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.