Mining of different currencies isn’t just an easy task, and most of the hardware needed are mostly expensive. But what if there’s a much more easier approach to solving the problem?
If you’ve looking for means of increasing your assets with lesser effort, here’s how to put your cryptocurrency holdings to work, in order for you to earn passive rewards in the process.
Whether you’ve been into cryptocurrencies for several years, or just a newbie o the world of cryptos, there’s a good chance that you must’ve heard of the word “staking” (especially in recent talks concerning Ethereum, and many other currencies).
In regards to that, what does “staking” a cryptocurrency actually mean, and why is it even necessary?
A Primer on Cryptocurrency Transactions and Staking
The very first cryptocurrency to ever exist (Bitcoin) pioneered the decentralized currency concept when it was released in the year 2009. It simply means that the coin doesn’t require the oversight of governments, central banks or other authorities. Instead of oversight from authorities, it rather operates on a global peer-to-peer network of participants, and all data are recorded on a blockchain.
The validation process of Bitcoin transactions (known as mining or Proof of Work) is regarded universally as one of the best standards in decentralization and security. The disadvantage though is that the network is not infinitely scalable.
Within a decade later, hundreds (if not thousands) of other decentralized cryptocurrencies were created, each with their unique niches and advantages. These coins are collectively referred to as AltCoins, and Ethereum, Litecoins, Ripples etc. are grouped under this category.
Since Ethereum’s inception in 2014, it utilized a similar security approach and transaction validations as Bitcoin. Due to massive use of the network however, transaction prices increased by the second, and the transactions were processed at a slower rate.
In an attempt to combat this problem, the developers of Ethereum proposed lots of sweeping changes to the network, including removing the “Proof of Work”.
Proof of Stake (its alternative) is actually expected to improve efficiency, reduce overall congestion of the network, and also transaction throughput. The upgrade is not yet launched yet though (it is proposed to be launched sometime in the year 2021), switching the network to the Casper Proof of Stake algorithm.
Staking on a Raspberry Pi: The Good News
Making passive income from the cryptocurrency market ever since Bitcoin introduced the concept of mining has been very possible.
However, resource requirements and high costs makes mining suboptimal for majority of the cryptocurrency users. The hardware required for mining cryptocurrencies in large-scale are very expensive, hard to operate, maintain, and even to dispose of properly.
Ethereum, which is the world’s second largest cryptocurrency will be adopting the Proof of Stake consensus mechanism soon. It simply means that once a certain amount of Ethereum is available in your wallet, participation in the process of validating new transactions will be possible in exchange for rewards.
So you might be wondering if it is possible to stake digital currencies on hardware as light as Raspberry Pi. And the answer is Yes, but the catch is that there must be enough memory space in it.
In order to accomplish the task of staking cryptocurrencies on a Raspberry Pi, the newest model of the tiny computer in its highest memory variant will be needed. The only device that can comfortably cope with the Proof of Stake algorithm of Ethereum is the Raspberry Pi 4 8GB, because of the validation software’s high RAM requirements.
Another non-optional hardware needed is an external 1TB Solid State Drive (SSD). The Ethereum Blockchain spans 200GB approximately (and growing). 1 Terabyte of storage could get one going for years.
Asides two previously stated considerations, the process of cryptocurrency staking is not extremely power or resource-intensive.
So if you possess a good amount of Ethereum, passive income is possible for a Raspberry Pi and an external drive. A minimum of 32 ETH to participate in the staking process is needed though. At the time of writing, 32 ETH will set you back a cool $40,000, so it isn’t exactly a low-bar for entry.
You might also be interested in!!!
Staking Ethereum on a Raspberry Pi
In getting started with Ethereum staking on a Raspberry Pi, there are two approaches. First is an automated script which will fetch and install the requisite software for you automatically, while the other approach involves manually setting everything up.
Once you’ve gotten your Raspberry Pi running, visit Prysm’s documentation website for instructions. Make sure to follow the commands from the tab titled ARM64, as that is the hardware architecture on which Pi is based on.
Following that, you’ll have to choose between running your node on Ethereum mainnetor testnet. Ethereum testnet as the name suggests is used in experimenting with new changes, and real money or ETH tokens are not involved.
Ethereum’s testnet known as Pyrmont is good for testing out your configuration and hardware, and if you’re not confident completely with staking 32 ETH just at the moment. Since Ethereum tokens on the testnet platform are virtual the cost of entry is zero, and mistakes will not lead to losing real money.
Staking doesn’t lets you squeeze out maximum returns on your cryptocurrency investment only, but enables you to also contribute to the security of the network.