Passive Income:
Passive Income is income that is obtained without carrying out direct physical or intellectual activity constantly or continuously over time.
They are profits generated by various types of assets that, once put to work, produce automatically.
It is for this reason that passive income is so sought after by many investors. It is an ideal way to earn passive monetary income, allowing investors to use their personal time on other activities of their choice.
It consists, in practice, of acquiring or creating an asset (making an investment of capital or time) and putting it into production (generating money automatically).
Passive Income in Traditional Finance:
In Traditional Finance, some of the ways to obtain passive income are through the purchase of Shares that generate Dividends (not all Shares give dividends) and the acquisition of Real Estate that generates Income (for rent). There are also some banking financial products and Investment Funds.
Passive Income in Crypto Finance:
In Crypto Finance you can obtain passive income, among other ways, through the use of Mining, Lending, Farming and Staking.
The example of Staking (Proof of Stake) is very simple to implement and in fact there are various platforms that facilitate this process.
Staking can be done on Exchanges, on specialized Platforms and in Wallets.
In the case of Wallets, there are those that are used to do Stake a single Cryptocurrency, those that have a series of Cryptocurrencies within the same Blockchain, or Wallets that support a wide variety of Cryptocurrencies to do Stake.
Each of the Cryptocurrencies that can be staked has its own technical characteristics: different blocking time, different APR percentage.
Investing in Staking carries its own risks (like all investments). You must always perform the DYOR (which you can read about in another of my already published articles) for each Cryptocurrency in which you intend to invest. Researching and analyzing is very important for an investor (even for experts). Not only do you have to look at the APR percentage (which can decrease at any time after the investment), but you also have to evaluate a whole set of interrelated factors.
Furthermore, as in any investment (even more so in the crypto market) there is the risk of total or partial loss of the money invested. That is why a very popular piece of advice is the one that recommends only investing money that you can afford to lose.
In summary, passive income is a comfortable way to receive regular profits, but not free of financial risks.
Disclaimer: The content of this article cannot be considered as investment advice or financial advice. This post is for informational purposes only.
This article was first published on the Hive Blockchain: How is passive income generated
