According to ISTAT, there is a profession that is paid three times as much as the others: we are talking about the notary, a job that many believe could one day be replaced by the blockchain. We don’t want to get into this dispute, but there is no doubt that there are overlaps: both the notary and the blockchain are entrusted with an enormous responsibility, namely to certify the validity of the transactions. Without it, the risk of scams or errors would be exponentially higher.
Imagine, for example, that you want to buy a house: how much is it worth having the certainty that whoever is selling it to you is the real owner? Well, a lot! This type of security plays a huge role in so many transactions, which is why the notary gets paid so handsomely.
But the advent of blockchain is creating automated verification solutions, supported by a technological infrastructure and mathematical algorithms. All this makes the verification process:
- accessible to all, even turning it into an earning opportunity.
If the reasons for the first two points are clear enough, it is more interesting to delve into the third. The big evolution is that the blockchain allows to democratize the verification process: if until now it was the exclusive competence of a small circle of people, the notaries, now it is accessible to all. All that is needed is to have some capital and make it available to the blockchain we want to contribute to.
To date, the most used processes are two. On the one hand the system “Proof of Work,” used for example by Bitcoin; on the other the system “Proof of Stake,” instead used by Ethereum.
The former is a process that uses computer power to verify the validity of transactions; the second instead exploits the blocked capital as a guarantee, together with the resolution of some algorithms. We don’t want to bore you with excessively technical details, but we would like to focus on this second model which, in addition to being the most popular, is also the one that offers the greatest earning opportunities.
Indeed you must know that There are no special requirements to participate in the transaction verification process in a Proof of Stake model. All you need is to have any capital, buy the token of the blockchain you want to support, and finally delegate those funds.
Specifically, the funds are delegated to a validator, i.e. an entity that makes the necessary technology available to the infrastructure to guarantee the validity of a transaction. Each blockchain has several validators, and each user is free to choose who to delegate to in exchange for a portion of the rewards generated by this process. A bit like notaries, validators are paid for their work and distribute these earnings to all users who have participated.
But that is not all. Thanks to DeFi, we can introduce a new level that allows us to make our capital work in a more efficient and profitable way. The limit of the process described up to now is that, once delegated, we no longer have the capital; this reduces our ability to access credit or generate additional income. In order to solve this problem, the so-called were created “liquid staking” protocols, i.e. applications that allow us to delegate our tokens, but at the same time receive a usable receipt within the DeFi world. Thus, it is possible not only to earn rewards from the verification process, but also to retain the ability to apply for loans and adopt more advanced trading strategies.
The combination of blockchain and DeFi opens the door to unexplored opportunities up to now, even if it should be emphasized that the process is still ongoing and will take time: let’s talk about an experimental technology that brings with it risks that should not be ignoredwhich is why it is always a good habit to investigate and verify what you are going to use, even if it might seem like “a bargain.”
Alberto Cuculachi is an entrepreneur, popularizer and university professor in Marketing and Business Development. He has been following the blockchain world since 2013, and in 2021 he founded the YouTube channel DeFi Talks. In the last year, he has reached more than half a million people in over 100 different countries through his channels. Today he is engaged in the creation of training content and tools useful for making the crypto and DeFi world within everyone’s reach.
Alessio Vilmercati is a 22-year-old investor and DeFi enthusiast, with a degree in Business Administration and Management. In 2022 he obtained the certificate in Blockchain Technology & Management at the Blockchain Management School in Rome. Mainly in the DeFi world, Alessio dedicates himself daily to the study of dApps, always looking for new opportunities. A clear supporter of this technology and its future application in the traditional world, he collaborates with the DeFi Talks YouTube channel.
Federico Chironi is a 23-year-old trader and DeFi enthusiast, with a degree in Business Administration; he then chose to continue his studies with a Master in Blockchain Technology & Management at the Blockchain Management School in 2021. He has been studying and investing in the blockchain world, in particular in the DeFi sector, since 2020. Firmly convinced of the innovations that Decentralized Finance will bring over the years to come, he is recently engaging in outreach activities on the matter, in collaboration with the YouTube channel DeFi Talks.
Luigi Travaglini is a popularizer and technical consultant in the cryptocurrency sector. He crosses paths with the crypto world between 2014 and 2015, to then become passionate and never detach himself. He combines his academic career with a long technical study in the blockchain field, so much so that in 2018 he began to offer his training and assistance services.
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