What is HODL
Today we will talk about cryptocurrency slang, or rather about one of its terms – stupid. Seven years ago, he appeared as a result of an ordinary typo, but was so firmly entrenched in the digital world that a whole cryptocurrency strategy spilled out of him.
Making money with cryptocurrencies is quite difficult for several reasons.
- Many options for the development of events due to the difficulties of forecasting.
- Market volatility and unpredictability.
- Mining, investment in development and arbitrage deals are simpler and more understandable, but require significant financial injections on an ongoing basis, and the result is not always worth these efforts.
Those who are not nice to all of the above options and came up with an investment strategy, which was called Hodl. The bottom line is very simple – you acquire assets and keep them regardless of market events.
That is, do not sell, even when you can make a profit of 100 and 200 percent. The calculation is for the long term. Hodlers believe that sooner or later cryptocurrencies will replace fiat money and will occupy a central position in the global economic system. Of course, you can spend money (exchange), and not wait until the world changes, and get very significant bonuses.
A striking example is Bitcoin, which could once be bought for 6 cents, and at the peak of its value, 1 Bitcoin could be sold for 19 thousand dollars – this is almost 32 million percent of the profit. Nice, isn’t it?
Of course, not every cryptocurrency can bring such a profit even in the long term, but in any case, the main benefit is received by those who buy coins earlier and cheaper than everyone else. Of course, invested funds can be lost – currencies do not always take off.
Therefore, hodl investors most often rely not on one currency, but not several. Of maybe five, and ten – at least one, but will fire. And if you buy up assets at the very beginning at the lowest price – the probability of income is very high.
Why Hodl is Ideal for Beginners
Firstly – this is elementary. Cheap bought and sit wait. Not everyone can afford in-depth study and analysis of the market, blockchain, ICO and exchange trading. Relying on the opinion of Internet experts is also not worth it. Therefore, sales is the most primitive way to generate income. Secondly, it does not require daily attention and nerves.
Constantly monitoring the ups and downs of prices, the market capitalization, the news feed is a resource-consuming business. Thirdly, there is the possibility of making money at Hard Fork. This is an absolutely passive income on a new cryptocurrency, which appears on the basis of another.
Fork in translation means a fork, and this is what happens in practice. Holders of the parent currency most often receive a certain (sometimes identical to the original) number of new tokens. That is, they increase their capital without additional effort and investment. As an example of forks, we can cite the mother currency Bitcoin and its branches: Bitcoin Cash and Bitcoin Gold.
There were others, such as Bitcoin XT, Bitcoin Classic, Bitcoin Unlimited, but they quickly closed. Fourth, currency holders can make a profit on AirDrop – these are shares on various platforms that give out free new tokens to asset owners in order to popularize them. Having the mother currency in the account, you can receive airdrops of all its forks, and if you store funds on exchange wallets, the list expands with many new tokens.
All the coins that a hodler receives in a passive way can be converted into another currency using exchange platforms, or you can leave it as it is – well, what if they also grow by a couple of million percent?
The main problem is to guess the field for investment. The opinion of experts is that Bitcoin has not yet reached the peak of its price, that is, theoretically, it can and should be bought and stored. But this is far from affordable for everyone, like buying Ether, Bitcoin Cash and other expensive currencies from the top ten.
You can invest in currencies with low popularity, which are cheap, but there is a risk of losing your investments, because there are about a hundred currencies that simply disappeared and this happens everywhere. Therefore, having small assets and a clear desire to make money, you still have to do some research on the market and the prospects of a particular cryptocurrency.
The Hodl strategy provides an excellent opportunity to significantly increase your assets, without being involved in mining, stock games and more. But this method does not provide a 100% guarantee on profit, therefore it is not recommended to invest more than you are willing to lose.