What is Blockchain in simple words and how to make money on it + TOP 5 business ideas for making money on the blockchain

How does blockchain work and how to make money on it? What platforms are suitable for making money on blockchain? Can investments in blockchain projects bring profit?

Probably everyone who uses the Internet has heard the word “blockchain”. But not everyone understands what is hidden under this term.

The media and bloggers write about blockchain technologies, state leaders, economists, businessmen, cryptocurrency miners and everyone who keeps up with the times talk about them. If you still don't know what blockchain is , this article will fill the knowledge gap.

Denis Kuderin is with you, an expert on the HeatherBober portal on financial and economic topics. I will tell you what blockchain is, how to make money using this technology , and why encryption of data on the Internet is so important.

Let's sit back and read to the end - in the end you will learn how to use blockchain technology in various business sectors and which platforms for creating blockchain-based applications are the most popular.

What is blockchain - just about the complex

There is an opinion that the widespread introduction of blockchain technology will produce the same global changes in the world that were caused by the invention of the Internet and smartphone.

Cryptographic data encryption will penetrate into all areas of our lives in the near future and will have a tremendous impact on the economy, financial structure and even politics.

Why is blockchain so interesting? It's simple: this technology is nothing more than a revolutionary new way of storing and transmitting data - without intermediaries and other difficulties that inevitably arise when handling money, information and documents.

But let's take it in order.

Blockchain is a continuous sequence of information blocks (database), built according to certain rules. The literal translation from English exactly reflects the essence of the term – “block chain”.

For the first time, such data distribution was put into practice in 2009 when creating the world's first cryptocurrency - Bitcoin.
Thanks to the blockchain, all transactions with Bitcoin occur without intermediaries and in a safe mode - from user to user. This ensures the speed of transactions - without the need to pay banks and payment systems for intermediary services. All the details on this topic are in the article blockchain wallet.

In a broader sense, blockchain is a way to store and securely transfer any information blocks:

• money transfers;
• contracts, transactions and agreements;
• confidential information;
• property rights;
• personal data of the citizen;
• any other files that require saving and checking.

The main “trick” of the technology is that information is not stored somewhere in one place (on a common server), but is distributed across all computers connected to the network. In this case, all users have access to the register of operations with encrypted blocks. For example, all transactions with bitcoins are stored publicly on the Block Explorer resource.

Globally, blockchain technologies have been actively developed and used since 2014. Now billions of dollars are being invested in such projects, and all large companies have full-time specialists in the study of “chains”.

Each block of information in the blockchain is protected by encryption . Only the user who has the secret key for this record has access to the data. The blocks are linked into a chain using complex mathematical algorithms, with each individual segment connected to the previous one and has a mark corresponding to the time of its creation.

The appearance of each new block leads to an automatic update of the registry, and it is almost impossible to change it in any way on all computers at once. It is this property that guarantees the circuit the highest level of security. Hackers, no matter how brilliant they are, will not be able to gain simultaneous access to all computers on the network.

I will list all the advantages of blockchain technologies:

• There is no centralized control - no one controls the network from the outside;
• Reliable encryption – anonymity and confidentiality in a public environment;
• Instant synchronization – information in blockchains is updated simultaneously for all participants in the system: data does not need to be coordinated, double-checked or copied;
• Secure conclusion of transactions, agreements, contracts - data is transferred without intermediaries and is inaccessible to third parties;
• The entries in the chain remain unchanged - they cannot be changed “retrospectively”;
• Speed ​​and accuracy of transactions – fund transfers are carried out instantly and do not require the services of third parties.

Optimistic blockchain proponents believe that the technology will put an end to corruption, bureaucracy, dishonesty in commercial transactions and various forms of fraud in the near future. Agreements concluded using the “chain” are carried out in enhanced security mode and are free of the risk of double interpretation.

If we are talking about the pros, we must also talk about the cons, since nothing is perfect in the world. So far, blockchains are not productive enough and cannot provide the required number of transactions in developed global payment systems.

For example, when transactions with cryptocurrency (bitcoin), which should in theory be instantaneous, you have to wait for confirmation of the transfer, which takes from several minutes to several hours.

The main thing about blockchain technologies in this video:

Blockchain game with withdrawal My Crypto Heroes

The project was created by Double jump.tokyo, which develops various software. The game is one of the most popular among those created on the basis of blockchain. You can have fun with it not only through the browser; official applications have been released for Android and IOS.

The audience here is mainly Asian, but the resource has also been translated into English. According to the plot, it is necessary to create characters that allow you to participate in battles, engage in farming and more. By leveling up your hero, you can win battles more often, for which rewards are provided.

The game uses its own currency - Game User Money (GUM token). You can start without investing, registration is simple, you just need a Metamask wallet. Beginners are given 4 starting characters, so you can slowly buy more expensive heroes without donations. No knowledge of cryptocurrency is required.

How Blockchain Works – 5 Main Steps

The unofficial name of blockchain technology is the “Internet of Values.” With the help of a block chain, each user can easily send any valuable data to another user at any time. Only those who have the private key will have access to them.

Of course, in theory, such a key could be stolen from your computer or from other media by third parties, but attackers can also steal your money. True, saving code is much easier and simpler than physical assets .

Let's look at how blockchain works using the example of transferring money from one person to another.

Stage 1. Transmission of transactions to the network

Let’s say Petya, a Russian citizen, wants to transfer money to Vasya, who lives in another country. Petya categorically does not want to use bank services - he is not satisfied with the amount of commissions.

He decides to use the blockchain and transmits his transaction to a network consisting of peer computer nodes.

Stage 2. Formation of transactions into a new block

On the network, this transaction is confirmed using special algorithms and is formed into a new block - a link in the overall chain. The new operation is added to the end of the existing chain, given a link to the previous link and a timestamp.

This creates a new unique block.

Stage 3. Distribution of blocks for verification to all system participants

New blocks are sent for verification to all participants in the system, and each one enters them into their database. This database exists on all computers simultaneously. The addition of a new block is automatically and simultaneously reflected in the general register.

Stage 4. Getting the block into the chain

The new block receives a unique signature (place among other blocks) and becomes part of the updated system containing information about all transactions. This information is available to everyone, but the content of the block itself is only available to the people for whom it is intended.

Stage 5. Final stage of the transaction

Vasya receives the transfer via the blockchain system. He has his own unique key , which gives him access to the contents of the cell.

Money transfers are just one of hundreds of uses for technology. In the next section, we will look at the most popular uses of blockchain.

Direction prospects

GameFi has already gained significant popularity, but analysts believe that this relatively new sector still has a long way to go. Thus, Tron founder Justin Sun recently stated that this industry could be the key to increasing the adoption and integration of cryptocurrencies, as GameFi makes decentralized finance easy for ordinary users to understand.

New projects are launched almost every day, and entire gaming platforms are created, such as MOBOX, which allow people to create their own games on the blockchain and NFT tokens. With the influx of new investments, the sector's potential is limitless. Another factor that could drive further growth is the decentralized future that developers are striving for. We'll definitely see a lot more innovation and improvement.

How is blockchain used – 5 uses of the technology

Blockchain will become more and more widespread in both digital and real-world activities. In theory, the technique is applicable for any transactions between individuals and legal entities where there is an element of mistrust.

For example, in any purchase/sale transaction there is a risk that the buyer will not receive the goods, and the seller will not receive payment. Block technology will make such transactions reliable and secure.

A smart transaction is carried out according to the “if, then...” principle - the key is transferred only if certain conditions are met. Otherwise, the parties to the transaction remain to their own.

Any operations in which there is a risk of changing data at the input or output, the blockchain will eliminate such risk. Any files that are included in the sequence of blocks can no longer be removed from there and replaced with others.

Let's consider the most promising options for using the technology.

Option 1. Confirmation of authorship

Blockchains will help authors protect their intellectual rights to a product. Any creative product (invention, technology, text) will become unavailable to third parties.

Blockchain is a secure data transfer

If the owner wants to transfer his rights to another, he will conduct the transaction in a secure mode. Such transactions are called “smart trades”. There are already platforms through which “smart contracts” are executed.

Option 2. Operations with gold, raw materials, goods

Transactions for the sale and purchase of gold, platinum, valuable raw materials and large quantities of goods are always associated with risks. The use of blockchains and internal cryptocurrency in this area will secure such transactions to a minimum level.

Option 3: Data management

Not only financial management, but also any other data often requires compliance with security rules.

Blockchain decentralizes the storage of information - if information is stored simultaneously on thousands of computer nodes, it is almost impossible to change, falsify or delete it.

In addition, it is cheaper than using servers and other traditional storage technologies. There is no need to spend huge amounts of money on protection against hacking and intrusion.

Option 4: Identification and confirmation of access rights

Blockchains are already being used by some large companies to identify their customers (employees or users) and give them access to information that is not intended for outsiders. This is much more reliable and cheaper than any other methods of confirming access rights.

Option 5. Voting

Electronic voting supported by blockchain will provide participants with anonymity and reliability of the results . Since it is impossible to falsify blocks entered into the chain, it will be impossible to change the final ratio of votes after the end of the voting procedure.

Areas of application of blockchain - comparative table:

Best blockchain game Crypto Dozer

An arcade game from PlayDapp, which was translated into English, Russian and several other languages. By analogy with previous projects, dolls are assembled here, each of which has individual characteristics. Depending on them, the cost is set (in Ethereum).

The generator will decide which character you will get. Beginners may not register immediately, but use the guest mode. In this case, the results are not saved. To fully play, you still have to create an account and for this you still need the same MetaMask wallet.

The development team is currently working on launching other games. It is planned to use as many blockchain networks of famous cryptocurrencies as possible. Collect dolls and exchange for ETH, you can start without investment.

How to make money on blockchain - TOP 5 business ideas

If just a year ago the future of technology seemed uncertain, today it is already clear - this is a promising area, investments in which promise multiple returns.

We offer five of the simplest and most understandable business ideas based on the use of blockchain technologies.

Business idea 1. Introduction of blockchain technologies to successful companies

Now only the most advanced companies use blockchain technologies; tomorrow they will be used by everyone. Blockchain programs and algorithms themselves are an expensive and difficult thing to implement, but going against progress is more expensive.

After all, all the big banks are: it's better to do it early and get a head start.

If you have blockchain developments and access to technologists of financial organizations, you have a good chance of selling your services profitably. Emphasize that working without intermediaries is profitable and will save companies more than one million a year.

However, there is a catch: Bitcoin, the most convenient currency for the blockchain, is not used by banks and large financiers. Simply because crypto money has not yet been recognized by the state.

Business idea 2. Issue of tokens and exchange for cryptocurrency (ICO)

Now there are hundreds of different cryptocurrencies in the digital space. You have the right to develop and implement your own virtual money.

The action algorithm in a simplified version is as follows:

1. The ICO team sells digital tokens to everyone - devices for identifying users and ensuring data security. Tokens are sold for bitcoins, litecoins and other popular cryptocurrencies or even fiat (real) money.
2. A new cryptocurrency is put into circulation, after which it is used as an internal means of payment for the project or sold on cryptocurrency exchanges.

The main task is to inspire confidence and enthusiasm among potential investors. To do this, the project must be completely legal, transparent and open. Otherwise, the idea will be too similar to hype.

Tokens, in their functions, are a bit like shares and provide future dividends, but unlike securities, they do NOT provide legal ownership of a share in a future project.

However, investors do not buy them out of personal sympathy for the organizers. They hope to make quick and high profits. ICO projects are based on a wave of unrelenting interest in cryptocurrencies. For some cryptocurrencies, other cryptocurrencies are issued and third ones are purchased with them.

Business idea 3. Cryptocurrency lending

Cryptocurrency loans are becoming increasingly popular among active users of modern technologies.

There are existing decentralized platforms that issue cryptocurrency loans to everyone. Borrowers use credit funds either to purchase ICO tokens or for trading operations on cryptocurrency exchanges.

Business idea 4. Opening an exchange or bitcoin payment services

There are already dozens of cryptocurrency exchanges operating on the network, and each of them hosts hundreds of exchanges, purchases, sales and other manipulations every day. Each such transaction brings a certain percentage to the owners of exchanges: they receive money only for providing a platform for trading operations.

The number of payment services with bitcoins, ethers and other digital currencies is also growing by leaps and bounds. Even bookmakers and pizza delivery companies have started accepting bitcoins.

It's time to join the trend and open your own network resource, powered by secure and advanced blockchain technologies.

Business idea 5. Registration of copyright or legal rights in the blockchain

Another option for a service that uses “chain” technology. While there are few such sites, their popularity will inevitably grow. If you start competent promotion now, in a year there will be no end to clients.

Read more about ways to use the technology in the article “Blockchain training”.

Exchange-traded funds for investing in blockchain

If you're looking to invest in blockchain and don't trust cryptocurrency exchanges, which are often under attack, you may want to consider exchange-traded funds.

Despite all the distrust that state securities commissions show towards cryptocurrencies, they, for the most part, give a positive assessment of the blockchain. For example, in the United States, after permission was granted by the Securities Commission, two funds managed to raise $240 million in a week. These investment funds, the BLCN ETF and the BLOK ETF, provide opportunities to capitalize on blockchain companies. There are significant differences between these exchange-traded funds:

• The BLCN ETF is designed to track the so-called rsblcn index. The 68 well-known companies included in the rsblcn index are assessed based on blockchain ratings. The yield of a passively managed fund that pays dividends quarterly has not yet exceeded 1% per annum;
• BLOK ETF has not yet reached this level of profitability. To make investments, firms are selected that process and store information using blockchain.

A more reliable option for investors seems to be buying shares of well-known companies using blockchain.

Walmart

Capitalization: $296 billion.

Platform: Hyperledger Fabric.

Only two companies can compete with Mastercard in terms of the number of blockchain patent applications filed: Walmart and Visa. Walmart is the world's largest retailer. Walmart's interests in using blockchain are aimed at improving the delivery of goods. At the moment, the corporation's developments are used to track the quality and quantity of deliveries of 25 types of perishable products (strawberries, lettuce, yogurt, etc.).

Broadridge [BR]

Broadridge blockchain shares are another great option for investors, as the company has partnerships with banking institutions (Northern Trust, JPMorgan) that use distributed ledger technology.

Broadridge has also created several DLT-based options, including proxy voting, which allows shareholders to agree on certain matters.

With some of the biggest players in the banking industry on Broadridge's list of partners, this makes the company a viable investment option.

Mastercard

Capitalization: $247 billion.

Platform: Mastercard Blockchain.

Mastercard began patenting everything related to blockchain back in 2016. At the moment, the number of applications to the USPTO from the credit giant is already more than 80 and 16 of them have been approved. The USPTO has patented a multicurrency blockchain platform, an anonymous blockchain, and a number of other less important developments.

Mastercard is partnering with Amazon and Accenture to test a transparent delivery and payment system for goods. It is known that the corporation’s plans include combining a conventional payment system with a blockchain to increase the speed of electronic payment systems.

Intel

Capitalization: $263 billion.

Platforms: Hyperledger Sawtooth, Corda, Ethereum, Hyperledger Fabric

Intel, like IBM, chose to use private blockchains, neglecting the benefits of a public distributed ledger. The world's most famous processor designer drew attention to the convenience of Hyperledger Sawtooth, which suited Intel clients: Cargill, T-Mobile and Tel Aviv Stock Exchange.

Amazon

Capitalization: $916 billion.

Platforms: Hyperledger Fabric, Ethereum.

Amazon Web Services provides blockchain solutions to any enterprise that cannot or does not want to write its own blockchain for the company's internal needs. Competing in the cloud services market with Microsoft, Amazon managed to make a profit of $7.3 billion in 2022. Amazon's cloud clients include Change Healthcare, Guardian, HR Workday, DTCC.

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Create a wallet

It is customary to use various wallets to store coins:

• hardware;
• paper;
• desktop;
• mobile;
• online.

Which one is best to acquire is decided based on one’s own ideas about safety and the activity of using accumulated funds.

JPMorgan Chase

Capitalization: $369 billion.

Platform: Quorum.

The largest US bank has invested in the development of Quorum, a private version of the Ethereum blockchain. Quorum's main competitor is the Hyperledger Fabric and Corda blockchains - all of them are created for enterprises that need to implement a distributed ledger without the unnecessary inconveniences inherent in the classic decentralized blockchains of Bitcoin and Ethereum. One of JP Morgan Chase's projects was JPM Coin, a cryptocurrency that makes it possible to make payments between institutions without unnecessary delays inherent in the classical banking system.

Which blockchain platforms are currently the most profitable?

Representatives of the expert community rarely speak out definitively about which blockchain platforms may be among the most profitable. In such a volatile market, changes occur so quickly that even a carefully prepared forecast turns out to be of little use.

Among the projects that have clearly found themselves in the spotlight are:

• Emc DNS, which securely distributes domain names;
• Brave browser;
• decentralized social network Steemit;
• decentralized platform LBRY, which allows you to share video content;
• providing document fixation Emc TTS;
• allowing you to prove ownership of Emc DPO property;
• designed for concluding transactions without intermediaries Emc Atom.

The rise of some projects turns out to be caused solely by speculative excitement. As a rule, a few users manage to ultimately win. It is extremely rare to climb a financial pyramid and stay on it.

It is safer to bet on projects that are based on a technology that is really important for society.