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Why HODL: What You Should Know About Hodling

It is an initial reaction of individuals to ask regarding the meaning of hodl where it might be an unfamiliar word for some users. However, the term HODL is a misspelling of the word hold in the context of cryptocurrencies, and it refers to buy-and-hold strategies. Furthermore, it denotes the possession of one’s cryptocurrency. If this piques your interest in learning more about this term, continue to keep scrolling! The following information will help you understand and give you insight into what this is.

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The Meaning of HODL

The terminology “HODL” is an acronym for “Hold On for Dear Life,” referring to a one-way investment journey. This term originates from a post back then in Bitcoin Forum, lending the opinions of investors regarding Bitcoin in the economy. It refers to a buy-and-hold strategy for investing in the underlying values of assets. Users will keep it to themselves rather than buying low and selling it later. Furthermore, this works by identifying projects with high potential for the medium to long term.

The timing of market participation may be irreconcilable. However, hodling develops a rational method to make it easier when investing in projects. Nevertheless, if you want to learn more about other cryptocurrency terminologies, you can visit sites like Immediate Edge that are beginner-friendly and offer support from specialists. You can use this to explore some guidelines and read information about the volatile cryptocurrency market.

Why you should HODL Cryptocurrencies

Blockchain technology supports cryptocurrency wherein it functions as a medium exchange for assets and investments. Bitcoin, Ethereum, Ripple, and other cryptocurrencies are examples. Furthermore, it has a decentralisation feature, which is advantageous because no central authority or central bank is involved. Because of the remarkable breakout in 2017 and 2020, it continues to emerge for investments and acquires opportunities, resulting in massive growth for cryptocurrencies. Alongside the inflation expectation, investors hold it for value reservation.

Since “hodling” refers to a buying and selling strategy, investors prefer to maintain their assets for an extensive period to profit from long-term value appreciation. Traders, on the other hand, are even more active in transactions. As a result, they seek to buy at low prices and then sell at a high price. Aside from that, due to their high volatility, cryptocurrencies offer numerous significant opportunities. It acquires for traders to build long and short positions regularly. With this, hodling provides investors with greater security and eliminates the risk of buying high and selling low.

The Strategy in Hodling

When it comes to the emergence of cryptocurrencies, investments should not impose short trends. Hodling encourages beginners to keep their money for a longer length of time before selling it. Because of the volatility and prognosis, the value of bitcoin can reach 17 times its original price. However, due to unfortunate circumstances, it may peek into half.

Users who hodl counteract two destructive tendencies they might encounter.  FOMO is a concept that can lead to the purchase of a high-priced item. It puts investors under pressure to buy at a high price. FUD, on the other hand, refers to a process that can result in a low-value sale. Because of some uncertainties, it results in a negative profit, which leads to panic selling. Furthermore, they consider SODLING to be the inverse of hodling. These are some of the most common noticeable mistakes.

Long-term traders and firm followers of cryptocurrency acquire hodl as a strategy for reigning in FOMO, FUD, and other pervasive profit eroding conflicts, not just in the way of practising hodl. Because they believe that cryptocurrencies will eventually replace fiat currencies, presumably that dominance will gradually be imposed in the financial market. As a result, physical assets will not be required to trade for the value of crypto coins.

Ways to Hodl Cryptocurrency 

There are various methods for hodling cryptocurrencies, especially as it emerges as a popular investment strategy among bitcoin investors. It is plausible with ROI, resulting in lower risks of losing money when compared to short-term trading. However, before you can begin hodling, you must first purchase cryptocurrencies from an exchange such as Bitcoin or CoinBase. It simply means that you must register with one of these platforms. Following the sign-up process, you will purchase cryptocurrency with fiat currency such as USD or GBP.

After purchasing the bitcoin of your choice, it is necessary to store it in a wallet. When it comes to processing, you have the option of using an online account also known as a hot wallet or an offline account also known as a cold wallet. The internet provides access to hot wallets. It consists of the below:

  • Web Wallets. A website imposes these types of wallets.
  • Desktop Wallets. These wallets are available and are downloadable to your desktop. It does, however, necessitate internet access.
  • Wallet Apps. These wallets are downloadable to your phone via the app store in iOS or the Google Play store in Android.
  • Exchange Wallets. The trading platform assigns the exchange and sign-up process in this wallet.

Cold wallets, on the other hand, do not necessitate an internet connection to access. In comparison to hot wallets, you are unable to access them from anywhere. These are typically and similarly in the form of USB or Bluetooth devices. Trezor, KeepKey, and Ledger Nano are examples of popular cold wallets. Aside from that, it is safer since hackers cannot connect to it. As a result, it recommends using cold wallets for security and convenient long-term storage when hodling. However, if you need some trade to store, you can keep it in your hot wallet for easy access.

Conclusion

Learning information about hodling has come a long way and is beneficial to users since they gain insights from the process. As cryptocurrency has grown in popularity, hodling has become a viable tactic for novice users who lack trading skills. Buying and holding for a while increases the value of your investments when the asset is ready. Furthermore, it primarily pertains to investment and personal objectives.

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