Hello everyone,

this is the first entry of my new blog: CryptoTech. As the name says, it's all about Cryptocurrencies and Technologies. I'm on Crypto since 2015 and I love to deepen the functioning and technology behind the things I'm passionate about.

What you should NOT expect from this and future articles are the issues related to trading or technical analysis, topics that I leave to those who are more experienced than me and are interested in intraday trading.

A specific theme that I have been dealing with in the last two years concerns PoS mining and staking: said in simple words, how to generate revenue simply by purchasing and maintaining shares of cryptocurrencies that are based on Proof of Stakes mining protocols.

Let's take a small step back: there are mainly (but not exclusively, but for the moment we do not delve into this topic) two algorithms underlying cryptocurrency mining: Proof of Work and Proof of Stake. While PoW mining requires that a computer be "actively" put to work to perform the calculations that allow you to extract new currency (as in the case of Bitcoin), PoS mining is based on the simple possession of a cryptocurrency stored inside a wallet that allows staking. Each of these wallets becomes a network validator and is remunerated for it. The end result and the purpose of the two algorithms is not technically the same, but pratically similar: to obtain a reward (for PoW) or fees (for PoS) for the validation of transactions carried out within the blockchain, even if the way in which this objective is achieved is deeply different.

The PoS algorithm solves several problems of PoW networks: in the first place, it turns out to be extremely energy efficient, as it is not required to perform complex calculations to our CPUs or to our video cards to extract cryptocurrency, but simply to keep our wallets in execution in order to act as network validators.

Furthermore, PoW mining becomes less and less profitable with the passage of time due to the halving mechanisms, which periodically halve the rewards of mining, making the cost / benefit ratio less and less convenient.

In reality, even the PoS algorithms have their negative aspects, especially from a decentralization point of view, since the fees that are paid for the validation of the network is proportional to the amount of currency put in staking and therefore people or groups of people in possession of large quantities of cryptocurrency can influence the entire network (in a similar way to what can happen with large mining pools in the case of PoW).

It is not easy to decide which of the two algorithms is the "best" in absolute terms, but what we are interested in knowing is that even a small investor who does not have expensive mining equipment has the ability to "extract" cryptocurrency and generate passive incomes from their crypto-savings, which can allow to increase returns or, in bearish market phases, to compensate for the loss of market value.

In summary, PoS allows us to:

extract currency with a limited investment and in an extremely simple way (we just need a computer connected to the network, a wallet and a minimum amount of cryptocurrency).

obtain more or less predictable and recurrent passive returns.

actively participate in the functioning of the specific currency network, playing an active role in maintaining its decentralization.

it does not impose any limits on us, as at any time we can decide to move or sell our currencies or disconnect from the network.

In the next articles we will deepen different aspects of these issues: how to technically be able to make staking, what is a "masternode" and how to settle it, how to distinguish a "good" PoS currency from a simple scam (of which the market is unfortunately full) and what alternatives exist to the official wallets of PoS cryptocurrencies in order to earn from PoS mining.

These articles will alternate some insights on the most popular specific PoS currencies and others less known but promising, and their purpose and functioning, since one of the fundamental aspects of investing in this market is understanding what is being done and what is being invested in, in order to make informed choices, not limit yourself to being influenced by what we read or are told without deepening and understanding.

I hope you found this first article interesting, leave me your comments, opinions and questions about it and I will be happy to answer.