Stake

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Stake is defined as an amount of cryptocurrency deposited by the user as collateral. For some cryptocurrencies, the stake is a requirement to become eligible to record and verify the correctness of transactions. Their incentive is earning fees paid by every user, for each transaction.

Staking is used in the Proof of Stake method as a more efficient and affordable way to mine. Mining is the process of recording and validating transactions in a cryptocurrency. With Proof of Stake, you can participate in mining after depositing a certain number of cryptocurrency in a known wallet. This is known as a “stake” or a “staked wallet”.

People who provide a stake are randomly selected to record and verify information on the blockchain. In most Proof of Stake systems, the larger your stake the greater your chances of being selected to record and verify the blockchain and then to receive the reward.

However, if the user records and verifies false information and is caught, his stake is forfeited. His incentive for staking is to earn transaction fees paid by users.

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