Hive Backed Dollars Continue To Capture My Passive Income Fascination
The More I Consider HBD
I have written a number of articles in relation to Hive’s Hive Backed Dollar and have even mentioned that HBD was the most solid passive income earner during the course of 2022. As I mentioned, high returns on an asset that is depreciating rapidly doesn’t make a good income earner, and this is the reality of many DeFi tokens. HBD, on the other hand, is designed to represent $1 worth of HIVE and remains well within its “peg”. Momentary moves of a few basis points are inconsequential. Simply hold out for a few days or hours, and the price returns.
Essentially, this creates an excellent income generator and is perfect for those looking to generate a passive income. Risk is always present, so let’s just clarify that before we continue. Any investment or financial instrument carries risk. I have noticed that the majority of investors nowadays choose to rely on the opinions and information of others, rather than spend time doing their own research. This should be the responsibility of each investor. Nobody but you are responsible for your decisions.
Establishing passive income streams during these challenging times is imperative. Anything can happen at any time, which could ultimately disrupt your regular income. Having additional income on hand is a great security to have. If you are not needing to utilize it, you can simply keep compounding the profits. In this way, your monthly passive income is growing over time.
Almost 2% Per Month
Being able to earn 1.66% per month makes HBD a viable option as a serious passive earner. Back in the good old days, this would have been considered a decent annual return from a banking account. This enables investors to actually be able to earn a hefty monthly portion from a fairly modest deposit. Furthermore, compounding returns will see an investment double every 3.5 years, provided monthly interest is reinvested.
Image Source – Calculator.me
That is quite good in terms of battling inflation, at least for now. Even a fairly modest allocation, over time, will go on to experience the mysterious power of compounding. As I say, if you don’t require the additional monthly income, compounding is an excellent idea.
Furthermore, being able to double your investment every 3.5 years enables investors to completely de-risk in this time frame as well. The principal investment can be removed at this stage and put into an alternative investment, while the interest (same amount as the principal) can be left to continue growing. This would all take place without incurring any risk, as the initial investment would be recouped.
Creativity Abounds
This is where creativity is so important and equally powerful. Passive earnings from other mechanisms can be invested into HBD, which would also eliminate risk. I consider passive income risk-free. Why? Well, quite simply, if I am not exchanging my time for it then I am risk-free. What makes failed investments so devastating is that they are often funded via one’s savings and salary. In other words, how can they make up for the years it took to acquire that capital?
On the other hand, if capital is being generated without effort, and while you sleep, what risk is there? Those mechanisms will simply continue to produce as time passes, and if you have designed them well, even increase in their ability to produce. This is the brilliance of passive income, compounding, and continuous diversification and expansion.
If you have not begun to work on investment strategies that incorporate these dynamics, then I believe, you are missing out. This is how wealth is created, outside of privilege and nepotism. In other words, this is how it is truly created. The abovementioned is simply passed on, or “stolen” through legal loopholes.
Final Thoughts
As I have mentioned numerous times, I am looking at HBD as an exit strategy for the next cycle top. I did move significantly into stablecoins in 2021, but for the next peak, I am primarily looking at HBD. I believe that it has the ability to create a passive income stream of significance. Obviously, one requires some decent gains in order to make an allocation of significance.
For me, this is something worth working on and planning towards. As they say, “to each his own”. This is one of my strategies for the next peak, and I enjoy working towards it. Remember, altcoin gains are best captured by a stablecoin, especially one that delivers a passive income on top of it!
Disclaimer
First of all, I am not a financial advisor. All information provided on this website is strictly my own opinion and not financial advice. I do make use of affiliate links. Purchasing or interacting with any third-party company could result in me receiving a commission. In some instances, utilizing an affiliate link can also result in a bonus or discount.
This article was first published on Sapphire Crypto.
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I heard a lot of news about Hive and it was promoted by my friends, I want to explore something new and I think Hive is a new space to learn. Though I heard it's more complicated than read.cash but I think as time goes by, I can understand it's ecosystem.