WHY IS IT THAT ONLY SOME
Cryptocurrencies Allow Staking?
No Central Authority
Cryptocurrencies are often decentralized. This means that there is no central authority overseeing them. How does a network of computers decentralized from a central authority arrive at the right answer? They use a consensus mechanism.
Proof of Work
Many cryptocurrencies, including Bitcoin, and Ethereum 1.0, use Proof of Work as a consensus mechanism. Proof of Work allows the network to use a large amount of processing power to solve problems such as validating transactions between strangers and making sure that no one is spending the same money twice. The process also involves “miners” from all over the globe competing to solve a cryptographic problem. The winner gets the right to add the most recent “block” of verified transactions onto blockchain and also receives some crypto.
Proof of work is a scaleable solution for a simple blockchain such as Bitcoin’s. It functions much like a bank’s ledger and tracks incoming and outgoing transactions. But for something more complex like Ethereum — which has a huge variety of applications including the whole world of DeFi running on top the blockchain — Proof-of-work can cause bottlenecks if there is too much activity. Transaction times and fees may be longer as a result.