Monday, July 16, 2018

Crypto "Passive Income" - Staking, Masternodes, Dividends

"Passive income", "income investing", "yield investing" are the fashionable investing trend buzzwords of our time.

If you thought that only traditional investors can be blinded by yield and end up completely overlooking fundamentals and only focusing on the yield number, you would be wrong. This sort of irrational thinking exists and runs rampant in the crypto space as well.

The easiest example to give is the notion of Staking and Masternodes (MNs). What the similarities and differences? They are actually extremely similar. In both cases, you "lock up" your crypto and in return you get back a return. It's like a rolling fixed deposit. The difference is that for Masternodes there is usually a substantial minimum amount required, and also hardware and node requirements.

Just why are Masternodes so appealing? Just check out the yield. For the top 10 largest cryptos with masternodes, the annual yield ranges from.... 7% to a mindblowing 1407%.

Of course, if you use your brain for a moment, you realize that who cares if the yield is 1% or 9999% if its all in worthless masternode shitcoins?

And in almost all of the cases, that is exactly what it is. You get a billion % return, but your return are in coins that are rapidly losing their value faster than you can sell them off.

But you know what is funny?

Everyone knows that you CAN run masternodes with 5000% annual ROI, but yet no one does this. Why?

Pretty much everyone who is in crypto have already formed a rational argument against running shitcoin masternodes because of the worthlessness of them, yet strangely a lot of them cannot see that some of the crypto that they own is essentially the same thing.

Which ones, dare I name them?

Sure. NEO and ONT.

They pay out "dividends" in GAS and ONG.


Herpy herpy derpy derp derp.

If you're smart enough to see why 98% of masternode coins are scams, but you don't see how NEO/GAS or ONT/ONG is essentially a rehashed version of the same thing, your logic might not be working properly.

I don't want to shit on NEO too much, because a lot of fanbois own NEO and they are fanatical af, but the hypocrisy for me is painfully laughable when I see NEO/ONT supporters criticize shit masternoders or stakers. To be fair, NEO and ONT *could* be very successful in the future, and that would lead to their crypto becoming valuable, but I wouldn't bet on it. Like, I literally wouldn't bet on it. I own neither.

Honestly, there is nothing wrong with:
- Staking crypto (ARK, QTUM, DCR, etc)
- Masternode crypto (DASH, PIVX, XZC, BLOCK, etc)
- "Dividend" crypto (NEO, ONT, crypto securities, etc)

The key thing though, is that it isn't how much ROI% they payout. It's a question of whether the crypto that they pay out is valuable and useful. Is it digitally scarce and useful that other people would be willing to pay for it? How do they get the crypto to pay the returns? Who actually "pays" the return to the stakers / masternodes / crypto "asset" holders? *gasp* Don't tell me that they are just minting new coins out of thin air to pay these returns!

So, while I myself also like to relish the sick fantasy of being a fatcat rent-seeking passive income asset hoarder, I restrain myself from suffering from YIELD BLINDNESS - a strange disease that blinds yield seekers to the fundamental risks of the crypto that they are blindly chasing.

Of course I am biased and I will now reference my own "yield producing" crypto so that I can illustrate the difference between my genius-insanity and just regular pleb-insanity.

DGD - pays out voters in DGX, which has tangible value, since it is backed and redeemable to gold. The payout is from the fee pool for governing the DAO, which are taxed to general DGX users.

HAV - pays out stabalizers in nUSD, which is collateral backed and redeemable. The payout is from the fee pool for maintaining price stability, which are taxed to general nUSD users.

REP - pays out reporters in ETH. The payout is from the fees for accurate reporting, which are paid by Augur market users.

And some security tokens treat token holders as shareholders and pay them ETH as part of their contract of profit sharing.

Now, the argument that delusional people will bring up is, "Hey, I can sell my GAS for BTC/ETH and then sell it to USD too". And the counter argument to that is...... a secret. Because I've already given enough hints, and that's all I'm going to give. If you can't already see the difference between your regular staking / MN / dividend shitcoin and the ones that I have carefully selected to mention, then you'll never be convinced and think I just have a weak argument.

Honestly, I realized that I can't be bothered trying to teach or explain to people about certain beliefs that are seared onto their hearts. What do I get if I convince them to exit? Do they give me any money from what they would have saved? Naw, I only get blamed and "See look it went up, you're wrong" whenever it goes up.

At the end of the day, the only thing that talks is money. Lots of these "income" coins have serious hype and fanatical supporters. But let's see if owning more and more of coins that no one cares about is going to be valuable, or not. Let's revisit this in a few years time. I'll still be around and in crypto then. What about you?

My final hint is, if you can't explain WHY the ROI of a certain crypto is a certain value, WHERE it comes from and WHO pays for it, then you might be in a serious pickle.

For the "income" crypto that I proudly own and support, I can happily say that if the platform isn't used, I get diddly shit and my investment goes to near zero. But on the flipside, if I am right and it is something that gets adopted and widely used, the payout is gonna be sick.

If your crypto pays you out for no reason, there is a problem.

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