Passive income as a target in crypto
Say what you want, but in your life, you need to set some goals. Some keep them damn low, others disproportionately high. Someone has no goals and perhaps does not even have an intrinsic motivation to do something extra in addition to what they do.
Cryptocurrencies, crypto, blockchain. As well as in this space, the individual should have some goals. Save for retirement? To buy a Lambo? Or a house? Or to leave something for children? Anything, but you should at least say those goals out loud.
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Goal of my friend - bitcoin accumulation
One of my friends gave me some advice a long time ago, which I then spread.
"Always trade cryptocurrencies in pair with BTC, because you want to accumulate BTC in the final. This is your goal, to have more BTC! You may not be interested in the price against USDT."
Yes, I take this idea for granted for a long time. But my pragmatic approach decided to reformulate it. I have found that my friend has no real goals. With no timeline specified.
"To have as many bitcoins as possible. When only bitcoins are paid in the world, dollars will be irrelevant." This is the goal of my friend. And with respect to my friend, I don't think its a good goal. If we thought x years ago that adoption would be necessary for 2018 ... we are disappointed. If we look at 2025 now ... I think we will also be disappointed. Who knows which generation will receive some such level of adoption at all. Only bitcoin, no cash. Nice idea indeed, but not realistic.
Another friend of mine recently convinced me that "bitcoin must be used, there must be adoption from ourselves". In other words, to use cryptocurrencies for payments, in your daily life.
Yes, it's not a misconception. Everyone should start with themselves. I've been using cryptocurrencies in my life, but I am not using it in my grocery store. Because they don't care about crypto. So adoption from my side is not enough. My penny is not here for mass adoption.
It must come with quality infrastructure and the benefits of using cryptocurrencies, such as the speed and finality of transactions and low transaction costs.
Yes, I'm a bit of a pragmatist and a bit of a price speculator, I know that. This is not to say that I do not trust cryptocurrencies, blockchain, and their ideas. On the contrary, I believe and support it, but on the other hand, I would like to use my experiences to get some profits.
Does bitcoin for me have expensive transactions? Yes, it has. So whether it is cheaper or another coin comes, which will have them cheaper and will be used by the mainstream. Is the crypto volatile? Yes, it is. So let's use stablecoins.
Beautiful vision of bitcoin
Yeah, it's a beautiful vision. Central banks have bought thousands of bitcoins in reserves, in restaurants, cafes, shops, grocery stores, e-shops, all goods are sold for bitcoins. Grandmothers send bitcoins to their grandchildren "to spend", bitcoin is the king!
My friend I mentioned before has had this vision for several years, and I must say that it does not look like this beautiful vision of bitcoin.
One reason is that bitcoin will lose drive over time. There is already a pile of faster (PoS, DPoS, DAG), safer (some types of PoS) coins with dramatically lower transaction fees (some are even free!), and faster block finality. In addition, as bitcoin inflation declines, the price of 51% of the attack will fall, unless its price increases dramatically. In contrast, with PoS coins, with the greater adoption and distribution of coins among global investors, this cost of attack increases.
Then there is the threat of centralized mining (see Chinese mining pools dominance) and, in my opinion, a blind branch focused on microtransactions known as the Lightning network (I hope I will be wrong with that later on...).
Last but not least, there is the volatility of bitcoin and its cycles. Why would anyone pay for an asset that could be 5% more valuable? On the other hand, when you see the price falling during the bear market, maybe lasting several years, would you really want to spend it, or you better wait until it grows again, perhaps above the purchasing price?
The volatility of cryptocurrencies is insane and, in fact, no one can accurately predict where prices will go. If up or down. There are a lot of theories about this, and it's up to everyone they believe, or rather what they give the probability to them. But it's best not to risk too much that the price will go in the opposite direction than we want.
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Passive income in DeFi
Nowadays, when there are DeFi products on the market guaranteeing a reward for lending your cryptocurrencies between 2% -10%, isn't it better to let your crypto work for you? Yes, you can also lend your bitcoin through a smart contract. So you can enjoy the interest and the number of BTC will remain the same as in the beginning. True, it has its risks involved.
I do not deny that I like the idea of decentralized finances. Without an intermediary, a large bank that cuts its slice. Only thanks to a computer algorithm can you borrow money or, conversely, save some of your own, for the interest that is controlled by the MARKET, and not by the will of the bankers.
Conclusion - so what are my goals?
Finally, I come to the main idea of this article. That is, what goal to choose in crypto space.
My pragmatic goal is to multiply the value of cryptocurrencies expressed in USD, due to my activity. And then use these cryptocurrencies, for example, in DeFi products (or some CeFi products, ie partially centralized finances, which are, however, relatively independent, but with some custody).
Having a nice passive income in the future is my goal. Thanks to it, I can gain personal financial freedom. Not to be dependent on the employer or on your performance as a self-employed person. Not to be dependent on government pension policy and on politicians in general. They can screw things very quickly, most of them are not economic experts. I would like to be independent on whether the second wave of Covid-19, or the third and fourth, or Covid-20 will come in the future.
You can diversify DeFi products not only by combining platforms (Compound, Synthetix, Nexo, etc.), but also by differentiating selected cryptocurrencies. You can have a part in USDT, something in DAI, even in BTC, ADA, ALGO, LINK, or other promising cryptocurrencies. Thanks to PAX Gold, you can also diversify into gold (or into its price - if you don't mind that you don't have golden bricks at home under your pillow or in a depository, but only as ones and zeros in your computer). And those possibilities are increasing daily.
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The idea of "buying something for crypto", such as the mentioned Lamborghini, is short-sighted. If you give all your crypto-savings for Lambo, what then? Will you have enough money for gas and services?
Passive income, that's what's going on here. You can also read it in the books of Robert Kiyosaki, author of Rich Dad, Poor Dad. Generating passive income is important for anyone who wants to free themselves financially.
Therefore, I will continue to create content, continuing education, look for hidden gems, and investment opportunities. Therefore, I will research DeFi products and read their reviews, look for weaknesses, and try to eliminate them.
I will continue to educate others, give others instructions, guidance, or perhaps just pass on information that I have researched during my studies.
I don't always have accurate information and I may be wrong. I honestly admit that I was wrong many times in crypto and as well in my outside crypto life. But I already have some experience and that's why I write this article.
And what about you? What are your goals in the crypto sphere? Do you have any vision, your plan that you follow? Or do you leave everything to your intuition?