Investing in cryptocurrency is like putting your money in highly volatile growth stocks. Your profits (or just as likely your losses) will be determined by whether the price of your digital assets goes up or down. There is little akin to value stocks that pay out a regular dividend.
That’s why it’s intriguing to see Coinbase offer a new service called “staking,” which promises to let cryptocurrency owners collect fixed income. The San Francisco company announced the service on Friday, saying investors who own the digital currency known as Tezos can park it with Coinbase and receive a stream of revenue in return.
Tezos is distinct from digital currencies like Bitcoin or Ethereum in that it doesn’t rely on “mining.” The mining process, also known as “proof of work,” has people compete to solve math problems with the winner earning the right to add to the next block to a blockchain ledger and receive a reward.