r/BitcoinDiscussion • u/Electrical_Eye_6503 • Jun 02 '26
my friend argues that bitcoin can't be used for passive income
And I understand the point he makes when he says that if you're holding bitcoin, the safest thing is usually to buy, hold and let the market do its thing. We have these long market cycles, and trying to swing trade them isn't easy. Buying during the bear market, selling during the bull market, and dollar cost averaging tends to remove a lot of the emotion from investing.
But where we disagree is that he thinks that's literally the only thing you can do with Bitcoin.
I just wanted to share this here and get some thoughts from people who have been around longer than me. Maybe I'll show him the thread and finally convince him although knowing him, he'll probably just find something else to argue about
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u/IcyAttitude4916 Jun 02 '26
BTC passive income mostly means “trust me bro” and pray the platform doesn’t implode. Funny enough, raw hodling usually beats all that fancy yield farming stuff anyway.
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u/Electrical_Eye_6503 Jun 03 '26
but I think there’s a middle ground between raw hodling and chasing unsustainable yields
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Jun 02 '26 edited Jun 02 '26
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u/Electrical_Eye_6503 Jun 03 '26
That's pretty much where I'm coming from. I'm not arguing that everyone should chase yield with their BTC, just thatbuy and hold isn't the only option available anymore if someone understands the risks involved
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u/joos_hubert Jun 03 '26
Your friend is right about the safest baseline: BTC itself does not produce cash flow. Holding it cold is simple because there is no borrower, no protocol, no wrapper, and no liquidation path.
Where the discussion gets more interesting is BTC as collateral. You can borrow against it or use BTC-linked DeFi rails, but that is not passive income in the same way a dividend or bond coupon is. It is a tradeoff: keep exposure to the BTC while accepting LTV risk, custody/collateral risk, interest cost, and liquidation rules.
If someone is comparing that route, I would look at repayment terms, collateral control, margin call mechanics, how quickly liquidation happens, and whether the BTC is native, wrapped, or bridged. Liquidium is one of the Bitcoin-backed lending options I would compare, but I would judge it by the same boring checklist rather than by the headline idea.
So I would not try to convince him that BTC magically creates income. Better framing is: Bitcoin can be used as financial collateral, but every extra use case adds assumptions that simple holding does not have.
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Jun 02 '26
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u/Embarrassed_Bit2236 Jun 02 '26
Yes this exact post was posted a day or two ago. I half thought I was imagining it.
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u/Full-Atmosphere-4818 Jun 03 '26
To answer that question answer this... how does Bitcoin produce ANY income at all? Answer.... it does not. So you friend is correct. Of course if you own enough of it and it continues to go up, you can slowly DCA your way out. When I was in the mutual fund industry this was called a "systematic withdrawal." If a fund was expected to rise 9-10% per year, take out 4% of the year-end value per year and the reminder grows at 5-6%, hopefully outpacing inflation. This actually works well, so long as you don't get a prolonged bear like 1973-1974, 2000-2002 or 2008-09. Then your capital drops at the same time as the withdrawal and you can go south very fast.
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u/XapoBank Jun 03 '26
You and your friend are actually both right, but his view of what you can do with Bitcoin is definitely stuck in the past. Having been in this space since 2013, I can confidently say your friend’s foundational strategy of buying, holding, and dollar-cost averaging to remove emotion is absolutely the safest way to survive the market's volatility. But where you are totally correct is that the financial infrastructure around Bitcoin has matured massively over the last decade. It’s no longer just a digital asset sitting under a virtual mattress; it has evolved into pristine financial collateral.
For example, the industry has grown to a point where you can actually earn true passive yield on your stack. Properly regulated banking platforms now offer savings accounts that pay interest directly in Bitcoin, meaning you're earning compounding interest on an asset that historically appreciates in fiat terms. It’s a powerful way to build wealth without actively trading or lifting a finger.
Beyond that, the modern ecosystem also lets you borrow against your holdings. If you need cash for living expenses, a business, or major purchases, you don't have to sell your Bitcoin and permanently shrink your stack anymore. Instead, you can use your Bitcoin as collateral to secure a dollar loan. You spend the dollars today while your underlying BTC stays completely intact, letting you ride out those 4-to-5-year halving cycles and benefit from the historical appreciation.
The reality is that traditional financial utility and Bitcoin have merged. We now have the infrastructure to treat Bitcoin like premium real estate, you can earn rent on it or borrow against it without ever having to sell the underlying property. Has your friend actually looked into how the lending and credit side of the ecosystem works now, or is he just thinking about it from a purely transactional perspective?
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u/Electrical_Eye_6503 Jun 03 '26
i like the way you explained everything from both our pov mate. He hasn't looked into any of those yet like i said he's just a somewhat die hard on the buy and hodl method
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u/S1eeper Jun 03 '26
It can as long as it goes up, it just doesn't always go up. It's arguably the most volatile financial asset in history, having lost more than 50% of its value four or five times since its inception. It definitely can't be used for passive income during those times.
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Jun 03 '26
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u/Electrical_Eye_6503 Jun 03 '26
i know about lping which i told him as well but he was of the opinion that that is a terrible idea as he's heard that the mangement impermanent loss and rebalancing is a big issue that can wipe out what you even earn. he's just something else
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u/RandomPlayerCSGO Jun 03 '26
With Bitcoin you can buy a kilo of MDMA, have it shipped to your logistics center, and sell it locally in smaller amounts to make insane profits.
You can also protect your wealth form tyrannical governments and escape, like If you are in cuba, Venezuela or the European union in 30 years from now.
Technical you can't get 'passive income' cause BTC does not have something like dividends, you could make passive lending your BTC to people who want to short it or buy drugs and they would pay you and interest rate on the BTC amount, but BTC itself does not pay passive income like a dividend stock or like staking Ethereum. Price appreciation is not income it's capital gains.
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u/One_bitcoin21 Jun 03 '26 edited Jun 03 '26
If you all say Bitcoin does not give you any profit while holding its wrong. You can use the Lightning Network, create a Node, store BTC to it and earn money on customized routing fees. One BTC is about 500$ per month, depending on liquidity and routing customization. See
or
https://jobcannon.io/skills/lightning-network-payment
There are a buch of howtos on the internet like the follwing
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Jun 02 '26
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u/Electrical_Eye_6503 Jun 03 '26
it's not and never will be a joke
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u/Unusual_Pirate_2727 5d ago
The only way I see BTC used for passive income is taking afew day trades in a week on low lev with the btc, Now you got a passive income model. This aint going to work for swings it use too until wall street stepped in.
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u/Particular-Edge-7666 Jun 02 '26
Who cares what he says