Competition - Passive income

The Problem with Bitcoin This guide is for those that got caught up in the excitement of the recent crypto bull-runs which took place in the midst of the global pandemic. Maybe you bought some Bitcoin or Ethereum over the past 2 years and watched your holdings grow rapidly, only for the price to recently come back down to earth.Many people own Bitcoin, but very few of us are aware of how easy it is to earn interest on this asset. You don’t have to leave it dormant on a central crypto exchange making nothing!This week I will be looking at the Harmony blockchain which is one of the cheapest and easiest ways to earn interest on your crypto assets. And you won’t need a PhD in Blockchain technology to figure it out!The Harmony Blockchain Harmony is one of the smaller and less well known blockchains among the group of so-called “Ethereum killers” which provide much cheaper and faster transactions for DeFi and NFT-based applications. You can look at my previous article on stablecoins to see a quick overview of these other blockchains.According to reports, Harmony is able to achieve rates of 2,000 transactions per second (similar to the Visa network), and the fees are extremely low, typically costing fractions of a cent per transaction.At a very high level, Harmony is able to achieve this performance through two main technologies: Proof of Stake and Sharding. (Note: variations of these technologies have also been used in other blockchains, so this is not 100% unique to Harmony).Proof of Stake is a mechanism for validating and securing blockchain transactions via the coins which users “stake”. Staking is a bit like locking up your coins in a bank deposit which cannot be withdrawn immediately or without incurring a fee. The proof of stake verification process is more complex but does not require as much computational power and energy resources as traditional “proof of work” solutions like Bitcoin.Sharding means that the blockchain network is split up into smaller partitions or sections. On Harmony multiple shards are able to process transactions simultaneously or “in parallel” which also improves the blockchain’s speed and efficiency. Not to mentioned Harmony is not affected by short squeeze, which is a big problem for companies like AMC and Apple.As shown in the screenshot below, Harmony is currently ranked 15th by total value locked or TVL with a total of $767.84m worth of assets deposited in the ecosystem. While this figure sounds impressive, it pales in comparison to the top 5 blockchains with Ethereum at the top with over $100 billion in assets, to Solana at almost $7 billion. If we dive deeper and look at which apps on the Harmony blockchain have attracted the most capital, we see that the DeFi Kingdoms, a play-to-earn GameFi app is by far the most dominant with just over $320 million in TVL. I will be covering GameFi and DeFi Kingdoms in later weeks to explain the risks and opportunities of this new subsector within crypto. But ranked at number 2 (and circled in red) is Tranquil Finance, a lending and borrowing money market app with almost $223 million in TVL. This is where we can deposit and lend out Bitcoin, and earn just over 9% (at the time of writing). Let’s go through exactly how to do this in the next section. How to use Tranquil Finance Step 1: Convert your Bitcoin (BTC) to Harmony’s ONE token.The first step is to temporarily convert Bitcoin to Harmony’s native ONE token. While this is not the most elegant solution, there is currently no way to simply transfer from a centralised exchange to a decentralised web3 wallet in one step.Last month Harmony launched a special direct BTC “bridge” which allows you to transfer Bitcoin directly if you hold it in a non-custodial wallet (not on an exchange). But this bridge solution is still in beta. I have never used it myself so if you decide to try it, make sure you test it first with a small trial amount.Step 2: Setup Harmony Web3 Wallet with Metamask Metamask is the most trusted and widely used web3 wallet across a number of blockchains including Ethereum, Polygon, Avalance, BSC and others. It is also the main wallet used in the Harmony ecosystem.