).
As a result you will end up having 112 Polygon with value equal to 112$ which is lower from your initial money.
Of course this is a risk that you are already taking if you decide to invest in the crypto market.
Potential liquidity problems
Another risk that you should be aware of is that there is no guarantee you can convert your cryptocurrency earnings into cash or other coins.
This could happen if you choose to stake a crypto with low capitalization and liquidity.
Therefore, a good piece of advice would be to stake cryptocurrencies with high trading volumes to stay away from unpleasant surprises.
Lock-up Periods
Some cryptocurrencies might impose lock-up periods during which you can’t access your staking assets for a certain period of time.
This could happen for the reason that the creators of the cryptocurrency want to prevent substantial drops in the price of their coin.
And that’s because there is a possibility that many investors will try to withdraw their staked assets at the same period of time.
If the value of the staked crypto falls substantially during the locked period and you are not able to withdraw it, that would affect your earnings.
Popular examples for look-up periods include the Cosmos and Tron crypto.
Be aware of the scams
Last but not least, there is always a possibility of falling victim to scammers.
Is very common for investors (experienced or not) to lose the wallet’s private keys or the funds are stolen if they do not pay enough attention.
Subsequently, always be suspicious when you are starting something new in the cryptocurrency world and NEVER share your personal information with strangers.
In addition, the profitability of crypto staking is high and for that reason attracts more and more people who want to earn money but don’t actually know how the process works.
This situation creates an excellent environment for scammers making it very difficult for everybody to distinguish whether there is a scam or not.
Is it a good idea to stake crypto?
After all the above has been mentioned, the time has come to discuss whether it is a good idea to stake crypto.
A short answer is that it is worth it. (If you want to learn more about why crypto staking worths it click here)
The interest that cryptocurrencies offer is amazing and it can offer you a refreshed and passive income while you will be busy doing something else.
Although there is a BIG disclaimer here:
Money does not fall from the sky.
You must first study and understand every aspect of the staking process, because if you don’t you will end up losing money, which is leading us to the next critical question.
Can you lose crypto by staking?
If you don’t fully understand the concept, we can tell that you are not investing in crypto staking but on the contrary it will be like investing in gambling.
And that’s something that I am sure you don’t want to experience.
