Saturday, August 17, 2019

How to make passive income with Blockchain

If you are competent with cryptocurrency you would want to use an opportunity like this. One interesting thing with  blockchain is that there are no gatekeepers of this platform. I already made a post on how blockchain can transform social media, check it out here. There is a new blockchain app called Compound finance which allows you to use your existing cryptocurrency you hold to earn interest. All you have to do is put your cryptocurrency on the app and this will fetch you income overtime. The app is responsible for two basic things, lending and borrowing cryptocurrency. You can set it, leave it for sometime and you get your interest. The model for this app is simple and the protocol for granting loans is pretty straightforward.

How it works

In case you want to send cryptocurrency to this app and earn interest, you select your desired currency at a stable price with the interest rate attached. Some of the cryptocurrencies have APR  (a form of digital asset) chart you can refer to and see the price change overtime. You earn your money (interest) from other people borrowing (say Ether) who use the app. The lovely UI allows you to  withdraw your interest and original principle if you like. On the other hand if you have a bunch of 0x tokens and you want to borrow ether for transactions, you can collateralize your tokens and borrow back some ether. If you expect the price of 0x to increase over the value of ether, you borrow ether in an exchange to purchase more 0x tokens. Should the price go up, you can keep the difference from the more 0x tokens you got in the trade. This is a way to make profit as you can get your original amount back. This logic can be applied back and forth - a sure way to make profit anytime you want to trade.

Why this app is cool for the crypto-space

It basically gives you a DAPP (Decentralized Application) which is a real world use case of blockchain  right now and has a volume of users. There maybe other reasons depending on what you are looking out for but the utilities this app provides makes it easy to want to interact with it. This actually serves value - with its self explanatory UI and nice user experience.

This is an initiative to push for the use case of decentralized finance system. As a blockchain and cryptocurrency advocate, I think this could be a way to improve the adoption of blockchain technology. The use of digital currency is a war cry against the conventional banking system which sort of criminalizes the use of Bitcoin and other cryptocurrencies. If digital currency becomes a widely used and adopted system, incentives would be attached when using it hence making it even better than the traditional transaction system. How many places can you put  money in and earn a 12-15% return? This is a huge game changer and decentralized finance can be a good way of pushing for the mass-use of blockchain technology. When it comes to money you have to be cautious but this is one of the coolest DAPPs in the blockchain industry. Should this get more stable and proven overtime, this is a sure way to gain interest.