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Understanding Passive Income and How to Create It in 2023

Understanding Passive Income and How to Create It in 2023

If you ever want to stop having to spend hour after hour at your job, you need to acquire some passive income. For many people, the concept of passive income seems new or out of reach. However, thanks to recent developments in the blockchain sector, anyone can now secure passive income sitting at home.

Passive vs Earned Income

The well-known financial author, Robert Kiyosaki, has an excellent explanation of the differences between earned, passive, and portfolio income. In his bestselling book, “Rich Dad Poor Dad” he explains that earned income is money you generate from your actions at that time. Notably, there are times when you leverage both passive and earned income to achieve your goals.

Earned Income

A perfect example of earned income is most people’s jobs. They wake up in the morning go to work and clock in. They are paid for their time or efforts and nothing more. If you were to stop going to work to complete those actions, you would stop receiving pay. This is the main reason why earned income doesn’t lead to financial freedom. It lacks the freedom aspect.

The main advantage of earned income is that it’s very direct and guaranteed for the most part. You work your past hours and you get paid the predetermined amount. For most people, this form of income is their primary source of survival funding. Earned income is also where the majority of people begin to learn money management.

Cons of Earned Income

Imagine if you tried to collect a week’s worth of pay that you never completed. Your boss would look at you like you are crazy. It wouldn’t matter if you had held the job for a few weeks or decades. When you no longer work at an earned income position, your income is no longer produced.

Passive Income 

Passive income can be described as funds you receive due to previous efforts. Passive income will be paid to you regardless of your actions at this moment. One of the most common forms of passive income is rental property.

If your landlord decides to take next week off, your rent will still be due. Passive income is one of the keys to financial freedom because it allows you to spend your time how you like. Every person should consider focusing their efforts on obtaining some form of passive income.

Types of Passive Income

When you first hear of the concept of passive income, it can seem difficult to think of all the different types of ways people are making these funds. However, you are about to learn that there are now more ways than ever to generate passive wealth and secure a brighter financial future.

Real Estate

There are a lot of different ways that you can generate passive income today in the real estate market. Real estate is still considered a staple for wealth generation because people always need a place to live. Notably, it used to be more complicated to secure real estate passive income as you would need to purchase a property and find tenants.

There are so many ways to make passive income by leveraging real estate. Some people specialize in leasing out their land to developers who then pay them over time for the usage. Some builders and agents secure passive returns off of their actions under certain circumstances.

Aside from the obvious of purchasing a rental property, there are now decentralized options such as Airbnb. The great thing about these new options is that you don’t need to purchase the property to Airbnb it. You simply need to get approval from your owner. The Airbnb market varies widely. Consequently, you need to do your research before you dive in.

Crowdfund Real Estate

The last five years have seen an increase in the amount of crowdfunding platforms for real estate purchases. Crowdfunding real estate is gaining in popularity for many reasons. For one, it enables purchasers to diversify their holdings better. Additionally, property management costs are usually incorporated in these ventures. This structure makes them truly managed businesses.

Digital Products

Another great way to secure passive income is through the creation of digital products. Products like eBooks, music, video, and other digital creations can be sold on marketplaces. The great thing about these items is that they only need to be created once and can provide returns forever.

For example, a trainer could take their routine that they charge $100 per month for and convert it into an instructional video. they could then charge less and still earn more. For one, digital products have far more earning potential than earned income. The video could be sold unlimited times and to a global audience, whereas, the trainer is limited by both time and location when discussing in-person sessions.

Residual Income

Some business models integrate forms of residual income. Residual income is a form of passive income. Its payments are made to you by a company as part of your commission for a client. Credit cards and ATMs are both business models that produce residual income.  Residual income is excellent when available, however, in many instances, the employer can terminate your position and escape their payment commitments.

A Managed a Business

A properly managed business is another way that people enjoy passive returns. Of course, most businesses don’t start in this manner and they can take time to staff with the right people you can trust. However, when you have a properly run business or businesses, you are going to secure passive income on another level.

The difference between a passive income business and an earned income business is the structure. In a passive income business scenario, the business has a management staff that handles the day-to-day operation. This structure is ideal because it enables the person to duplicate the scenario.

The thing to remember about a managed business is that everyone has the same 24 hours a day. One person can only put in 24 hours. However, whenever you add more staff, you now leverage the amount of time that can be put into the business over 24 hours. The best-managed business maximizes profits and conducts day-to-day operations with a management staff rather than the owner directly.

Network Marketing

Affiliate or network marketing has been around for a long time. Thereis a huge selection of affiliate and network marketing projects to choose from. These systems work by enabling participants to operate as inbusiness. They can then secure returns from others they sign to their business structure.

Notably, network marketing sometimes gets a bad rap due to the high number of scams and pyramid schemes in this sector. However, several reliable network marketing options teach members helpful skills and leadership strategies. The main thing to remember is that network marketing is not for everyone.


Royalties are another type of passive income that is more common than you think. Royalties are paid to entertainers when their likenesses or creations get used. Every time you hear a song playing in a blockbuster movie, the artist who created the song is getting paid. In most instances, royalties are small payments that add up over time. For example, an actor could receive royalties every time a commercial airs they stared in.

Blockchain-Based Passive Income Streams

The introduction of blockchain technology to the market opened the door for more passive income opportunities. The DeFi (decentralized finance) market focuses on removing centralization and middlemen from the financial equation. The profits are then split between the community via various protocols. Here are the most popular blockchain passive income streams in use today.

Trade Using Trading Bots

Trading crypto can be a great way to secure some returns. However, to up your game significantly, you should consider using a trading bot. These helpful automated protocols make trading crypto easier than ever.

Trading bots are systems that traders can preset to execute trades on their behalf under particular market conditions. For example, you could have a trading bot setup to sell or buy a particular asset if the price fluctuates 10%. There are all types of triggersof these systems today with the most advanced incorporating advanced charting tools and analytics.

Social Trading

Along the same line of thought are social trading platforms.These networks enable you to subscribe to other traders’ actions. This subscription will make your account mimic the traders. As such, you can learn trading strategies and secure returns. Social trading is ideal for new traders. They can earn and learn.


Staking is a great way to secure consistent passive rewards. It’s a far better option than trading for multiple reasons. For one, you don’t have to give up ownership of your asset to stake it. When you stake your coins, you agree to lock them into a smart contract for a predetermined time. Your rewards are paid out at the end of the staking period.

Protocols like META 1 enable users to stake self-appreciating stablecoins to secure passive rewards. These tokens combine the appreciation aspects of gold with value-locking control mechanisms to provide users with higher returns. Notably, networks like META 1 payout your staking rewards in the same tokens so you can add the rewards to your next staking round to improve results moving forward.


Farming is a similar concept but with different parameters. Farming pools don’t have locking requirements or set APYs. They fluctuate throughout the day. As such, yield farmers are known to move their tokens from pool to pool as part of their DeFi strategy.

Peer-to-Peer Lending

The introduction of peer-to-peer lending has got many traders overjoyed. These systems leverage large trading pools to eliminate gatekeepers and empower users. These networks can be set up in a variety of different ways but most pay the lender interest for lending their unused digital assets to the community.

These systems come in huge selections. Some enable the lender to set terms and shop for borrowers. There are also borrower-centric options that make lenders compete for their business. This system ensures that the lender gets repaid by requiring the borrower to over collateralize their loan. This term means that you need to provide more collateral than the amount you need to borrow.

High Yield Savings Accounts

One of the best ways to secure a passive income stream is through the use of a high-yield savings account. The decentralized nature of DeFi protocols like META 1 enables the network to pay out 10% APY versus the national fiat average of 0.03%. These higher payouts make a significant difference when you consider that fiat inflation is at a 30-year high.

Inflation is can be described as a loss of buying power over time. When inflation hits an economy, the prices of goods and services rise. Additionally, savers can find that their holdings have lost value. You must understand the concept of inflation. The inflation rate is now higher than the interest paid on your fiat savings, meaning you are losing money. Switching to a high yields savings account can protect you from further loss.

Earn in the Metaverse

There are some cool ways to secure passive income in the metaverse. One of the most popular options is to become a digital landlord. You can buy and build up properties in the metaverse just like in the real world. Some people are making a living renting out their digital properties with ease.

The cool thing about this approach is that you can build your virtual property to meet particular needs. There are concerts and trade shows venues for rent. There are also luxury homes next to celebrities selling. The main thing to acknowledge is that people are securing returns on their virtual property by renting, leasing, and getting creative in the metaverse. 

Passive Income – It’s in Your Grasp It used to be obtaining passive income was difficult and required funding or a lot of talent. Today, anyone can secure passive income using DeFi protocols like META 1 Coin. These systems were built to empower users and provide a more transparent and fair alternative to the status quo.

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