According to Cardano’s roadmap staking will start soon (at least within 5 months), Ethereum will also be moving to some kind of staking model in 2018. This will perhaps present a significant first adopter opportunity.
Lets rewind. Different networks secure their blockchains using different protocols. The two main protocols are Proof-of-Work and Proof-of-Stake (aka Proof-of-Share). Coin networks which use Proof-of-Work include Bitcoin, the first and premier coin, also many others (for now) Ethereum. Coins that use Proof-of-Stake include Dash and REDD coin.
Proof-of-Work involves doing complex, lengthy, electricity expensive calculations. This activity is colloquially referred to as mining. The participant who mines a block (by solving a cryptographic puzzle) makes the next block – and crucially, secures a reward – the reward is the motivation for engaging in the activity.
Proof-of-Stake is similar; a particular participant will make the next block and get a reward, however instead of competing with other participants to solve a cryptographic puzzle, the participant is chosen at random (but in proportion to their stake). The participant vouches for the accuracy of the block they are adding, by staking their capital. Should they try to cheat the system, they will lose their stake. The process is known as staking or sometimes minting.
POS has two huge advantages over POW; it is faster and it uses less electricity. The use of electricity should not be underestimated, the Bitcoin network uses more electricity than some African countries. Also as crypto networks are used by more and more people, transaction times for systems like Bitcoin have really suffered. Speed is one of the USP’s of crypto, transactions should happen within seconds. Recently Bitcoin transaction times have been in the hours. Without getting into the details, POS is more scalable than POW.
For these reasons Ethereum will be moving from POW to POS this year (2018). Right now for Ethereum you need a mining rig (computer with 6 top end graphics cards). Once the switch over happens, you will simply need to hold ETH. Anyone holding ETH will be able to mint more ETH. The exact details of how it will work for Ethereum have not be clarified yet.
Cardano (the ADA coin) is a little further along. It will be moving to a decentralised POS system Q2 2018. Currently liquidity in ADA is provided by the Cardano Foundation using centralised servers. So right now, Cardano is not POW or POS, it is centrally controlled. When that changes, holders of the ADA coin, will be able to participate in the securing of the blockchain, for the reward. Staking will be elective. Holders who stake will (over time) increase their holdings, while holders who do not stake, will not. Although the reward has not been announced yet, based on other POS coins the annual rate of return will probably be somewhere between 5-10% if all holders stake.
Here is the opportunity; at the moment no one is staking, once POS has been running for a while the majority will be staking. But what about those first 6 months? Will everyone stake on day one? I don’t think so. For a short time, there will be a small number of stakers, who will get all the rewards. Think about it.