Interest vs. Staking Income

The comparison between interest and staking income is an interesting one. Most persons are confused when defining, comparing, and differentiating between both words.

What is interest?

Interest can be defined as the profit one gets from investing his money in a financial institution like the banks. It is believed that institutions like banks use the money deposited by their customers to undertake a project that will yield more money. At the end of the year, they give about 1 to 2% of interest to its customers. For example, if one puts $100,000 in his savings account, at the end of the year the money will be $101,000 if 1% is added to it.

What is staking income?

Staking income can be defined as a form of reward that is given to users that decided to buy a coin and leave it in a particular blockchain. The idea behind staking is to make the particular blockchain robust. And so, with the income that comes with staking, many persons will be encouraged to buy tokens or coins and by so doing, participating in the network by creating blocks. The advantage of staking income over interest is that one can gain up to 10% profit from the coin staked as against interest from savings which will hardly be up to 5%. And not just that, if the coin the person bought is increasing in value that will be an added advantage. For instance, if one decided to buy a BNB coin and decided to lock it up for three months if the staking income is 10% for the 3 months duration and the coin within that period grows by 50%, it means the person will have a gain of 60%.

Although staking income is more attractive, there is also a big disadvantage. If the coin within a period of time reduces in value, the person will be responsible for the loss. The staking income percentage is constant and, one can never lose from staking, but one can lose if the value of the coin depreciates. For instance, if the BNB coin falls by 50% within three months and the staking income is 10% profit, it means the person has lost 40% percent.

Furthermore, it is important to note that the more the period of staking, the better the percentage profit. Staking is a reward for supporting nodes and, the more coin you stake, the better your reward. It is a good way to get passive income.

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