Owners of Ethereum cryptocurrency have now staked over $14 billion worth of their tokens on the Ethereum 2.0 network. Robert Testagrossa mentions that Ethereum 2.0 represents a fundamental change in how the Ethereum blockchain works.

But before going any further, Robert Testagrossa explains what "staking" is in this context.

To remain decentralized or operating without a central authority, cryptocurrency networks work by incorporating a consensus mechanism. This means that all computers on that network can agree on what's going on at any given time without a central bank or similar entity overseeing everything.

Ethereum, quite like Bitcoin, uses a consensus mechanism known as proof of work (PoW), wherein people use computing power to keep the network up to date in return for new tokens. This process is called "mining."

But PoW has issues, which include high energy usage and incredibly strict hardware requirements. It sees network users compete for the chance to update the network by updating it with all the new transactions that have taken place.

Another consensus mechanism, called proof of stake (PoS), may eliminate some of the problems associated with proof of work. Robert Testagrossa explains that PoS sees cryptocurrency users contribute to network validation by depositing a certain amount of cryptocurrency into that network as a stake.

Users then can either be potentially rewarded for this by being given new tokens in return for their stake, if they are the user that is chosen to update the network; or punished by losing part of their stake if they attempt to attack the network, go offline, or fail to validate the network.

Also, Robert Testagrossa points out that it is locked for all intents and purposes once a stake is made.

Based in New York City, serial entrepreneur Robert Testagrossa is passionate about building businesses and is active in the software development, cryptocurrency, retail, and luxury hospitality industries. For similar blogs, visit this page.