Is Hive a good place to keep our emergency funds
Some people might have a full-time job in the real world and have Hive as their secondary income or a hobby income. They might think that they don't have to take this income to their real-world unless there is a dire need which in most cases can be true. The main income that they get from their primary job can mostly take care of their real-world income needs. In such cases, people might think that having emergency funds on Hive or other crypto-related platforms can be good. I would like to clarify the good and bad aspects of this decision.
Not easily accessible
The first problem with funds on Hive is that the funds are not easily accessible when there is an emergency need. The definition of an emergency fund is that it should be easily accessible and should be withdrawable when there is a need for it.
- Most of the time the funds are either locked in HBD or as Hive Power. This way the funds cannot be taken to the real world.
- The second problem is that even if the funds are liquid, we cannot immediately take the funds to the real world. The reason is that we have to do conversions and find a seller who would be able to exchange it for a good price.
- The third problem is that we have to also consider taxation and stuff like that and only based on the amount of tax, we will be able to calculate the remaining funds that would be available for spending.
Value of the holdings can vary
Based on what we are holding the value of the crypto we are holding can vary. Sometimes the value can be high and sometimes the value can be low based on the market conditions. We might have brought the amount to the crypto world when the value was very good and when there is an emergency need for us and if the value is down because of market conditions, it may not be very useful for us and we would be hesitant to take the money out because it is anyways a loss for us.
In such cases we cannot be free the money we are holding in crypto can be our safe funds or emergency funds. But in a way, we can say that the money we hold as HBD inside the Hive ecosystem is somewhat safe because the price of HBD has been stable for a few years already after the stability was introduced. There have been instances where the entire market had problems but the HBD price was stable. So in a way, we can consider holding some money as emergency funds inside HBD but there again, when we withdraw it, it will initially take 3 days to withdraw and later it would take some more time to go through all the conversions and reach our hand.
Crypto taxes needs to be handled
When we keep this as an emergency fund, we have to also consider taxes when we take the funds out. Different countries have different policies. Every transaction we do is all taxable and when there is a gain for us, we have to pay the taxes accordingly. No matter how many times we get the gain, we have to pay the taxes collectively based on the rules.
Most governments are very clear in saying that the profits are to be shared with them and the loss is all ours. In other investments, there is a consideration for loss. For example, if we are doing an agriculture-based investment, we can submit a loss and we can get some tax amount reduced. This is not the case with crypto-based taxes. I'm not sure about the other countries but at least that is not the case in India. We cannot disclose loss in crypto and reduce the tax.
If you like what I'm doing on Hive, you can vote me as a witness with the links below.
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The tip has been paid for by the We Are Alive Tribe through the earnings on @alive.chat, feel free to swing by our daily chat any time you want.
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Yes I have. Very little but decent enough to pay a part of my internet bill.
Thanks for answer, I will try it to see how it works for me.
$PIZZA slices delivered:
@robertonis(3/15) tipped @bala41288
For me, hive is the only income stream right now. I have a plan to do some business, but currently don't have money to do that. Yes HBD can be perfect choice.
All the best for your next steps. 🙂
Having Hive as the only income source can be very difficult, especially with current prices. I'm going to give you a hand by giving you some HSBI units. That'll give you a permanent/lifetime source of additional income as long as you keep posting. That link has more information about how HSBI works.
Although it'll come from me, consider this a gift on behalf of the FreeCompliments community. 😊
Thanks for the gift, I really appreciate it. I will read the post and see how it could benefit me in my hive journey. Thanks again @freecompliments
Of course I will say here that this is a place where we can put our money and for some time we wait and see all we will have a very good profit because the way we are looking at it as much as we want. As things stand, we don't see it coming down that far.
I am very happy to read that hive ecosystem is not a suitable place to hold emergency fund. Overall, like what you say, the fund is for emergency.
I have seen many posts trying to just so one sided that they only post positive things about hive ecosystem to the extend that some statement I find it very far fetched.
This is a very factual post and definitely a gem to read.
I'm glad that you found the post interesting. Yes we have to see both negative and positive sides.
I really do understand your point but I believe we all know what works best for ourselves. If hive is your major source of income find a way around the cons and if it is not well good for you.
Yeah it differs from person to person.
Your post is very factual and appreciated. Hive works for some people as a source of income or a hobby. It depends on one's location and the cost of living in those localities. I guess for those who uses Hive as a source of income they are grateful and hence can live with the lack of immediate access to their funds. It can not be an emergency source.
It makes a lot of sense, it's not like having an immediate emergency fund, it's quite true.
It can be used to have a secondary fund of money, not so much for an emergency, but more as an insurance fund. The fact that you don't have immediate access is partly a good thing, if a problem arises, and they try to take your funds, you have a window of time to avoid it.