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Passive income is money generated from ventures in which an individual is not actively involved. For the most part, all you need to do is invest your money or digital assets in a particular crypto investment strategy or platform and watch it generate profit. In some cases, the earnings are fixed and predictable. In others, several factors beyond your control may come into play. A typical way many try to make a return in crypto with little to no involvement is through buying and holding crypto – also known in the industry as "HODLing." This means an investor is prepared to purchase a digital asset with the mindset that its price will hopefully rise significantly sometime in the future. Such investors are ready to go the distance as this long-term strategy might require them to hold their positions anywhere between six months to five years. Through the duration of this investment, an investor does not have to be proactive in the crypto market. They only need to buy the digital asset and store it in a secure wallet – preferably a non-custodial wallet. A wallet is a device or app where you can store a special key (private key) that gives access to your cryptocurrencies. The non-custodial variants let you store the private key in your personal devices, including a computer, mobile phone or purpose-built wallet devices. With this, you have complete control over your private keys and, ultimately, your digital assets. By comparison, with a custodial wallet, a third party controls your private keys. However, simply buying and holding a crypto asset for any length of time does not guarantee you will make a profit. In fact, it's very possible you could lose money. As such, exclusively HODLing crypto cannot be considered a truly passive income generator.
Source: coindesk.com