Is Passive Income Purely Passive?
Among the different types of incomes we have is passive income. Growing up as a child, I always felt passive income is completely passive that is, judging from the name. I guess I was wrong after all.
In earning passive incomes, there's always some work to be done or some structures to be put in place. The only difference with passive income and other active income sources is that there's a reduction in the work rate. With passive incomes, you don't have to be actively involved in the earning process to earn.
Equally, you cannot just go sleep forever and expect the money to keep rolling in. If the structures or systems being put in place collapse, then there'll be no earning for you. Which is why some checks and balances must always be done to ensure the structures remain productive.
This is where it is often being said that passive income is not purely passive. Let's see some definitions of passive income in order to understand it better.
According to Investopedia, passive income is earnings derived from a rental property, limited partnership, or other enterprise in which a person is not actively involved. As with active income, passive income is usually taxable, but it is often treated differently by the Internal Revenue Service (IRS).
In other words, earnings from rental properties, limited partnerships, or other businesses in which a person is not actively involved are referred to as passive income.
Likewise, Wikipedia defines passive income as the type of income that requires minimal labor to earn and maintain. Here, the earner expends little effort to grow the income or does not materially participate.
Which Income Class Does HIVE Fall Into?
Oftentimes, people rush to conclude that cryptocurrency is a passive income source alone while same classify it under portfolio income alone but that's not completely true. Cryptocurrency Investments fall into all three types of income classes. Meanwhile, the three classes of income are; Passive, Active and Portfolio Incomes. Let's see how crypto (HIVE) investments fall into all three categories.
Narrowing it down to HIVE, we see that depending on your area of preference and specialization, you can earn on HIVE by either being very active, passive or by just adding HIVE to your portfolio.
Content Creation or Blockchain Gaming: This is where Hive (crypto) falls into the active income source. As a content creator or blockchain gamer, being very actively involved is your only gateway to earning some incomes.
Let's look at it this way, if you don't post and make comments here on Hive, there's no way you'll find rewards in your wallet. For the gaming, if you don't play them, I don't think you'll earn either. In this case, we see that activity is the determining factor which gives the boldness to say that crypto isn't just a passive or portfolio income source alone.
Staking, Curating and Delegating: In this aspects and more, crypto serves as a passive income source. To get staking or curation rewards, you basically don't have to do much. Particularly, on the second-layer of Hive, once you have staked, your rewards just keeps rolling in.
For curation rewards, all you need do is just go about upvoting as many high quality contents and comments as you wish while you sit back to receive some incomes. With the use of trails, you may not need to even login on the platform everyday.
Similarly, with delegation rewards, simply click a few buttons to delegate and that's all you ever do but you keep receiving rewards. There are still many other passive ways like providing liquidity to pools.
Buying and Hodling: Here, crypto investments fall in the portfolio income source. Remember, portfolio income is money received from investments, dividends, interest, and capital gains. When you buy crypto assets, they become your investments. When you hodl different assets, it becomes a portfolio. Now, you can always take profits from them by just hodling them and selling at some increased price.
It is just interesting and amazing how we can use cryptocurrency in different ways to still earn incomes. It's left for us to choose where we fit in and enjoy the ride.
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It takes a lot of work to earn passive income.
This type of classification tends to fall apart when one looks at reality.
One could define farming as passive income. I decided to choose farming because I know it involves a great deal of work.
The farmer doesn't actually create plants. Farmers simply drop seeds in soil. The plants do the actual work of growing. The farmer then harvests the crop after it has.
Okay the farmer has to do things like water the soil; pull weeds, chase off magpies and other things to assure the crop is a success.
But the actual production of food happens within the plant. It is not directly produced by the labor of the farmer.
If I put my mind to it, I could probably find a way to dismiss most of the work done in society as passive income.
!BEER
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Great contribution!
There's no income with zero-work. The work might not necessarily be hard labour; it could be you risking your money (Investing), supervision or follow up processes etc. Either way, there has to be some work to be done which in turn propels the earnings.
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I think there are two general principles at work. As you just said:
The second is that income never perfectly reflects the work involved.
Now, lets look at something like a fireman or a security guard. People in these positions spend most of their time on stand by.
There are a few times when they are engaged in extremely dangerous activities.
Attempts to create a dichotomy between passive and active income are bound to fail because this thing called "work" really isn't the foundation of the economy.
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In addition, income earned could be a reflection of one's skill set or the extent/quality of value/solution offered.
What then would you say is the foundation of economy?
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View or trade
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BEER.That's the thing right, income can only become passive once we've worked hard to let it be passive... or risked a lot. And then it need to still be maintained to stay active and/or risk free(ish).
Valid.
The bottom line is that, passive income isn't as passive as some persons perceive it to be. There's always work to be done in earning passively
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