Andreas Antonopoulos, a popular bitcoin proponent and educator is of the view that people may eventually earn some passive income via HODLing BTC, but what that means is that their money isn’t working for them now. “Passive income” refers to money earned using investment methods that require minimal effort.
In a recent livestream Q&A on his YouTube channel, Antonopoulos stated that there are risks behind any current method of earning steady income with one’s BTC holdings. According to him decentralized finance (DeFi) offers one of the few ways to do so without giving your funds to other people.
The bitcoin educator said that investors could convert their BTC into ETH or a stablecoin like DAI, and then lend it out on a platform where the token can earn interest. He however cautioned investors about carrying out such trades on Ethereum-based platforms. He said trading on those platforms was quite risky in terms of security, smart contracts with bugs, and the platform itself.
Antonopoulos stated that:
“Ethereum 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.”
DeFi was not the only method for getting investor’s money to work that was mentioned by Antonopoulos. However, it appeared almost all the other methods he mentioned meant relying on a custodial exchange. He said such investments come along with the risk of theft or mismanagement.
On the other hand, BTC HODLers do not earn any interest on their investments until they finally decide to cash out. According to Antonopoulos, although HODLers hope for appreciation, they should bear in mind that “what goes up can come down”. He also said investors who convert their BTC to altcoins can also watch those altcoins later crash by 98%.