What is the meaning of HODL 📖
Isn’t it wild to think about a typo turning out to be so huge that it ends up becoming an acronym? Oh, it sure is!
HODL – a disarrangement of the word hold – is a slang term that is used in the crypto realm by users, investors, and developers alike. However, some believe that it is actually an acronym for Hold On for Dear Life. Which one is more believable and correct? Let’s find out.
HODL – a typo or an acronym?
The term surfaced in a 2013 online post to the Bitcointalk website as a spelling mistake of “hold”. Bitcoin‘s price was turbulent throughout 2013, soaring to over $950 at the start of December 2013, up from just over $130 in April of the same year. The person posting encouraged people not to sell and that they were “hodling”.
So what came as a spelling mistake during a bear market in a way demonstrated the anxiety around volatile market conditions, went on to inspire several crypto and web3 terms like BUIDL to come into existence.
HODL later turned into an acronym for “Hold On for Dear Life” and can be understood as a recommendation to hold on to coins very tightly during market volatility, almost as if an investor’s life depends on it. The acronym is widely used during a bear market or crypto winter in online spaces when stock prices are down.
Example Sentence: “To everyone reading, I know these are scary times but for the love of God please HODL”.
Why you should HODL
HODLing your cryptocurrencies and crypto stocks has a bunch of benefits. Let’s dive deeper into them.
1. The compound effect
Cryptocurrencies can be quite volatile in both good and bad ways. One of the benefits of HODLing on to your crypto assets is that over time, with the changing market trends, conditions, and prices, you will be able to increase the value of your assets. You can also try yield farming and staking to HODL your currencies and earn from it.
2. HODLing can give you peace of mind
People, at times, can get emotional and make decisions that can lead to more losses. In a situation like the one in which the market is bearish, many would consider trading off the assets a wise decision.
However, selling assets or trading them is not always the go-to idea when the market prices plummet. Sometimes it is better to HODL on the currency and wait for the time when your assets turn into gold. This is, however, dependent on the market conditions, market parameters, forecasts, and future projections.
3. Investments have never been simpler
HODLing may be a basic concept but things with HODLing couldn’t be easier. When you decide to play safe, HODLing is literally your best bet. With no pressure of trading, constantly monitoring the numbers and getting mini heart attacks upon seeing a minimal decrease in the overall prices, you have a simple risk-free crypto presence. And the good thing is that you can earn in crypto without taking any major risks.
Reasons to not HODL
- By HODLing your currency, you miss out on get-rich-quick opportunities. Essentially, there is nothing wrong with quick money-making schemes. However, if such schemes are overdone and if a user becomes dependent on them then it becomes a big problem.
- Generally, crypto assets and stocks are stored in digital wallets. Apparently, these wallets are safe and secure but they can be tampered with and hacked by outsiders.
- As mentioned, the crypto market is pretty volatile. HODLing can work very well with you all it will take is one jolt and you will have lost a significant chunk of the value.
- HODLing is not a sprint; it is a marathon. If you don’t have the stamina to run a marathon (there is nothing wrong with that), this may not be the right option for you to go for.
- HODLing shows results after some time. Thus, you will have to bid adieu to instant gratification and quick results.
In conclusion, HODL is a disarranged take on the word “hold”. It is a popular cryptocurrency and web3 term used for investors who hold on to their crypto regardless of prices increasing or decreasing. It more often comes into play during a bear market when prices drop and investors refuse to sell or are encourage to refuse selling.
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HODLing could be both a good and a bad strategy. And this depends on multiple factors such as the market conditions, the demand and supply numbers, consumer behavior, investor sentiment and the type of your digital asset. If the factors and conditions are favorable, it is a good strategy. Otherwise, it is a bad one.
The major difference between HODL and trading is that in the former, you hold or stack your assets and cryptocurrency. In the latter, however, you keep the cryptocurrency exchange going. You buy some and based on your research and market conditions, you also sell some. Many tend to go for HODL to get some long-term returns. However, the purpose of HODLing depends a lot on investor intent and sentiment.