Current events show that keeping money "under the mattress" is not a good idea for saving money. Inflation of the global dollar currency was 7% in 2021, a record since 1982. Stocks, gold and real estate which have generally more stable and positive dynamics protect against inflation, but do not have high returns. There is a need for new financial instruments.
Cryptocurrencies are an alternative investment option that can not only save but also increase funds. For a visual argument you should look at the graph of the cryptocurrency market capitalization over the past 2 years.
Total market capitalization of cryptocurrencies
Judging by the graph we can state a stable increase in the total capitalization of the cryptocurrency. The main growth is based on digital assets included in the TOP-20. The leading roles here are occupied by Bitcoin (BTC) and Ethereum (ETH). The share of BTC is 40-50% of the total cryptocurrency market.
Social significance and state regulation
Many examples in life prove the social importance of cryptocurrencies in the world. Previously a large number of people were cut off from banking services due to various circumstances. Now, for example, a user who is located in a remote village in India but who has the opportunity to access the Internet at least occasionally can use cryptocurrency without any restrictions. And this increases the coverage of the population with cryptocurrency technology and strengthens the position of digital finance.
In response to the high social significance of virtual money the government does not stand still starting to adopt various bills regulating the activities of cryptocurrency which contributes to its promotion to the masses. Developed countries create a favorable tax climate for owners of digital assets and develop infrastructure. These actions allow you to declare your income and make cryptocurrency a completely legal means of saving and paying. These countries include the USA, Canada, Japan, South Korea and others.
Prospects for growth in value and reliability of digital assets
The main factors confirming the growth of digital assets are:
- Limited offer of coins included in the TOP. Unlike ordinary money and digital shitcoins popular cryptocurrencies are limited in supply, and as demand grows, supply decreases. This process causes an increase in demand and, accordingly, the price of a crypto asset.
- Digital money belongs only to the owner of the wallet password. No one has the right to limit the use or freeze funds.
- Low commissions. Unlike the traditional banking system, digital money does not require the maintenance of intermediaries thereby reducing the cost of transfers between users.
- Mining and staking. They allow you to increase profitability for investors and participants who support the operation of the network.
How to make money on cryptocurrency
Among the available ways to earn cryptocurrency two directions can be noted: active and passive. The first option is trading which requires certain knowledge and experience comparable to high risks. The passive option does not require active participation and taking large risks but it is possible to receive a stable income, although not as large as with trading. Among the popular options for earning on a crypto asset are:
- HODL - implies a "buy and hold" strategy. The easiest way to earn money is by increasing the value of a coin in relation to fiat funds over a certain period of time. An example of this is Bitcoin which increased its initial value thousands of times.
- Mining - the process of earning is to receive income in cryptocurrency for participating in the network. When a block is found, miners are rewarded. In order to take part in mining you need to spend money on the purchase of specialized equipment or the construction of a mining farm. An alternative option may be "cloud" mining where no equipment is required, and the participant himself buys a share in the production of coins. In the "cloud option" there is a high risk of fraud.
- Staking is a passive way of earning cryptocurrency that does not require significant financial costs for the purchase of equipment.
The popularity of staking among cryptocurrency investors is due to the availability, high profitability and environmental friendliness. The principle of operation of staking is based on the usual storage of coins in your cryptocurrency wallet which allows you to maintain the network and thus provide good liquidity. The standard staking method uses the Proof-of-Stake (PoS) algorithm (based on proof of stake). The reward for participation in staking can be fixed or adjusted according to the number of blocks issued taking into account various factors.
Cross-chain Staking Innovation (Cross Staking)
An alternative and most modern staking option is the Cross Staking technology developed by Matrix Network. CROSS STAKING allows providers to stake Proof-of-work coins. From a technical point of view it is a sidechain and is an add-on to the main blockchain of the network. The sidechain allows you not to load the main chain but to work on top of it saving resources, increasing transaction speed.
Scalability is provided through interactions between different blockchains. One of the technical aspects is that the staking provider has the ability to freeze cryptocoins in the main chain and activate them in a specially created additional chain where staking takes place. At the moment two providers have already integrated Cross Staking technology - these are PRIME STAKE and OREOL STAKING.
The main advantages of the technology are as follows:
- Cross Staking interacts with multiple blockchains and currently supports:
- Bitcoin (BTC),
- Ethereum (ETH),
- Solana (SOL),
- CARDANO (ADA),
- Litecoin (LTE),
- Ripple (XRP),
- Tether (USDT),
- USDCoin (USDC),
- BNB (BNB).
- Energy efficiency. Cross Staking reduces energy costs by 99% compared to traditional mining.
- Availability of technology. To start using the Cross Staking technology you do not need to purchase expensive equipment but just connect to partner providers delegating a certain amount of funds (currently PRIME STAKE and OREOL STAKING).
- Security of funds storage. Working on the sidechain interacts with two chains which increases the security of working on the network. To obtain data it is not enough for an attacker to break one chain. Accordingly, the level of security is at least doubled.
Results and prospects of cryptocurrency in 2022
Market trends and the multiple growth of digital finance ensures the stable growth of cryptocurrency in the future. Analysts note the further promotion of digital assets in various areas of life. Stable financial instruments like gold or bonds are losing their positions, while the cryptocurrency is gaining momentum. The next argument pointing to the prospect of digital money is the ever-expanding list of states that have adopted cryptocurrency at the legislative level.
The profitability of digital assets, regardless of the method of accumulation, significantly exceeds the instruments of the classical banking system. Cross Staking technology will help improve the result of investing, being the best solution not only for professional investors, but also for ordinary users of digital finance. To start using the technology it is enough to connect to partner providers, the list of which will be constantly updated, deposit the desired amount for investment, and the staking process will be launched. Due to the increase in users of Cross Staking technology the crypto industry as a whole will develop more actively.