Is it possible to stake Bitcoin?

The Bitcoin blockchain is based on Proof-of-Work, and not on Proof-of-Stake, so in theory, you cannot do actual staking of BTC.

However, the term staking can be used with different meanings, some of which allow the phrase “staking di Bitcoin” to be considered correct.

The Proof-of-Stake

The verb “to stake” in English means “puntare”, to bet, to put at risk.

It is therefore a term with a very generic meaning, and not at all technical, which lends itself to multiple uses.

However, in the crypto field, it has taken on a specific technical meaning since the launch of Proof-ok-Stake (PoS).

Bitcoin is the first cryptocurrency to have been created in the world, in 2009, and has always been based on Proof-of-Work (PoW).

PoW requires that miners discover which hash validates a new block to add to the blockchain, and once they discover it, they can add the block to the blockchain and collect the reward. This work by the miners is the basis of Proof-of-Work.

PoW, however, is slow and energy-consuming, so subsequently new blockchains based on alternative systems were created. One of the first was Ripple, launched in 2012, but based on a still different consensus algorithm.

Also in 2012, the unknown Peercoin was launched, based precisely on Proof-of-Stake. That was also the beginning of true crypto staking.

PoS, unlike PoW, involves validator nodes validating the blocks by staking their own funds, with the risk of losing them if they validate incorrectly. This “staking” of one’s own funds is indeed called “to stake” in English.

Staking

Therefore, in the crypto field, staking technically means putting your crypto at stake (or betting) on a blockchain based on PoS, in order to participate in the block validation process.

However, the generic term “to stake” also means many other things, such as betting your funds on the outcome of a number in roulette.

So, generally, the concept is to stake your funds to earn rewards.

For this reason, the term staking in the crypto field is actually used with different meanings.

The first, the technical one, is related to staking your crypto on validator nodes that validate blocks thanks to Proof-of-Stake, but there are also others linked to the concept of betting your funds to try to earn profits.

Bitcoin Staking

Using the first meaning, the technical one, it is not possible to state that you can stake Bitcoin, because the Bitcoin blockchain is based on PoW and not on PoS.

Note that even Ethereum in 2015 was launched with PoW, but to make transactions faster and cheaper in 2022 it switched to PoS. So from a technical point of view, it was not possible to stake ETH before 2022, but from September of that year onwards it was possible.

However, if the verb to stake is used with the other meaning, the generic one, it is absolutely possible to state that staking can also be done with BTC.

In fact, there are several services that allow you to lock up your Bitcoin in exchange for a return, more or less high, and more or less variable. It is essentially about staking your BTC in the hope of earning something from it.

Stacking Sats

Regarding Bitcoin, there is also another term that is widely used: stacking Sats.

It should be highlighted, however, that it is another verb, namely to stack and not to stake.

To stack has a completely different meaning, and it means to pile up, with the sense of stacking, accumulating.

The Sats are the Satoshi, that is, the hundred millionths of Bitcoin.

Given that the value of a single BTC is now high, there are not many people who can afford to own at least one whole one.

The smallest unit into which Bitcoin on-chain can be divided is the hundred millionth, commonly called Satoshi in honor of the creator of Bitcoin, Satoshi Nakamoto.

As of today, a Sat is worth about a thousandth of a dollar, and this makes it clear why it is said stacking Sats, and not stacking BTC.

The concept behind the term stacking Sats is to accumulate fractions of Bitcoin over time to hold in a portfolio indefinitely, and this is why it is a widely used term. However, it has absolutely nothing to do with the staking in the title of this article.

How to do staking with Bitcoin

Given that you cannot stake BTC on Bitcoin validator nodes, as these simply do not exist, there are however several ways to stake BTC on services that promise returns.

The most classic, and most used, is the loan.

There are indeed several platforms, for many years now, that allow those who own Bitcoin to lend their BTC to third parties who in return pay active interest.

This is a form of high-risk staking, especially when using the widespread centralized lending platforms, and it often yields lower profits than those that can be obtained in the same timeframe with well-executed trading.

Definitely, stacking Sats is much more widespread than this staking of BTC.

Another possible form of BTC staking is to use Bitcoin layer-2 solutions based on Proof-of-Stake.

In this case, however, technically the BTC are only immobilized in a smart contract, meaning they are not truly put in staking, in exchange for the native crypto of the layer-2 which in turn will be effectively put in staking. Therefore, it is an indirect staking of BTC, and still high risk, because if the layer-2 for some reason implodes, closes, or fails, it might be impossible to recover one’s BTC.

There are also other cases, but always based on the concept that you have to deliver your BTC (or Sats) on a platform that in return promises yields. The risk is such that very often those who stake in this way prefer to use other cryptos that are not Bitcoin.