The Word ‘HODL’ in the Cryptocurrency World
You, either as a cryptocurrency novice or expert, must have come across the jargon ‘hodl’ in many blogs, articles and forum threads on multiple occasions. In fact, the slang term ‘hodl’ came into existence in the cryptocurrency universe in the year of 2013 and it has been used by blockchain users ever since. While it may sound weird as it looks like it is misspelled, actually it stands for the verb ‘to hold’ a number of cryptocurrency tokens in one’s online or offline cryptocurrency wallet until the price of the coin raises to such a level that once sold, the seller will benefit from a great profit. The jargon emerged out of the Bitcoin early era, but it is applied to any other cryptocurrency as well.
If you are about to start familiarizing yourself with the cryptocurrency world, which came to life in 2008, it is of utmost importance to know the most common terms specific to the new revolutionary digital economics (technology), including ‘hodl’.
In the new paragraphs, we will talk about the origin and meaning of the slang term ‘hodl’ as well as its pros and cons. Furthermore, some real-life examples will be discussed along with the top cryptocurrency coins worth taking the risk to ‘hodl’. Lastly, this article will introduce you to other jargons used in the world of blockchain, which are constantly used by the cryptocurrency communities.
Origin of the Word ‘HODL’
The first time the jargon was used was back in 2013 in the most used forum for cryptocurrency discussions known as Bitcointalk, which was originally created by the founder of the blockchain technology – Satoshi Nakamoto. Interestingly enough, the identity of the inventor still remains unknown.
On December 18th, 2013, an anonymous user known as ‘GameKyuubi’ posted an alcohol-fueled thread expressing his frustration at the crashing value of the Bitcoin and the fact that he cannot predict the fluctuations of the cryptocurrency value. He also said that only indecisive person would get rid of their coins based on the fear of further reduction of the coin’s price. However, he informed the community in the same thread that he will ignore this fear and hold onto his coins. He also admitted of being drunk that is why he misspelled the word ‘hodl’ for ‘hold’ in the title. The thread became popular for the comical way the author expressed his feelings and the fact that the word was misspelled. Ever since then, the cryptocurrency space has been flooded with the jargon.
Meaning of the Word ‘HODL’
As already mentioned, the intoxicated trader ‘GameKyuubi’ misspelled the word ‘hodl’ for ‘hold’ back in 2013. Holding is associated with the act of keeping cool and not panicking when the market is experiencing, either tiny or huge price drops.
In fact, this trading approach has been used ever since trading came into existence, and more specifically digital trading. ‘Buy-and-Hold’ strategists are also known as long-term traders. The approach refers to the act of buying tokens and holding them, or neither sell nor buy more of it for a prolonged period. This method is considered the least effortful, hence it is the most used approach among the most general investing population.
However, this technique requires some extensive research prior to making the first step. Experts advise finding a reliable cryptocurrency, which has been on the market for at least a couple of months and have a great, realistic and long roadmap. Furthermore, they recommend choosing one that has outstanding maintenance behind it.
Another element to consider of the buy-n-hold strategy is the actual sale of the cryptocurrency coins. Traders must know when to exit the market, even if doing so happens prematurely. There are certain signs, which points at the sell button, and they include bankruptcy, or an executive being involved in thefts or other significant disputes.
Pros and Cons of ‘HODL’ as a Trading Approach
There are many advantages of the buy-and-hold approach for the cryptocurrency market. However, like any other strategy, it also has some disadvantages, which may not come to mind at first.
To start off, the very first advantage of the easiest and the least involving approach is the amount of time spent. Both the energy and attention are kept to a minimum when following this strategy, because traders do not need to keep regular track of company information, price histories, or even market performance. Furthermore, buy-and-holders are trading considerably less than short-term traders, which translates into fewer transaction fees and commissions paid to third-parties. Moreover, this approach involves less anxiety, because usually, buy-and-hold traders invest in not-so-volatile cryptocurrencies. In other words, the value of the chosen coin fluctuates relatively less than other ones. In addition, ‘hodling’ involves less workload to keep a portfolio on track, simply because tracking of cryptocurrency market movement is not as frequent as what short-term trading requires.
Lastly, the buy-and-hold strategy allows traders to make money off the money they would normally have previously paid in capital gains taxes. Also, there are no skills required to jump into the cryptocurrency world by ‘hodling’ apart from gaining some basic knowledge and carry out a basic research for the coins worth investing in, unlike short-term trading.
All in all, ‘hodl’ approach is proven to reap great success, only if it is executed properly.
On the other hand, this strategy also hides some weaknesses. It is silly to think that it is risk-free, even though it is considered to be the least nerve-wracking and time-consuming approach. Another disadvantageous aspect is the inability to profit from some short-term spikes in price, while short-term traders may catch on such great rises in value and greatly benefit from them. This disadvantage is tightly connected to the less observation involved in market movements mentioned in the advantage paragraph above.
As it could be observed from the information above, there are considerably more advantages than disadvantages in adopting this strategy, thus it might be the best beginner-friendly one to consider.
Real-life Examples of ‘HODL’
In this paragraph, we will share some real-life examples of people ‘hodling’, which brought them great profits.
The first story of a person, who reaped enormous profits from ‘hodling’ Bitcoin, is about a Norwegian student. He invested 150 Kroner an equivalent of 27 American Dollars, back in 2009, when he came across the Bitcoin cryptocurrency while writing a thesis on encryption. The funny part of the story is that he completely forgot about the investment until the mass media boomed with news on the blockchain technology in April 2013. After holding for 4 years, he netted a profit of 5 million Kroner or 886,000 American Dollars.
Continuing with the next story, which turned out to be a total disaster, of a man called James Howells. He began mining bitcoin on his laptop in 2009 until 2013, when his mining rig became obsolete, thus he sold it but leaving the hard drive in his stash, so he could later retrieve his mined coins and sell them. However, while cleaning his house in 2013, he threw away the hard drive by mistake, which later became the biggest regret of his life. After realizing what he had done, he immediately turned to the authorities for an approval of searching the local landfill site. Unfortunately, his request was declined as digging up the huge amounts of waste would cause some environmental issues, such as the release of hazardous gasses and any potential fires. Also, the officials informed the man that the hard drive would have probably damaged by the exposure to toxic waste, which made the possible recovery of the computer part even more meaningless. Just before James lost his Bitcoins forever, he had mined 7,500 coins, which total value is 53 million American Dollars as of today.
Last but not the least, one of the youngest cryptocurrency millionaires in the world called Erik Finman, profited from great entrepreneurial skills and market timings. He invested back in 2011 in 83 Bitcoins, when the price per token was 12 American Dollars for a total of 1,000 USD. Four years later, when the price of a single Bitcoin rose to 1,200 USD, he made a total revenue of 100,000 USD. However, his journey to establishing millionaire status was just beginning. He founded an educational tech company called Botangle in 2014 with the profits gained last year. Another year later, he got offered to sell his company to an investor for either 100,000 USD or 300 Bitcoins. The young businessman did not hesitate to get the Bitcoins as he had strong faith in the future of the Bitcoin market. As of August 2018, the value of his investment nets around 2.1 million USD.
While there are many other stories of people becoming wealthy because of timely investment in cryptocurrency, we pointed out the ones that were the most interesting to read.
Top Cryptocurrencies to ‘HODL’
Monero’s fanbase is growing each and every day and it seems highly unlikely that the community will abandon the project for another alternative. Unlike other cryptocurrencies, it has not witnessed any major drops or corrections in price.
One of the most prominent aspects of successful cryptocurrencies is a huge and loyal community, which Litecoin excels in. The other name for Litecoin is ‘the silver to Bitcoin’s gold’. Up until now, Litecoin has grown by the astonishing 3000%.
NEO is a smart asset platform also known as China’s Ethereum. It has proven resistant to the attempts of the Chinese officials’ repression on the cryptocurrency universe, thus remains one of the leading cryptocurrencies. Having the past records of NEO’s price charts, it would be to no surprise if NEO grows by another 200% by the end of 2018.
Considering that Ripple’s market cap is 35 billion USD, we do realize it has great potential yet to come. The most important aspect of Ripple is the fact that it is used as a payment method, which transaction completion time beats Ethereum. Many big corporations make use of Ripple such as American Express, Saudi Arabia Central Bank, and JP Morgan.
While you may think that the time to invest in the first and best cryptocurrency has long passed, it is still viable to buy and hold for the future. Many experts think that many new global events will happen that will raise the Bitcoin price value to new heights. The only disadvantage of investing in Bitcoin nowadays is the heavy investment needed in order to get any appreciable gains.
Other Common Terms Used in the Cryptocurrency World
When entering the world of Nakamoto’s invention, it is vital to know the many terms and jargons, the community came up with to describe different situations.
FUDFor Instance: ‘If somebody tells you to sell all your coins now, they just have FUD’
FUD means ‘fear, uncertainty, doubt’ in the future of the cryptocurrency coin in question. Usually, people with FUD are the people outside the cryptocurrency communities.
SATSFor Instance: ‘How many SATS are you going to buy at this price?’
Experienced traders are looking at bitcoin not in USD value but in SATS, which is short for ‘satoshis’, or the smallest fraction of a Bitcoin that can be sent – 1/100,000,000 of a single unit.
WHALEFor Instance: ‘There must be a whale behind this coin’s price movement’
A whale is referred to a person or organization that owns great amounts of a particular coin. If ‘whale’ decides to sell all its coins, it can cause a great dip in the coin’s value.
PUMP and DUMPFor Instance: ‘This coin’s chart looks like there was a pump and dump recently’
Pumps and dumps are referred to situations when a coin’s market experience drastic rises and drops because a lot of people either buy or sell their coins at the same time.
ATHFor Instance: ‘Bitcoin was at its ATH in 2017’
ATH is an abbreviation for ‘All-Time High’, or the highest historical price of a specific coin.
AltcoinFor Instance: ‘Ethereum is one of the best altcoins’
This is a short way to say ‘alternative coin’, which is any other coin but Bitcoin.
FOMOFor Instance: ‘People are investing because of FOMO’
FOMO or ‘Fear Of Missing Out’. This is about the feeling, which overtakes people when they see green spikes in a coin’s price value charts. People start selling other stuff, only to have the capital to invest in rising prices of a particular product or coin.