Blogging is probably the best method of earning online money. But you need dedication, patience and hard work offcourse..
It does not happen overnight. You have to post, post, post and post. Then get your blogs name out there to drive traffic to it. But yes with hard work you can make money by this method. Make sure you host your blog at a decent provider so yo9ur hard work is not lost or have extended downtime and lose traffic which costs you money.
Just choose a niche you'd enjoy writing about, and keep posting daily things that people would return to the site to read. While doing that, do a lot of promoting your posts on all kinds community boards. Once you get about 500 unique visits per day, put ads. If your content is unique and good enough, you'll be earning from it in no time.
Blogging definitely has a lot of potential but you need good traffic for that. On the contrary if you just blog for traffic and not concentrate on quality, you might loose audiences. If you just blog for traffic and not because it's your interest, again you're not going to enjoy it and leave it after some time. Blogging needs passion and patience. If you've both of them, it definitely has a lot of potential.