Tezos, Neo and EOS for passive income generation
The Passive Income Agenda
Some people are investing in crypto because they hope to sell it later for fiat or for Bitcoin. This class of investors is mostly fueled by short term speculation because the only way to make a profit from volatility is to rely on technical analysis and other methods which favor a speculator mind set. Leverage which from some places I hear is as high as 100x further pushes this kind of trading. This agenda is the opposite agenda from what I'll call the passive income agenda.
The passive income agenda is a different set of priorities where investors in some cases buy for a lifetime hold. Holding for life is something unthinkable in the crypto space right now but this is very common in real estate, stocks, and other spaces. Institutional investors like to invest in assets which pay dividends because retired people rely on those dividends for income. In addition, young people who wish to take advantage of compounding will also benefit from what is called dividend growth investing. Dividend growth investing is essentially picking stocks which are expected to grow in value over time and increase dividend yield over time.
Tezos, Neo and EOS are some of the first crypto assets which will reward holders just for holding it. This is a completely new paradigm in the crypto space and I think it is this paradigm which will create the next big bull rush or "gold rush" moment in the cryptosphere. Let me also make it known in this disclosure that I hold one of these cryptos for the long term.
Tezos will be paying over 5% interest (yield) to anyone who bakes. Baking is in essence like staking in Proof of Stake where in exchange for helping to secure the network you get rewarded Tezzies (Tezos tokens). In order to bake and get maximum reward you must have 1 roll worth of Tezzies. A roll currently goes for $19,500 and is around 10,000 Tezzies. But you can also delegate and earn a reward which means even people who don't have enough to bake on their own can pool their stakes and be rewarded. This means from what I can see so far there isn't a lower limit or barrier to entry for anyone who wants to get some of the 5% interest and that is a big deal.
The more people who follow through and either delegate or bake their Tezzies the more the token gets locked up. This is similar to EOS or Steem. Steem on the other hand last I checked was paying around 10% interest so Steem is still the better deal but Tezos token price appreciation has more room to grow in the long term. EOS and Tezos in my opinion are the two main "Ethereum Killers" in competition right now while Neo in my opinion from a technological perspective is not as sophisticated.
Tezos is Proof of Stake from the start (unlike Ethereum) which gives it the ability to scale. Tezos also has a self amending ledger so they can adopt all the best features of EOS. EOS is focusing on performance and scalability from the start but has sacrificed decentralization. Whether this sacrifice puts EOS in danger is yet unknown. Will EOS become a security because of that centralization? In my opinion the centralization may or may not be a problem but currently it's not looking good for EOS.
From an investor point of view if the goal is passive income then any of these three tokens will pay a percentage which resembles a dividend to holders. This incentive is why I do not sell Steem (and hopefully never have to). The ability in essence to get "rent" from crypto puts crypto on par with real estate and stocks. The size of the real estate market is estimated to be over 4000 billion by 2025. If we think of crypto as a kind of digial real estate then the cash flow seeking strategy can begin to make sense.
Those who have more cash flow from their investments can reinvest to buy more digital real estate or diversify to buy more assets over time. In addition they are possible tax advantages. If it turns out that the IRS does see it like a dividend then it's possible we could get the dividend tax rare. If it's not seen like a dividend then it's the income tax rate. It's currently unknown how they'll be treated but I would say even if it's treated as income it still is income can be used to buy more tax efficient assets such as stocks and real estate.
Nothing in my post should be considered investment advice. If you do want passive income and you have spoken to an official financial adviser or if you have the ability to speak to one then ask them about these three sources. The benefit of passive income is that it can provide a stable source of income in the bear markets and as things go into the bull market it will provide a stable source of income which can be used to invest elsewhere. From my perspective it's a win/win long term strategy but it's also a strategy which requires patience. When Bitcoin goes up to $50,000 a lot of people will want to sell all their income generating assets but in the long term Bitcoin only spends maybe a month or two in those high prices before it comes back down and unless the amount of Bitcoin is extremely significant it might not actually make the most sense long term. Fact is, Bitcoin does not pay a dividend, or interest, or yield, and you cannot extract any kind of rent unless you're a miner. Tezos, EOS, Neo, let everyone participate.
See here to learn how the delegate system of Tezos works:
- https://www.cryptodelegate.com/
- https://medium.com/@bakechain/baking-on-tezos-34d952d79c9d
- https://medium.com/@Njord/tezos-in-a-dividend-income-portfolio-cd1107221ab3
To buy:
An interest payout is essential when a cryptocurrency has a significant inflation policy. Otherwise, you're position is worth less over time (unless the token appreciates considerably in the marketplace).
Bitcoin is something fundamentally different since it will be deflationary once it hits the 21M issuance. Then its value could mimic the behavior of gold ... where if 1 BTC buys a house today then 1 BTC continues to buy a house 50 years from now.
Eventually, BTC would not be about shorter-term speculative returns, but about storing value.
In choosing the alternatives with inflationary models, you need to consider how much that inflation rate can be gamed. Who can change it? How easy is it to change? Could the community choose to change it to keep it's value "stable" (compared to some peg like USD)?
Regarding EOS, my understanding was your tokens can be auctioned off if your account has no activity for 3 years. That undercuts a long-term buy-and-hold strategy.
I'm not sure anyone should buy-and-hold huge amounts of any crypto unless they are willing to pay attention to events around that crypto project.
I hold Steem and Steem price can be gamed but Steem also can be locked up. Same is true with Tezos which has a very similar DPOS consensus. The reason to hold for the long term is if you think the crypto is undervalued. If you see the prices of these cryptos going up within the next year or next 5 years then selling it means you take on opportunity cost. There isn't going to be any interest in holding fiat, and stocks are in a bubble. Real estate is good if you have millions of dollars but you take a risk with that too because that can collapse.
So the options are over priced stocks, a real estate market which could collapse if there is a recession, or cryptos. What do you know of which has as much potential for growth and which pays interest?
What do you think of this spreadsheet? https://www.reddit.com/r/tezos/comments/8wk57z/tezos_baking_income_scenarios/
upvote for me please? https://steemit.com/news/@bible.com/2sysip
Neo is a great platform. I buy NEO. When the price was increase?
Neo is a great
Platform. I buy NEO. When
The price was increase?
- mintu1319
I'm a bot. I detect haiku.
When the price was increase?
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Really?
If Steem Power can pay your living expenses indefinitely why would you sell it? Steem has a lot of room for growth with minimal competition. Steem Power can be delegated for curation and get you 10%+ annual interest on it. Why would you sell something which you can rent out indefinitely?
I suppose diversification? If Steem goes to $50 or $100? But even then why ever sell all of it? As long as the platform is growing, building new features, and demand exists for the Steem token?
I try to move a % of my STEEM income every couple of months just to diversify, my STEEM always increases faster than my other hodling, i like to keep my portfolio balanced and diversified... I don't take out the profit to fiat though, that would be a step backwards
Cash flow positive and assets which outweigh liabilities. Debt is the enemy. Credit for the most part scams us into debt. Diversification is a method of risk management.
The challenge is building a passive income generating portfolio. This portfolio if it can be built via crypto will become a common wealth building strategy provided enough people manage to build such a portfolio and reveal how they did it. Instead of mining, people can just know which tokens to buy and hold.
Of course crypto is extremely volatile so I think a well made portfolio would not keep the majority of assets in crypto form. Crypto are the high risk high reward assets which appeal to the younger generations and to demographics in poverty looking for a way up.
I've been meaning to get into the stock market dividends to diversify even more, the problem is that in my country it's harder to get into it then it is for example in america...
I'm 24 years and still studying so i'm one of those younger generations that can go for the high risk high reward assets, my plan atm is getting 10k into cryptos and after that get another 10k into stocks, i might also try some lending platform or something like etoro which i can copy trade other traders... after those 20k i really don't know, i'll think about it when i get there, it's not much money but it's all i can spare
Look into Vechain Thor, it's also going to provide passive income in the form of Thor, one of the biggest investors that i know has invested and is very bullish on it Jim Breyer, Vechain has connections to some of the biggest companies in the world like PwC, Dnv, etc... it's already being used in some companies and others are going to use it, the concept is amazing and the mainnet launch is happening atm, already launched but the tokens still need to migrate, etc...! I just wish i had more money to put into it tbh.
I'm also a big believer in passive income, in cryptos my main passive income coins are STEEM, EOS, VeChain, Steelar(1% inflation every year), i'm trying to increase my Vechain atm and after it i'll either go for NEO or get 1000 SmartCash (it's very cheap atm).
dana, Have your heard of Boscoin? very similar to the projects you just mentioned!
I have heard of it but I'm not very familiar with it. It looks interesting though.
I'd love to see an exploration of some other coins that do this. The introduction to both Tezos and Neo were new to me. Are you familiar with Cloak? I snagged some at a good bargain for a privacy coin during the last downturn.
I prefer only Enigma for privacy platform.
I'm picking up some Enigma after doing a little research about it. Thanks for the info.