Bitcoin Staking: How to Earn Rewards by Staking Crypto?

If you’re a crypto enthusiast looking to earn passive income, staking is one of the most popular ways to do so. Staking allows token holders to participate in network validation and consensus mechanisms, earning rewards in return. But staking isn’t just about passive income. It also contributes to blockchain security, governance, and overall ecosystem stability.

However, staking is not universally applicable to all cryptocurrencies. While it’s a common feature of Proof-of-Stake (PoS) blockchains, Bitcoin operates on a Proof-of-Work (PoW) system, meaning traditional staking isn’t an option. That said, although Bitcoin staking is not available, BTC holders still have alternative ways to earn rewards from their holdings. 

For that reason, this guide will explain the mechanics of staking, its benefits and risks, and the opportunities available for both PoS cryptocurrencies and Bitcoin investors.

Bitcoin Staking & How to Earn Rewards by Staking Crypto: Summary

Even though the article is about Bitcoin staking, it is quite fun to reveal that one can’t stake Bitcoin unlike other cryptocurrencies. However, you can lend your Bitcoin on platforms like BlockFi or Nexo in exchange for interest payments. We shouldn’t consider this as staking, but it’s definitely a way to earn passive income.

Further, you can also convert your Bitcoin into Wrapped Bitcoin (WBTC), which is an ERC-20 token on the Ethereum network. This lets you stake WBTC in DeFi platforms that support PoS staking. So, in layman’s terms, you are not exactly staking Bitcoin but you still have some workarounds through which you can successfully stake your BTC.

What is Bitcoin Staking?

Since Bitcoin relies on mining rather than staking, BTC staking isn’t possible in the traditional sense. Yet, newer platforms enable indirect Bitcoin staking through staking pools or wrapped tokens. 

These top staking platforms usually use wrapped Bitcoin (wBTC) or synthetic assets on PoS blockchains. Participants can deposit BTC equivalents to validate transactions and maintain network security. Some of the best Bitcoin staking platforms include:

• Binance: As one of the largest crypto exchanges, Binance allows you to stake Bitcoin through their Binance Earn section. You can also convert your Bitcoin to a wrapped version, such as WBTC or BTCB (Binance-Pegged BTC), and stake it.
• Lido: Lido is a decentralized staking platform that allows Bitcoin to be staked through WBTC. This allows BTC holders to participate in staking on Proof-of-Stake (PoS) blockchains, such as Ethereum, while still earning rewards.
• Crypto.com: You can also “stake” Bitcoin on Crypto.com by depositing BTC into Crypto.com Earn, where the platform lends your Bitcoin to institutional borrowers. In return, you can earn interest based on your chosen duration, which can be either flexible (lower interest, but you can withdraw at any time) or a one or 3-month fixed term (higher rates, but funds are locked for the duration).
• Nexo: Nexo is a crypto lending and staking platform that allows users to stake Bitcoin (BTC) and other supported assets. You can earn passive income on BTC through its “Earn interest on Crypto” program. Unlike traditional staking, Nexo offers daily payouts with no lock-up periods, providing users with liquidity and flexibility. 

How to Stake Bitcoin?

While Bitcoin itself cannot be staked in the traditional sense, alternative methods allow BTC holders to earn rewards on their holdings. Below, we’ll walk you through the steps to effectively “stake” Bitcoin:

• Convert to wBTC: Many platforms allow converting BTC into WBTC, making it an ERC-20 token. 
• Transfer it to a PoS blockchain: Send the acquired wBTC tokens to a PoS blockchain like Solana, Ethereum, or Polygon through a cross-chain bridge. 
• Choose a staking platform: The platform should support wBTC staking. In the previous section, we’ve mentioned some of the best BTC staking platforms.  
• Stake wBTC: You can do that by transferring your tokens to the platform’s staking pool. 
• Claim your rewards and unstake: These rewards vary depending on the platform’s staking terms. Also, not all platforms allow for unstaking. If the one you choose does, you can unstake the tokens and convert wBTC back to BTC if needed.

Benefits and Risks of Bitcoin Staking

Bitcoin staking can be a great way to earn passive income without actively trading. It offers accessibility and low entry barriers, making it appealing to many investors. However, there are risks like price volatility, fund lock-ups, and counterparty exposure.

At first glance this seems like an easy way to grow your Bitcoin, but as with everything in crypto, there’s both pros and cons. Let’s break it down.

If you’re comfortable with the risks and don’t mind locking up your BTC for a period, staking can be a way to earn extra rewards. However, if maintaining full control over your Bitcoin is a priority, you may prefer to hold it in self-custody instead.

The best approach depends on your risk tolerance and investment strategy. Before making a decision, take the time to research the platform, understand the terms, and consider whether the potential rewards outweigh the risks.

Bitcoin Staking vs. Other Crypto Staking

Bitcoin staking isn’t quite the same as staking in Proof-of-Stake (PoS) cryptocurrencies. With PoS coins like Ethereum, Cardano, and Solana, staking is built into the network—holders lock up tokens to help secure the blockchain and earn rewards in return.

Bitcoin, on the other hand, doesn’t have native staking. When people talk about “Bitcoin staking,” they usually mean earning yield through centralized platforms (like Binance Earn or Crypto.com Earn) or using wrapped Bitcoin (wBTC) in DeFi apps. These methods rely on financial models rather than network validation.

So, the key differences? PoS staking helps run the network, while Bitcoin staking is more about earning passive income through third parties. That means different risks—Bitcoin staking depends on external platforms, while PoS staking is tied to blockchain security and governance.

Bitcoin Staking vs. PoS Staking: A Quick Comparison

Below is a quick comparison to see how Bitcoin staking compares against other staking options.

• Built-in Staking: PoS coins have it; Bitcoin doesn’t.
• Decentralization: PoS staking happens directly on blockchain networks, while Bitcoin staking often relies on centralized platforms.
• Security Risks: Bitcoin staking carries platform risks (hacks, insolvency), while PoS staking depends on the blockchain’s security.
• Liquidity: PoS staking can have lock-up periods, but Bitcoin staking options might offer easier withdrawals.
• Where Rewards Come From: PoS staking rewards come from network participation, while Bitcoin staking rewards come from lending, DeFi, or centralized yield programs.
• Overall Risk: Bitcoin staking involves third-party risks, while PoS staking comes with network-related risks like slashing penalties.

At the end of the day, Bitcoin staking is more like a financial service than a blockchain feature. If you’re looking for staking-like rewards with BTC, it’s important to be aware of counterparty risks—your Bitcoin isn’t secured by a blockchain consensus but by external companies and financial mechanisms.

Common Mistakes to Avoid When Staking Bitcoin

These methods can generate returns but several mistakes can lead to lost funds or missed opportunities.

Ignoring Platform Security Risks

Staking Bitcoin involves third-party platforms that hold your BTC in custodial wallets. If the platform gets hacked, goes bankrupt or mismanages funds you can lose your Bitcoin. Before staking, research the platform’s security, reputation and history of user protection.

Not Considering Lock-Up Periods and Withdrawal Restrictions

Some platforms require you to lock your Bitcoin for a set period during which you can’t withdraw or use your funds. If the market moves suddenly you may not be able to react in time. Always check the terms before committing your BTC.

Ignoring Bitcoin Price Volatility

Bitcoin’s price is super volatile. Even if you’re earning staking rewards a price drop can eat your earnings. Make sure you understand the risks of holding BTC while it’s locked in a staking program.

Not Understanding Wrapped Bitcoin (wBTC) Risks

If you’re using DeFi platforms to stake Bitcoin you may need to convert BTC into wrapped Bitcoin (wBTC) or similar tokenized versions. This exposes you to risks such as smart contract vulnerabilities, liquidity issues and reliance on third-party custodians managing the wrapped asset.

Falling for Unrealistic High-Yield Offers

If a platform promises unusually high returns it’s usually too good to be true. Some high-yield platforms turn out to be unsustainable or outright scams. Stick to reputable platforms and be cautious of returns that seem much higher than industry averages.

Forgetting Fees and Hidden Costs

Staking on certain platforms may have fees for withdrawals, transactions or management. Some programs take a cut of your earnings before paying out rewards. Always check the fee structure to avoid unexpected reductions in your returns.

Using All Your Bitcoin for Staking

It’s tempting to stake as much Bitcoin as possible to maximize rewards, but this reduces your flexibility. If you need quick access to funds or if the staking service runs into problems, having some BTC in self-custody can save you from financial trouble.

Staking Bitcoin can be a great way to earn passive income but it comes with risks that most users ignore. Always research platforms, read the fine print and never stake more than what you can afford to lose. Take your time to understand the process and you’ll avoid costly mistakes and protect your Bitcoin.

Future of Bitcoin Staking: Will Bitcoin Ever Support Staking?

Bitcoin isn’t likely to ever support traditional staking because it runs on Proof-of-Work (PoW) instead of Proof-of-Stake (PoS). In PoS blockchains, people stake their tokens to help secure the network, but Bitcoin relies on miners solving complex puzzles to verify transactions and keep things secure. Switching to PoS would require a massive change to Bitcoin’s code, and there’s no real interest in making that happen.

One big reason Bitcoin will probably stick with PoW is security and decentralization. A lot of people see PoS as more centralized since those with more tokens get more power. Bitcoin’s developers and miners have always resisted major changes that could mess with its core principles. Unlike Ethereum, which moved to PoS, Bitcoin is all about keeping its original design, focusing on security and stability over efficiency.

That said, while you can’t stake Bitcoin directly, there are still ways to earn staking-like rewards. Platforms like Core DAO mix PoS features with Bitcoin’s security, allowing BTC holders to earn yield without changing how Bitcoin works. Wrapped Bitcoin (wBTC) and various DeFi platforms also offer ways to earn passive income with BTC.

Bitcoin will probably stay PoW forever, but new solutions will keep popping up for those who want staking-like benefits without changing the Bitcoin network itself.

What is Crypto Staking?

Staking allows token holders to earn rewards by contributing their tokens to a blockchain network. When users lock up their tokens, they help the network operate securely and efficiently. In return, the network rewards them with additional tokens. Essentially, staking is a way to support the blockchain while generating passive income. 

To better understand what is staking and how it works, think of it like depositing money in a bank. Banks use customer deposits to fund loans and other financial activities, just as blockchain networks use staked tokens to maintain and finance their operations. In both cases, regardless of whether it’s a bank or a crypto network, it offers incentives to encourage participation. Banks pay interest on deposits, while crypto networks reward users with additional tokens for staking. In this way, staking and banking rely on using assets to sustain their systems, providing incentives to attract participation.

Proof of Stake (PoS) vs Proof of Work (PoW)

Blockchain platforms use Proof-of-Work (PoW) and Proof-of-Stake (PoS) as the most common consensus mechanisms. However, they are substantially different from each other, particularly in transaction validation and adding new blocks to the blockchain. 

While PoW relies on mining, where miners solve complex puzzles, PoS uses staking, allowing users with a small amount of crypto to participate. For BTC mining, PoW uses a competitive validation method for transaction confirmation and adding new blocks to the blockchain.

In contrast, PoS uses randomly chosen validators for transaction confirmation and creating new blocks. Proof of Work (PoW) relies on substantial energy consumption for Bitcoin mining, as miners compete to solve complex cryptographic puzzles. The first miner to successfully solve the puzzle and validate the block is rewarded with newly minted BTC in addition to the transaction fees. 

Meanwhile, PoS is a more energy-efficient consensus mechanism. Instead of competing to solve complex mathematical puzzles, validators in a PoS system are chosen based on the number of tokens they hold and are willing to “stake” as collateral. This, in turn, allows for a greater number of participants.

Why is Crypto Staking Important?

Staking is important because it supports and secures the network, ensuring a diverse group of validators instead of just a few. By allowing more participants to validate transactions, staking prevents the control of a single entity. The decentralization of power makes it a lot more challenging for malicious actors to gain control over the network. It ensures the stability and security of a PoS blockchain, providing substantially higher efficiency, speed, and scalability than mining-based blockchains.

Many crypto users focus on trading, hoping to earn a big-size return. But they don’t pay much attention to crypto staking. A lot of people from crypto industry think crypto staking is one of the most underrated profit-making strategies. Consider this tweet, for instance, 

Types of Staking

Now that you know the meaning of staking, let’s discuss the types of staking and the different ways to stake.

Active Staking

Active staking is simply locking your coins in a network to actively participate by creating new blocks and validating transactions to earn token rewards. Users who actively stake have to hold their funds in a compatible wallet or use a staking platform. They stay engaged in the staking process by making sure their funds or nodes stay operational to increase the rewards. While this staking form allows for more control over the staking rewards, it also requires more involvement. 

Passive Staking

This means locking your coins to a network in order to help it operate effectively and secure it. In other words, users simply delegate their assets to another party without directly engaging. While this isn’t time-consuming, it generates lower crypto rewards than active staking.

Now, let’s focus on the ways to stake:

• Solo staking: It allows users to run their own validator infrastructure directly by running individual software and hardware. This method gives participants complete control over the process but requires technical expertise. 
• Delegated staking: Participants can delegate their staking power to a validator node run by a third party, and the rewards are shared between delegators and validators. 
• Pool staking: In this type of staking, a group of holders combine their resources in order to compete for staking rewards more effectively. The earned rewards are shared among the pool members. 
• Exchange staking: Some top crypto exchanges provide staking services, with the platform handling the staking process and distributing the rewards to participants. 
• Liquid staking: Here, users get representative coins in return for staking their cryptocurrencies. These can be used or traded, offering liquidity to the participant. 

Pro Tip: If your goal is to maximize returns, you can earn more money by not just staking but also by investing in best crypto staking coins.

How to Stake Crypto? Step-by-Step Guide

Before starting to stake, holders should research and understand the tokens they are planning to stake. They must consider the minimum staking requirements, fees, APYs, staking rewards, and lock-up period. People can also go and stake more established coins or opt for many lucrative presale options. 

Now, for the purpose of explaining the step-by-step process, we have taken Best Wallet as an example. It’s one of the top non-custodial wallets in the industry, offering not only secure storage but also the ability to buy and stake your coins.

Let’s walk you through the steps of staking your tokens through Best Wallet:

Where Can You Stake Crypto?

When choosing where to stake, consider platforms that support the best staking coins. These are the places where interested holders can stake their tokens:

• Centralized exchanges (CEX): These exchanges offer direct and easy access to cryptocurrency staking. This is probably the easiest way to stake your tokens since they all come with staking services, where you only have to stake the coin and leave the rest for the CEX to do. However, the yield will be slightly less than if you were operating your own node. Some examples of popular centralized exchanges include MEXC, and Binance, KuCoin. 
• DeFi platforms: These platforms enable direct interaction with smart contracts but require technical knowledge. However, when using DeFi platforms, you are in charge of your assets instead of entrusting them to a third party. Examples of well-known DeFi platforms are Lido,Aave, and Rocket Pool. 
• Directly on the blockchain network: This requires technical knowledge and access to your validator node. Such examples include staking Polkadot through the Polkadot.js wallet, staking ATOM through the Keplr wallet, and staking Ethereum through its staking contract.
• Liquid staking platforms: Liquid staking is an innovative approach that enhances flexibility compared to traditional staking. Users can maintain liquidity and continue trading or using their assets in decentralized finance (DeFi) projects by issuing synthetic tokens representing staked assets. Such platforms include Lido, Stader Labs, and Frax ETH.

To know more about where you can stake your coins, check out our article on 12 Best Crypto Staking Platforms for 2025.

How Are Staking Rewards Calculated?

These are the rewards cryptocurrency holders receive for staking their coins. They are calculated based on several key factors:

Protocol Specifics

Different protocols have different reward mechanics, tokenomics, and rates. For instance, Ethereum pays rewards in ETH to validators from a combination of transaction fees and block rewards. 

Current Staking Rewards Rate

This refers to the annual rewards rate for protocol staking. Rates differ among chains, impacting potential earnings. 

Staking Duration

The longer participants stake their tokens, the more compounding can boost their cumulative rewards. For example, staking for a year offers more rewards than one-week staking. 

Also, a staking tool calculates the staking rewards based on factors like the amount of coins staked, duration of staking, and current staking reward rates.

Pros and Cons of Staking Crypto

What’s the Future of Crypto Staking?

Staking is widely regarded as a more sustainable alternative to mining, offering greater efficiency, scalability, and transaction speed. Beyond its lower environmental impact, ongoing advancements continue to make staking more accessible and energy-efficient, positioning it as a key innovation in blockchain technology.

Staking is expected to play a significant role in DeFi, providing investors with new ways to use their digital assets profitably. Some innovations, such as cross-chain staking, may improve flexibility for investors by enabling assets to be staked throughout different blockchains.  

With clearer frameworks and increased regulations, staking can become a common investment method for institutional and private investors. 

Is Staking Crypto Worth It?

Crypto staking offers a way to earn passive income while participating in network decisions. With newer platforms enabling indirect Bitcoin staking through pools and wrapped tokens, its accessibility continues to grow. However, the variety of staking options requires careful evaluation, as risks like lock-up period and limited liquidity remain factors to consider.

Still, staking is poised for exciting developments, which are expected to play a significantly critical role in DeFi, making it an increasingly valuable tool for token holders looking to maximize their assets.

Well, crypto investors shouldn’t forget that the market is prone to extreme volatility, hence, in bear market if the price of a crypto drops significantly while your tokens are locked, you could lose money even if you earn staking rewards. Most importantly, if the staking platform that you have subscribed to is compromised or becomes insolvent, you can lose access to your staked funds too.

Conclusion

At the end of the day, it’s important to know that Bitcoin Staking and the process of staking other PoS cryptocurrencies aren’t the same. DeFi advancements have definitely made it possible to use Bitcoin in different ways by introducing the wrapped version of it, but when it comes to convenience, staking a PoS crypto can make much more sense. On the whole, crypto staking is a way to strengthen a blockchain network. Certain cryptocurrencies, like Polkadot (DOT), Cosmos (ATOM), or Tezos (XTZ), offer staking rewards of 5-20% annually, something that’s much higher than traditional bank interest rates. So, crypto holders who are keen on participating in staking activity should weigh in all the options before locking away their money. And above all, one shouldn’t forget that the crypto market operates in high risk and high volatile environment. Hence, expect the unexpected and always be vigilant.

See Also:

• XRP Staking: How to Earn Rewards With XRP in 2025
• What is Liquid Staking & How Does it Work?
• Lido Staked Ether Explained: A Beginner’s Guide to stETH
• Cardano Staking: How to Earn Rewards By Staking ADA
• How to Stake Pyth Tokens in 2025: A Beginner’s Guide
• Polkadot Staking: Where and How to Stake DOT in 2025
• How to Stake POL: Beginner’s Guide to Polygon Staking

Frequently Asked Questions

References

• Chainalysis, “What is Crypto Staking?” Chainalysis, https://www.chainalysis.com/blog/crypto-staking/
• Ledger, “Staking Crypto and Earn Coins” Ledger, https://www.ledger.com/staking
• Fuze Finance, “The Future of Crypto Staking” Fuze Finance, https://fuze.finance/blog/crypto-staking-in-2025/
• Medium, “Different Types of Staking” Medium, https://medium.com/@coinix/different-types-of-staking-5cdf8ef22f70