2022 has been an interesting year for crypto. People are emotional beings – especially when it comes to money. As a result, the current crypto winter has created a sense of FUD (fear, uncertainty and doubt). The market’s volatility has clouded perspective and judgement. And, many have questioned whether now’s the best time to buy.
Yet, in a different scenario, the opposite is true. Take a sale at a retail store, for example. When merchandise is discounted – you’re likely to be excited, not anxious. You may even buy more as a result of the discounted prices. Why?
People panic when the markets are down because they worry about losing money. However, the only way to lose money during a market downturn is by selling your assets and locking in your losses. If you take a Buy and HODL approach, you’ll find the markets will eventually rebound, like they always do. Crypto prices will stabilize and the renewed sense of optimism will push prices even higher as more people buy in.
One of the most popular concepts in crypto is staking. Like a savings plan, crypto offers you the opportunity to generate a passive income while locking your tokens away for a period of time. Unlike a traditional savings plan, however, staking offers greater rewards over a shorter time period. Typically, traditional savings accounts offer 1-2% interest a year while crypto staking can offer 5% and more, over just a few months. It all sounds promising but should you consider staking during a bear market? Here are a few points to consider.
- You earn a passive income
Crypto staking makes your money work for you. It’s a simple process where you lock your money for a certain period of time and gain additional rewards by the end of that period. For many people across the world – from developing to developed countries – staking offers a wealth generation opportunity unlike that of fiat currencies.
Staking during a bear market is advantageous because you can lock your assets away when prices are low. By the time the holding period is over, the market is likely to have rebounded so your locked assets are valued higher and you’ll have earned the staking rewards. In addition, staking helps to alleviate any stress or anxiety stemming from the downturn, ensuring you don’t lock in any “losses” from panic selling.
2. You become part of a project’s ecosystem
Staking is more than passive income. It also gives insight into a project’s legitimacy and direction. While high staking rewards may seem lucrative, they can be risky – especially when projects are new. Despite having financial backing, will the project, be able to keep up with the future rewards it promises? Realistically, a start-up cannot sustain a staking mechanism promising 60% returns to its users in just a few short months.
When deciding to stake in a project, make sure you’re not being sold on exorbitant returns as these can pose huge risks both to you, the user, and the company. It’s better, and safer, to stake in a project with smaller staking returns that you know are realistic but also promise you a passive income that’s greater than that of a traditional savings plan.
3. You contribute to the greater good
Proof of Stake is better for the environment than Proof of Work. By participating in a PoS model, you know you’re leaving a lighter footprint on the world. Moreover, many crypto projects are realizing the role they can play in creating greater wealth for all. The more cryptocurrencies recognize their responsibility to help rebuild global wealth, the more staking will help to realise that wealth potential.
Philcoin’s staking process is launching soon and it’s going to be the first of its kind that will grant wealth generation on an individual and charitable level. With smart contracts in place, the staking process will be hassle and tamper free. It guarantees peace of mind to users but also gives them a sense of purpose as they generate wealth for themselves and those in need.
It’s important to remind you that we’re not here to provide financial advice. We want to educate you on the opportunities that exist within a bear market. Staking is one such opportunity that can help you generate passive income while riding out the downturn. As always, however, do your own research and make sure your decision is your own.