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If youâve taken even the slightest step into the world of cryptocurrency as of late, itâs likely that youâve heard of the term âHODLâ. This term was coined by cryptocurrency users back in 2013 and has since become a staple in the jargon-fueled talk of crypto investors. However, while itâs been around for around 5 years now, there are still plenty of interested parties who donât understand just how powerful this technique can be. Thankfully, a guide to HODL by eToro is here to help. Weâve summarized everything you need to know:
Picture: hackernoon.com/bitcoins-final-boss-22e2a52f9c7d
What Does âHODLâ Mean Exactly?
We will start our guide with the simplistic definition of what HODL actually means; initially a typo, this word essentially refers to the act of âholdingâ cryptocurrencies. If you hodl then you believe that your coin will be profitable at some point, whether that is today or in the future and as a result, you hold onto the cryptocurrency instead of selling it on, due to the predicted value it will hold in the future. This has become particularly popular when handling cryptocurrencies, especially Bitcoin, but tends to be used across different competing coins.
The term HODL made its debut back in 2013, when a member of a crypto-related forum wrote about holding onto his cryptocurrencies, even though the markets were failing at the time. The user however, misspent holding and put hodling instead, which was quickly coined as a popular new term. It even evolved into a backronymââââhold on (for) dear lifeâ.
Why Should IÂ HODL?
For those looking to invest just to get involved but donât necessarily have the enthusiasm or time to partake in the fast-paced market fully, hodling can be a great way to dip your toes in. It can also prove beneficial for those that arenât particularly confident in investing, or have limited technical analysis ability.
Alternatively, it is worth hodling if you truly have belief and confidence that your investment choices could result in long term successes if you bide your time. However, this isnât necessarily the best reason. While it could prove beneficial if you set yourself limits and targets, it also risks you losing money if the coin was to crash. For Bitcoin, this is particularly rife.
December 2017 saw an increase in Bitcoinâs exchange rates and overall price, reaching a whopping $20,000 per coin and, as a result, broke records. This triggered countless predictions from Bitcoin fanatics regarding the price in the future. Unfortunately, the anticipated future and strong hopes for Bitcoin proved incorrect thus far, as the price dropped significantly by half over the following month, causing investors to not only lose thousands, but completely reconsider their attitude towards cryptocurrency as a whole.
The Bear Case For Bitcoin
Bears in the industry, or those with a belief that Bitcoin (and other cryptocurrency) future is limited, more commonly tend to be those that will trade fast to make a profitâââif they get involved at all. After all, with Bitcoinâs current price subject to a number of factors, many things about this cryptocurrency are unknown.
Whatâs more, due to the amount of scandals and hacks that have shaken the industry, it has left the reputation of Bitcoin as a place of criminal activity and this continues to be a common strain of thought. Added criticizing pressure from economists and regulators on platforms across the globe have not helped Bitcoin to sit in a good light and from this, has caused countless governments to pay attention and start to introduce bans and regulation.
Even positive news regarding Bitcoin includes underlining scepticism; take the incident when the transaction fees price dropped for Bitcoin, for example. This theoretically is good news, however due to the distrust of regulators and economists, there hasnât been much positive surrounding it. For this reason, hodling can seem like a foolâs game. Despite the potential it holds, it also risks the loss of your entire investment should something go wrong and this isnât a risk that some investors are willing to take.
The Bitcoin Bull Case
The âbullsâ in the industry, however, are much more likely to hodl thanks to a more positive attitude towards Bitcoinâs future. In fact, the entire case is based upon patience that the price will rise to incredible heights againâââafter all, if it can do it once, why not again?
In fact, the general argument seems to be that the price will just keep rising in the future. The limited supply of coins means that itâll just keep getting more and more valuable. Though itâs still a niche subject, the interest is growing, and for this reason, it could see a spike in not only attention, but adoption too. For this reason, these âbullâ investors may be holding onto the coins in order to better prepare themselves for the future.
Hodling Alternatives
While it has been proven that long-term hodling does pay off and provide the best return, even with the likes of Bitcoin which is currently seen as quite volatile. A lot of people havenât given hodling a chance, but many others have seen that HODL is a valuable method and always has been, however, there are a number of alternatives that you could consider for a profitable trade.
For those who are not keen, there are similar possibilities that will either be greeted with disapproval or excitement, these are BUIDL and SPEDN.
For a valuable and usable blockchain, stuff needs to be built upon it. With recent figures showing that the blockchain community has fallen short in regards to payment, this is a clear indication that BUIDL would be beneficial.
So, what does SPEDN mean? In order for Bitcoin to be beneficial to us, we actually need to spend it to buy things. Therefore, it suggests that in the real-world we need ways for us to be able to use actually cryptocurrencies, so they become useful.
As you can see, HODL has a lot of power that you may not have initially anticipated. Therefore, take your time researching the cryptocurrency term before you decide whether it is for you or not, as well as before you make your initial dive into it.
The Power Of HODL: A Ultimate Guide was originally published in Hacker Noon on Medium, where people are continuing the conversation by highlighting and responding to this story.
Disclaimer
The views and opinions expressed in this article are solely those of the authors and do not reflect the views of Bitcoin Insider. Every investment and trading move involves risk - this is especially true for cryptocurrencies given their volatility. We strongly advise our readers to conduct their own research when making a decision.