Topic: Proof of work vs proof of stake? Why can't i STAKE my BTC? - page 2. (Read 286 times)
OP, there’s actually a way to “Stake” your Bitcoin for earning sats, but it’s not as a POS consensus mechanism. Provide liquidity in the Lightning Network through opening/funding channels, and being a routing node. I believe if Lightning usage increases, and the liquid channels become more in demand, fees in Lightning will increase.
You can't stake bitcoin, but you can borrow it to an exchange, for example. That will generate some interest, but that is not the same as earning staking rewards.
The other thing you can do is take advantage of the DEFI ecosystem. Again, you can't use bitcoin directly, but you can swap your coins for a bitcoin token like wBTC. You then lend that wBTC to the platform. I don't recommend that you do that, I am just telling you what is possible to do.
The other thing you can do is take advantage of the DEFI ecosystem. Again, you can't use bitcoin directly, but you can swap your coins for a bitcoin token like wBTC. You then lend that wBTC to the platform. I don't recommend that you do that, I am just telling you what is possible to do.
What are the conditions for a coin to be eligible to be staked?
The most important condition is to have that implemented.
While many altcoins/shitcois do have that, Bitcoin doesn't. Imho Bitcoin is way better without PoS/
And why are the returns on staking different on different exchanges?Is it simply due to difference in commission ,as logically the return on staking should be universally same depending upon the lock in period?
In the same way different banks in different countries give different interest rates for the money you deposit in different currencies, this is how I see whatever the exchanges and other businesses do.
You may also confuse staking with interest on deposits or with interest on lending some platforms may do, especially as they advertise their "products" in various manners.
Do not get it wrong when there are exchanges and wallets that says you can stake your bitcoin. You're not really staking your bitcoin on them but they're giving you an interest rate because you're allowing them to borrow your bitcoin and use them to whatever other service they're offering to the other users and most likely, it's about lending.
My understanding of proof of work is that basically (miners/CPUs provide power to write transactions on the blockchain) whereas Proof of stake (is when we hold a certain currency and lock it into the systemso liquidity increases).Please correct me if im wrong.
You understand correctly. If you want to stake BTC, you can use the Lightning Network. It's not a PoS consensus algorithm but it is a sort of staking mechanism.
Each LN channel has BTC locked in a smart contract so it is "staked" in the channel. The more channels you have open and the more connected your node becomes, the more BTC you can potentially earn. It's important to understand that the same rules apply to everyone on the lightning network. Those with more at stake don't have more "votes" than smaller stakers but they absolutely stand to earn more BTC if it is well allocated.
It all depends on the algorithm itself. If the developer of a coin wants to implement POS algorithm, you will be able to stake. For example, ETH is now a POW coin so you can mine it. But in 2022 (hopefully) they will be moving to POS mechanism, so you will be able to stake the coin and won't be able to mine it using your computing power.
What many people were hopeful about ethereum 2.0 was that people will be able to stake ethereum and also pay low transaction fee, but now still getting longer and ethereum fee is very high like nothing has been changed. Let us hope ethereum will finally move to PoS by 2022, but just that PoW is far better than PoS as the equipment used for mining are bought and help the companies producing the equipments to also gain unlike PoS that only deals with staking, also that electricity companies are also paid to produce more electricity, PoW helps in the progrey of these companies. 
PoW is like using your own labour to work for your earnings..
PoS is like taking a social security income for displaying your desire to not work to earn.
imagine a social security system that the more you have in your bank account the more you can earn from social security.
that system would be dumb. as its a scheme to make the rich richer and the poor poorer. where the rich dont have to put anything at risk to get richer. and the poor are left playing the free lottery hoping their lucky number will be announced. hoping, hoping, hoping.. forever. but never having enough 'tickets' to ever get a win.
i know alot of people want 'money for nothing'. but the only reason why PoS had any success is the small community, small enough to allow it to share the slices of winnings. (enough lottery results to give each person a lottery win), but the more popular a PoS coin gets the less of a share can go around.
this is why you see literally thousands of PoS coins. to have thousands of small communities instead of one big community.
bitcoin is different because those that want to secure the network and get rewarded for it need to work for their earnings. work together as one large community.
they way it should be
PoS is like taking a social security income for displaying your desire to not work to earn.
imagine a social security system that the more you have in your bank account the more you can earn from social security.
that system would be dumb. as its a scheme to make the rich richer and the poor poorer. where the rich dont have to put anything at risk to get richer. and the poor are left playing the free lottery hoping their lucky number will be announced. hoping, hoping, hoping.. forever. but never having enough 'tickets' to ever get a win.
i know alot of people want 'money for nothing'. but the only reason why PoS had any success is the small community, small enough to allow it to share the slices of winnings. (enough lottery results to give each person a lottery win), but the more popular a PoS coin gets the less of a share can go around.
this is why you see literally thousands of PoS coins. to have thousands of small communities instead of one big community.
bitcoin is different because those that want to secure the network and get rewarded for it need to work for their earnings. work together as one large community.
they way it should be
Why can't i STAKE my BTC?
Because BTC is not a shitcoin.My understanding of proof of work is that basically (miners/CPUs provide power to write transactions on the blockchain)
In PoW the computing power and the fact that by consensus rules we follow the chain with the most work is used to ensure reversing the blocks is so costly that it can be considered impossible. That way we ensure immutability of the blockchain.Quote
whereas Proof of stake (is when we hold a certain currency and lock it into the systemso liquidity increases).
Liquidity doesn't change whether or not you hold or stake a coin.Basically, in early days when developers were more interested in improving the technology, someone came up with the idea that a new algorithm could be introduced where nodes process transactions and get paid for doing so. Hence Proof of Stake came to life.
But this was a very flawed approach for many reasons. From different attack vectors to the economical design flaws (you get paid for having money!).
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Also why is it that only some coins can be staked?
Depends on the coin. Early coins were as I explained above, exploring changes in Bitcoin technology. Newer coins are mainly using PoS or planning to switch to PoS so that they can make sure their coin is going to die when the miners abandon it due to high difficulty or price dump.In some cases like ETH they are making the switch to also ensure their own revenue since they hold tens of millions of ether and in PoS you get paid to own that coin!!!
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What are the conditions for a coin to be eligible to be staked?
The algorithm has to allow that. 
You can't stake your BTC because the algorithm doesn't allow you to. So whatever staking option for bitcoin you can see in the market, it's more of a ponzi scheme. There are multiple companies who also offers you to create a deposit account with bitcoin and give you certain percentage of interest back. These are not driven by the bitcoin algorithm so there's no guarantee that you will get your money back at the end of the deposit period.
It all depends on the algorithm itself. If the developer of a coin wants to implement POS algorithm, you will be able to stake. For example, ETH is now a POW coin so you can mine it. But in 2022 (hopefully) they will be moving to POS mechanism, so you will be able to stake the coin and won't be able to mine it using your computing power.
As said earlier, these kind of exchange staking of bitcoin is not controlled by the algorithm. These are centralized operations just similar to a bank deposit. So the exchanges have the liberty to fix their own interest rate. There's no one control it! Hope this explanation helps!
Also why is it that only some coins can be staked? What are the conditions for a coin to be eligible to be staked?
It all depends on the algorithm itself. If the developer of a coin wants to implement POS algorithm, you will be able to stake. For example, ETH is now a POW coin so you can mine it. But in 2022 (hopefully) they will be moving to POS mechanism, so you will be able to stake the coin and won't be able to mine it using your computing power.
Quote
And why are the returns on staking different on different exchanges? Is it simply due to difference in commission ,as logically the return on staking should be universally same depending upon the lock in period?
As said earlier, these kind of exchange staking of bitcoin is not controlled by the algorithm. These are centralized operations just similar to a bank deposit. So the exchanges have the liberty to fix their own interest rate. There's no one control it! Hope this explanation helps!
My understanding of proof of work is that basically (miners/CPUs provide power to write transactions on the blockchain) whereas Proof of stake (is when we hold a certain currency and lock it into the systemso liquidity increases).Please correct me if im wrong.
Also why is it that only some coins can be staked?What are the conditions for a coin to be eligible to be staked?
And why are the returns on staking different on different exchanges?Is it simply due to difference in commission ,as logically the return on staking should be universally same depending upon the lock in period?
Also why is it that only some coins can be staked?What are the conditions for a coin to be eligible to be staked?
And why are the returns on staking different on different exchanges?Is it simply due to difference in commission ,as logically the return on staking should be universally same depending upon the lock in period?
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