QUESTION: What is crypto “staking”? Does it apply to bitcoin? ANSWER: It does NOT apply to bitcoin.

00:01 Hey everyone, let’s talk about crypto
00:03 staking, which you do not need to think
00:05 about, do not need to worry about, and
00:06 can’t even do with Bitcoin. So, what is
00:09 staking? Well, uh crypto tokens that you
00:12 should, should not own, don’t need to
00:14 own, and are that are a bad investment
00:17 use a mechanism for validating
00:19 transactions called staking. Not all of
00:21 them do, but some of them do like
00:23 Ethereum. So, what is staking? Well,
00:25 staking is a way that whoever owns the
00:28 most tokens of that type gets to
00:31 determine which transactions are valid
00:33 on the network. Now, this is a horrible
00:35 idea because why would you ever want
00:38 whoever owns the most of the money to
00:40 decide what is valid on the network? The
00:43 whole point of money is that nobody
00:45 should get to decide what in is and is
00:47 not valid. It ought to be as simple as
00:49 the cryptographic signatures of if you
00:51 own the Bitcoin, it’s yours. And that is
00:53 the way Bitcoin works. But that’s not
00:55 the way Ethereum works and a variety of
00:57 other platforms Salana and others. Uh
00:60 they have a mechanism called staking
01:02 where you stake your cryptocurrency. You
01:05 get a yield for that meaning a you know
01:07 they give you extra tokens and then you
01:09 become a validator for what is legit and
01:12 not legit on the network. Now the truth
01:14 is you’re not the validator. Whoever is
01:15 staking on your behalf is the validator.
01:17 So, if you’re staking with Coinbase or
01:20 Gemini or Kraken or Binance or some
01:22 company like that, they are the one
01:24 doing the staking. They are the ones
01:26 deciding what is valid and invalid as
01:28 far as transactions on the network and
01:30 then they’re keeping part of the uh
01:33 reward, the staking reward, and they’re
01:35 sharing part of that reward with you.
01:37 Now, the reason you do not need to worry
01:39 about this at all is because nothing
01:41 that you can stake is something you
01:43 should own at all. So, uh, it’s the
01:46 question of somebody’s like, “Hey, I’ve
01:48 got some trash in my backyard. Should I
01:50 spray spray perfume on the trash so it
01:53 won’t, you know, it won’t smell so bad?”
01:55 My answer is, “Take out the trash.”
01:57 Like, why are we talking about the
01:58 trash? Why are you trying to find ways
01:60 of holding the trash, preserving the
02:01 trash, getting more of the trash? You
02:03 don’t need to do any of those things.
02:05 The ideal amount of Ethereum or Salana
02:07 for you to own is zero. So the amount of
02:10 it that should be staked is also zero
02:12 because you shouldn’t own any because
02:13 it’s not an investment grade asset. Um
02:16 and you should not be storing your value
02:19 in a network that even allows staking
02:21 because that means someone other than
02:23 you is deciding and controlling that
02:26 network. So they’re deciding which uh
02:29 you know which transactions are valid
02:30 and they’re deciding how changes are
02:33 made to the network which you do not
02:35 ever want someone else other than you
02:38 getting to decide that for your money.
02:40 So the way Bitcoin works it uses a uh
02:42 proofof work pof
02:45 work mechanism which is the job that the
02:47 Bitcoin miners do. Now I’ve covered what
02:49 Bitcoin mining is on other videos. You
02:51 don’t need to worry about it. There’s no
02:52 way for you to make money Bitcoin
02:54 mining. You should not be Bitcoin
02:56 mining. You don’t need to worry about
02:57 Bitcoin mining. It’s basically the
02:59 plumbing of part of how Bitcoin works.
03:02 But just like the plumbing of the
03:03 internet, you don’t worry sit around
03:06 worrying about whether the DHCP servers
03:08 are assigning IP addresses properly on
03:10 the internet. No, other other company’s
03:12 jobs are to do that. You can just use
03:14 the internet and the vast majority of
03:15 the plumbing of the internet you don’t
03:17 need to worry about. You don’t need to
03:19 think about and it doesn’t directly
03:20 apply to you. It just works. So Bitcoin
03:22 mining is the same way. But the
03:24 important thing about Bitcoin mining is
03:25 that it’s fair. It’s that nobody gets to
03:28 control and censor transactions. Nobody
03:30 gets to decide how much of how much
03:33 Bitcoin you own or how much Bitcoin
03:35 there is. All of that is hardcoded in
03:39 the laws and rules of the network. And
03:41 there’s no concept of staking where
03:43 people can monkey with things. So if
03:45 somebody said how much of my you know
03:48 how much of my net worth should I feel
03:49 comfortable having in Ethereum or Salana
03:52 or any of that I would say zero. I would
03:55 not feel comfortable storing any value
03:57 in a network that even allowed staking
03:60 because that means they’re using staking
04:01 as their validation mechanism and I
04:04 would never want to store value in any
04:06 network or any currency or any digital
04:09 token or any cryptocurrency that allowed
04:12 staking because that means the way they
04:14 are validating transactions in my
04:16 opinion is insecure and not guaranteed
04:18 to be fair to me which is again the
04:20 benefit of Bitcoin. Now, the reason
04:22 staking comes up is because a lot of
04:25 platforms, now you don’t have to worry
04:26 about this on platforms like River
04:28 because River is Bitcoin only. So,
04:30 you’re never going to see the word
04:31 staking on River because it’s Bitcoin
04:33 only. So, they do not try to market you
04:36 uh trash that you should not buy anyway.
04:38 So, you don’t have to worry about it.
04:39 But if you’re on a platform that allows
04:41 you to buy any random token, uh, you
04:44 know, that you could possibly want,
04:46 which a lot of the other platforms do,
04:48 they will regularly show you what
04:50 percent of your crypto assets are
04:52 staked. And they will show you your
04:55 Bitcoin and then they will tell you that
04:57 0% of your Bitcoin is staked. Well, no
04:60 duh. Of course, 0% of your Bitcoin is
05:02 staked because you can’t stake Bitcoin.
05:04 So, if the only asset in your portfolio
05:06 is Bitcoin, they should not even show
05:08 you staking because showing you staking
05:11 indicates, as people ask me, they
05:13 regularly text me and they’re like,
05:14 “Hey, what is this staking thing and
05:16 should I be doing it with my Bitcoin?”
05:18 My answer is the same, which is staking
05:20 is not something that even applies to
05:22 Bitcoin. The cryptocurrency platforms
05:24 that are showing you the word staking
05:26 should not be showing it to you because
05:28 Bitcoin is the only thing you have on
05:29 their platform. So there’s no benefit to
05:31 them telling you that 0% of your
05:33 cryptocurrency is staked. Now the reason
05:35 they do that is they do not want you to
05:36 own only Bitcoin. Cryptocurrency
05:39 exchanges make a lot more money if you
05:41 are buying and selling and holding
05:44 assets that are not Bitcoin. Bitcoin is
05:46 the asset they probably make the least
05:49 amount on because people just buy it and
05:50 hold it until they spend it, which is
05:52 exactly what you’re supposed to do with
05:53 Bitcoin. But what they the
05:55 cryptocurrency platforms generally want
05:57 you to do is cryptocurrency trading with
05:60 altcoins. So they want you to wake up
06:02 every morning and sell a little bit of
06:04 Ethereum, buy a little bit of Salana,
06:06 buy a little bit of Dogecoin, sell a
06:07 little bit of Shiva anu, you know, sell
06:10 a little XRP, buy a little of this junk,
06:12 buy a little of that junk. Anytime
06:14 you’re trading worthless tokens, they
06:17 are making money, you know, 1%, 2%,
06:19 however much on every transaction. So
06:22 centralized exchanges generally want you
06:24 to trade as much as possible and the
06:27 more junk you own the more money they
06:29 make. So that is not what you want to do
06:31 though. What you want to do is own only
06:33 Bitcoin. Ignore all the trash on there
06:36 and you know if it shows that 0% of your
06:39 crypto is staked, good for you.
06:41 Hopefully that means you own exclusively
06:43 Bitcoin and that you can’t stake
06:46 Bitcoin. So of course the number is
06:47 zero. Now, that is why uh for people
06:49 that are new for the first few years at
06:51 least, I recommend that or I should say
06:54 I recommend Coinbase and River, but most
06:56 people that are new to cryptocurrency
06:58 and new to Bitcoin, uh most of them,
07:01 River works better for their first few
07:03 years. And the reason is River is not
07:05 doing any of that to you. They’re not
07:07 marketing you all these random tokens
07:08 you shouldn’t own. They’re not telling
07:10 you that you have 0% of your assets
07:12 staked. They are not uh constantly
07:15 telling you that you should be, you
07:17 know, doing futures trading and, you
07:20 know, doing puts and calls and perpetual
07:23 swaps and per, you know, all this
07:26 ridiculous stuff that you should not be
07:27 doing and that almost everybody who does
07:30 loses money. Um, they should not be
07:32 telling you that because that is not
07:34 stuff that is good for you. Uh, so I
07:36 like River because River doesn’t bombard
07:38 you with any of that. Every question
07:40 River ever asks you is a question that’s
07:42 trying to improve your Bitcoin journey.
07:45 And the way River makes money is they
07:47 charge a 1% fee when you buy or sell
07:49 Bitcoin, which is fine. That’s for the
07:51 service of connecting your Bitcoin to
07:53 the US dollar network all over the
07:56 world. Great. It’s 1%. That’s, you know,
07:59 pretty competitive in the grand scheme.
08:01 And if you’re buying it Bitcoin on a
08:03 recurring buys, meaning you have it set
08:06 to buy the same amount every week, you
08:08 only pay the fees on the first week and
08:10 then you get to buy Bitcoin for free
08:12 ever after, which is pretty fantastic.
08:14 So, you buy it for free uh on recurring
08:17 buys every week and then when you want
08:19 to spend it, it cost you 1% uh to
08:22 convert it back to US dollars, which is
08:23 something you should do infrequently, if
08:25 ever, anyway. Uh because in the future,
08:27 everybody will just accept Bitcoin. You
08:28 won’t even have to convert it. Uh but
08:30 anyway, so platforms like River are just
08:33 a lot easier for people to use because
08:35 they don’t even offer staking and
08:36 staking is not even a thing for Bitcoin
08:38 anyway. So what is staking? Something
08:40 you shouldn’t worry about, something
08:41 that unsecure uh networks use, and
08:44 something that I would never store value
08:46 in a network that use staking. And so
08:48 the ideal amount of staking you should
08:50 do is zero. The ideal amount of assets
08:52 you should own that allow you to stake
08:54 is zero. And ideally, the platforms
08:58 would not be constantly telling you
08:59 you’re doing it wrong and you should be
09:01 staking stuff when all you own is
09:02 Bitcoin because that makes no sense
09:04 because you can’t even stake it anyway.
09:05 Uh but anyway, that’s what staking is.
09:07 Uh avoid all that junk trash and
09:10 everything else. Buy Bitcoin, sit on it
09:13 as long as conceivably possible. That is
09:15 the path to success. Have a great day,
09:17 everyone. Thanks.