HODL Explained

Beginner Août 14, 2020

HODL
Key Takeaways:
– HODL is a term originating from a 2013 Bitcoin Talks forum post
– HODL means to not sell your crypto, even if the market is crashing
– By hodling your crypto for an extended amount of time, you could create a large return on investment
– When you HODL, it’s important to keep your crypto secure. This can be done with Ledger’s hardware wallets

To those unfamiliar with crypto, the term “HODL” might simply seem to be a misspelling… until you see it used thousands of times. However, for crypto adepts, it’s a way of life. In this article, we’d like to help those not yet fully versed in crypto vernacular – and give some more insight into why hodling might be interesting.

How HODL started

It all started on a December morning back in 2013. The Bitcoin market was crashing by almost 40%, reaching a “low point” of $447. Many early adopters started to panic sell their BTC. But one Bitcoiner refused…

Bitcoin Talk member GameKyuubi wasn’t having any of that, making a clear statement with his forum post “I AM HODLING” that he did not plan to sell and succumb to the market’s downtrend. He didn’t want to become part of the day trader group, and instead preferred to stay there as a “part of the market capital”. Instead, he would HODL.

GameKyuubi stated being aware of the typo in the title, but to have gone with it anyway – and the community caught on. They simply loved the term HODL, and sure enough it has become a deeply appreciated part of crypto vocabulary since.

What hodling crypto means

HODL,commonly seen as an abbreviation for Hold On for Dear Life, refers to keeping your Bitcoin or other cryptocurrencies rather than selling them whenever the market crashes. It’s the exact opposite of what day traders would do, who try to time the market and maximize their profits through it. Hodling is also seen as a measure against panic selling – the act of trying to jump out of the market in panic whenever a crash occurs.

HODL can quite simply be seen as holding onto the Bitcoin you buy for an extended period of time – regardless of any market swings. This strategy relies on the price of Bitcoin or other crypto to keep going up steadily over the years. Hodling can even be seen as more than one of the two major investment strategies (the other being trading). It’s become a way of life for many in the crypto community. Buying their crypto, then keeping them safe and waiting patiently. There are also those who HODL crypto for their strong belief in cryptocurrency fundamentals, seeing it as the eventual replacement of fiat currency. Hodlers are also encouraging each other to keep up the good fight, having a very strong community.

So how can hodling be interesting?

The success of the HODL

Let’s take GameKyuubi’s example. He hodled his Bitcoin while it was at $447. With the price currently being around $11,500, that would be an enormous increase in value of over 2570%, having multiplied by more than 25 times!

Of course, one can argue that trading can be incredibly more profitable – and indeed this is the case. Trading veterans that successfully sell their crypto at top prices and buy the dips could indeed yield a larger return. On the flip side, there’s a lot more risk involved. Timing the market perfectly is extremely difficult. As GameKyuubi phrased it: “You only sell in a bear market if you are a good day trader … people in between hold.”

As a result, hodling is often seen as a much safer and steadier way of investing into cryptocurrencies – especially for newcomers. Now of course, any investment remains risk-sensitive. Past performances are not any guarantee of future results – and we at Ledger are not offering financial advice. That said, the hodling strategy has thus far held up quite nicely.

HODL responsibly

When you HODL your crypto, you’ll be keeping it for quite a long time. When you intend to do this for years, it’s absolutely vital that you store your Bitcoin or other cryptocurrencies securely. Imagine having hodled your BTC on an exchange, only to find out that someone managed to crack your login details – or worse, that the exchange no longer exists. Sure enough, hodling securely is of utmost importance…

That’s where we come in.

At Ledger, we create hardware wallets designed to keep your crypto secure. Our devices keep the Private keys that give access to your cryptocurrencies offline in highly advanced chips, being out of reach of online attacks. These chips are very resistant to physical threats as well. Even if anything were to ever happen to your Ledger device, you’d have a set of 24 words known as the Recovery Phrase to give you access again to your precious crypto assets.

With Ledger, you can HODL your crypto resiliently. 

Related article