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Bitcoin educator Andreas Antonopoulos says there are risks behind any current method of earning steady income with one\u2019s Bitcoin holdings, but DeFi offers one of the few ways to do so without \u201cgiving your money to other people.\u201d<\/p>\n
In a\u00a0livestream Q&A<\/a>\u00a0on Antonopoulos\u2019 YouTube channel on June 27, he said decentralized finance (DeFi) contracts were one way for Bitcoin (BTC<\/a>) owners to generate\u00a0passive income<\/a>\u00a0without relinquishing custody of their coins. \u201cPassive income\u201d refers to money earned using methods that require little-to-no effort.<\/p>\n According to Antonopoulos, investors could convert their BTC into Ethereum (ETH<\/a>) or a stablecoin like Dai (DAI<\/a>), then lend it out on a platform where the token can earn interest. However, he said carrying out such trades on Ethereum-based platforms was \u201cquite risky\u201d in terms of security, smart contracts with bugs, and the platform itself:<\/p>\n \u201cEthereum may have problems. It may have bugs. The consensus algorithm may have failures. You may have increases in the gas price, which leads to other cascade problems. And all of those things can cause you to lose some or all of your invested capital.\u201d<\/p>\n Lending and borrowing crypto can be a risky bet due to the high volatility of digital currencies, with a large number of\u00a0crypto-backed loans<\/a>\u00a0used for margin trading. However, the volume of these loans reached $8 billion last year, and may continue to attract investors.<\/p>\n Though Antonopoulos mentioned other methods for getting investors\u2019 coins to work for them, nearly every way to do so meant relying on a custodial exchange. The Bitcoin educator said such investments carried the risk of theft or mismanagement.<\/p>\n Bitcoin HODLers, on the other hand, do not earn dividends or interest on their investments \u2014 or anything \u2014 until they finally decide to cash out. Antonopoulos says HODLers hope for appreciation, but \u201cwhat goes up, can come down.\u201d<\/p>\n The Bitcoin educator says the same is true for crypto day traders: \u201cYou can pull your Bitcoin out and convert it, buy 1,000 altcoins, and then watch them crash by 98%.\u201d<\/p>\n Others in the crypto community have commented on creating passive income through DeFi lending. Cointelegraph\u00a0reported in March<\/a>\u00a0that OKEx Director of Financial Markets Lennix Lai said: \u201cThe combination of cryptocurrency and DeFi creates an alternative way for users to earn passive interest that was not possible before.\u201d<\/p>\n Source:\u00a0https:\/\/cointelegraph.com\/news\/andreas-antonopoulos-use-defi-contracts-for-btc-passive-income<\/a>\n
<\/h2>\nHODLing not the only way to earn<\/h2>\n
Antonopoulos not the only DeFi advocate<\/h2>\n