The rapid rise of cryptocurrency as an innovative asset class and an alternative investment has created a whole new ecosystem with its own rules, principles, culture, and terminology. Navigating the crypto sphere can feel like wandering through a labyrinth, not only due to the complexity and innovative nature of this newly-emerged form of money with its roots in blockchain technology but also because of all the weird terms that form the crypto lingo.
Crypto enthusiasts seem to speak a language of their own that even seasoned stakeholders can have difficulties understanding. So, if you want to join the cryptoverse and learn the ins and outs of the industry, getting familiarized with the terms and phrases that populate this space is an absolute must. Understanding the meaning behind these strange-sounding words will help you communicate better with other people interested in the field, avoid potential misunderstandings that can lead to unpleasant outcomes on the one hand, and boost your crypto proficiency on the other.
So, how about beginning your jargon-learning journey with the term that has become one of the biggest buzzwords in the cryptocurrency sphere and has given rise to an entire philosophy embraced by a large number of crypto investors? We’re obviously talking about HODL.
How HODL turned into a crypto trademark – it’s kind of a funny story
For someone hearing about HODL for the first time, the term doesn’t make any sense at all, as it could mean anything. That’s until they learn of its unusual and quite humorous origins. The word was first used back in 2013 on the Bitcointalk forum, at a time when Bitcoin was going through a bit of a rough patch.
On this platform, user GamerKyuubi shared a short and slightly inebriated post titled I AM HODLING. He talked about his poor crypto trading skills and how that was the reason why he was holding his Bitcoins. According to GamerKyuubi, the best strategy for those who can’t accurately predict market movements is to hold their assets, as only versed traders can afford to sell in a bear market and make money out of it. Everyone else should just follow his lead.
So, HODL comes from a simple spelling mistake that the author of the post tried to fix twice, as he mentions in the beginning, but could not, given his intoxicated state. The comical language and tone GamerKyuubi used, as well as the spelling errors that riddled the text, turned the post into an internet sensation. Shortly after the message was posted, the term HODL traveled around the world and became an instant meme.
The humorous expression caught on and entered the vocabulary of crypto traders everywhere. At one point, HODL took a life of its own and became associated with the phrase hold on for dear life – which makes sense considering the trading approach it alludes to. Due to its intense use, people lost track of its origins and forgot that its etymology came from a misspelling of the word hold. In fact, that ceased to be important – HODL was already an established trading strategy, and that’s everything crypto enthusiasts needed to know.
Is HODL a viable approach?
Now that we’ve shed some light on the history and evolution of HODL let’s talk about its potential as an investment strategy. It’s pretty obvious from the very meaning of the word that HODL references to a rather basic investing method that implies buying assets and holding onto them for an indefinite period. It’s a tactic adopted by many crypto users, especially those who lack trading experience or deep crypto knowledge when investing in Bitcoin or any other cryptocurrency.
For most people, HODL represents the easiest and most reliable way to protect their investment and ensure positive outcomes in a relatively new market that’s known for its unpredictability and volatility. Even if you keep up with all the trends and developments in the market, it’s literally impossible to predict what’s going to happen next. No one really knows how much longer Bitcoin is going to maintain its supremacy, if the Ethereum price will go up or down in the months to come, or what other coin is going to rise to prominence next. With so many questions and so few answers, a lot of investors choose to cut risks by keeping their assets for long periods of time. Instead of trying to time the market, which can result in major wins and just as big losses, they simply wait and trust that their assets will appreciate over time.
So, is HODL the right approach to crypto investing? The answer is yes and no. There are both pros and cons to HODLing, which means the efficiency of this method really depends on the circumstances.
The first and most obvious benefit of HODLing is the fact that you don’t have to deal with constant price swings. That shelters you from the negative outcomes that can result from market volatility and ensures a stress-free investing journey.
HODL is also the preferred option for newbie investors who are not yet ready to take on too much risk. This gives them the opportunity to ease into the market slowly and learn about crypto trading at their own pace without having to worry about all the factors that could affect their investments.
Besides, HODLing is a great approach for anyone who is in no rush to make quick money. By purchasing an asset at a low price and holding it long-term, you can sell it later when the price for that asset goes up.
Nothing is sure when investing in crypto, so HODL is not a foolproof method for success. There’s no guarantee that buying crypto and keeping it over an extended period will result in high returns.
Another potential disadvantage to keep in mind is the limitation that HODL implies. If you decide to leave your assets untouched for too long, you won’t be able to take advantage of their value. This passive approach means you can miss out on many opportunities as you’re waiting for your crypto funds to appreciate.
In the end, choosing an adequate investing strategy should come down to your skills, expertise, objectives and personal preference. So, make sure you take all these aspects into account before you decide if HODLing is right for you or not.