HODL - what does it mean?
If you spend time chatting with cryptocurrency enthusiasts, you may already be familiar with the term. And if you are just starting your adventure in the world of digital currencies, it is very possible that it happened in the context of good beginner advice. In a nutshell, this term presents a rather blunt message, namely: "Don't sell your cryptocurrency!"
HODL is a term derived from the misspellings of the word "hold". Refers to a strategy called "buy and hold" in the context of Bitcoin and other cryptocurrencies. In order to fully understand this concept and the philosophy behind it, it is worth learning something about its origins - it was created in 2013 thanks to an entry published on the Bitcointalk forum. Since January of that year, the price of the Bitcoin cryptocurrency has risen from just $ 15 to $ 1,100 in December, and then - in just 24 hours - on December 18, it fell by a whopping 39%.
It was these events that initiated the discussion on the forum, thanks to which the term was created and functions to this day. A user named GameKyuubi posted a message titled "I AM HODLING" with a typo in the title and many more in the same message. Despite spelling errors, he explained exactly why he uses this tactic in the case of cryptocurrencies. The user stated that he is a bad trader and realizes it - he does not see the ups and downs related to the value of various currencies, the rise and fall of stocks, as are the "good traders" who can make the right analysis of the situation. The author of the legendary post came to the conclusion that "hodling" is the best solution, because selling works only for people who know what they are doing. Investors can only get your money if you sell. If you don't, they are safe.
Hodler - who is that?
HODL can now be described as both a strategy and a philosophy. Who is the Hodler? In short, he is a person with an approach to investing in cryptocurrencies that avoids trading based on short-term price movements. This approach reflects the rationale in the forum post mentioned above - novice investors will gain more and avoid the risk of losing a large amount of money by keeping their funds in their account.
Short-term volatility aside, Bitcoin's long-term volatility is hard to follow logic. From 2011 to 2013, the price of this cryptocurrency increased by 52,000%, only to drop by 80% in 2014. Since then, it has managed to grow more than 17 times, before dropping again by half. All this time, various voices were heard, more or less plausible, putting forward logical arguments about her rise or fall.
What is the Hodler's philosophy?
Inspired by a post from 2013, the hodlers don't care about this perverse volatility or any predictions. Through the method used - simple and requiring no action - they avoid falling into quite destructive tendencies. They don't buy cryptocurrencies for fear of missing out on a possible get-rich-quick opportunity, nor sell them impulsively at a low price when value goes down.
It is also worth mentioning that for the advocates of using cryptocurrencies, HODL represents something more than a good strategy. They believe that cryptocurrencies like Bitcoin will eventually replace standard currencies and become the globally functioning foundation of tomorrow's economic structures. For this reason, they believe that the cryptocurrency rate is not relevant.
HODLing and the future of cryptocurrencies
What was just a simple spelling mistake in 2013 has become an ideology for many cryptocurrency investors. When the author of the post posted it, Bitcoin was selling for only $ 100. Investors who followed this advice in 2013 have since "HODLED" their Bitcoins. Each one they own is worth around $ 44,000 today. This strategy is used by inexperienced traders and people who believe that Bitcoin will become a mainstream commodity - such as precious metals. The price of this cryptocurrency will grow with the growing number of people and institutions that consider it a possible and well-functioning payment option. A good example is the decision of Tesla CEO Elon Musk. He announced that Tesla had added a significant amount of Bitcoin to its balance sheet - thanks to this, there is a possibility that more corporations will follow suit.
HODLing is not a strategy for everyone. Swing-traders (so-called swing traders) or short-term traders focused on achieving frequent, but not necessarily huge returns on their investments, will be better at achieving set goals and making quick earnings without following this philosophy. It is also not an option for those who do not believe in the long-term stability of cryptocurrencies such as Bitcoin.
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