HODL: The Dumbest Sh*t You've Ever Heard or Pure Genius?
I remembered writing an article almost 2 years ago in Publish0x titled "Why Hodling is not for everyone".
If you feel particularly lazy today, here's the TLDR;
i. If you buy on top, chances that you will be hodling on your bags for a long time before another cycle makes a return. Even then you would be selling just to break even.
ii. Not everything is good for the purpose of hodling - exceptions are: Antiques, BTC (maybe), Gold and other precious metals. Collectibles. Real estate.
iii. While you shout HODL to the moon!, the guy next door is dumping on you. Picture it.
My personal clouds
Till today, there are still clouds of doubt in my mind that hodling crypto is a foolproof plan. In fact, anything that involves us humans are never foolproof. The ones that were better off were those who were lucky enough to forget about the fact that they bought ETH at 2 dollar per token, and BTC at 1 dollar per token.
These are the outliers - the bug in the system.
Whatever you may want to call it.
The number of people who had held their tokens from genesis block till today is less than the number your fingers could count. One of them is Satoshi himself.
But,
Some sold at 5 dollar
Some sold at 25 dollar
Some sold at 1,000 dollar
Some sold at 16,000 dollar
Some sold at 40,000 dollar
Some sold at a later date, because they had forgotten about it or lose the access to their digital wallet.
For most however - have sold their coins for pizza. Again, not everyone wants to admit how stupid that was, because at the time, it was a good choice. To be honest, I would too. I love pizza. I digress.
Back then there were no guarantees that those ultimate projects will somehow catch on the bullet train to the moon, trailblazing its way to Mars.
Fast forward to today, both prices were out of that low price zone. Possibly forever. Then again, who knows. Right? Similarly, who knows what the old bags could turn out to in the next 50 years? Maybe something worth pondering about. No body expect BTC to grow over 10,000%. That is 100x your initial investment, to keep it simple.
The romance
Because of these one in a million ultra rare event, the dream of becoming rich overnight by simply hodling has become a relatively a normal thing to pursue in the world of crypto. Hodl for the lack of better word to hold on your position, became a battle cry for projects and its early development to drive popularity among its community.
Some projects went bust before launching, while some see tremendous success. Some speculators got rich, while some got a lot poorer compared to when they stared. To each, the difference is merely the project they choose to support and buy from.
That alone, hints at how you should invest in at this current moment, doesn't it? Choosing the right project! Its definitely easier said than done. If you are someone like me, who constantly ask the question: What in the hell on earth could go wrong? Because honestly, 99.9% of crypto projects pose serious risks. I would maybe choose a project that has the least probability of failing. Again, easier said than done.
This is how I navigate the crypto sea: - Why price prediction efforts are often futile
Deep researches, ain't deep enough to soften the blow of loss. Failure is a failure, if you lose your money, you lose your money. There's a saying in crypto that says, you only materialize your loss, if you sell them. Get a better look at your current portfolio and come back to me, tell me it does not hurt you in the slightest.
At the time of this writing's publishing date, most of the current hodlers have sold during the recent dip - profiting in a net loss. Only to see BTC and the market bounced again last week. F**K, they said. Yup. Hodl gang baby. Paperhands are just one click away.
Why am I contradicting myself?
I am not here to share with you about the tactics of choosing the right project to choose or the right time to sell and buy. But rather to challenge the perception of why Hodling can be more destructive than most people think it would.
First of all, I have to state that I am no fan of WAGMI (you don't have a friend in me there). I have made it abundantly clear that it is a biased way of thinking. "The value of the coin is in the minds of its buyers" - tell that to the many thousands of failed altcoin and memecoins projects. Certain projects are just better positioned than others. That's me sugarcoating "Got lucky".
If you want to be rich the smart way, instead of shooting bullets in the dark, I suggest you take your time to read my other articles and a start thinking of a better way of looking at your investment: WAGMI everyone? & Why price prediction efforts are often futile.
Anywho, with that out of the way, let's pissed some people off why their Hodl bags from 3 years ago might never see the light of the day.
What is HODL?
You've seen it plastered across Reddit threads, Twitter feeds, and probably tattooed on some poor bastard's forearm. HODL – the battle cry of the crypto faithful, the mantra of the diamond-handed, the... well, you get the point.
But here's the million-dollar question (or should I say, million-Bitcoin question?): Is HODLing really the holy grail of crypto strategy, or are we all just drinking the digital Kool-Aid?
I'll reiterate, take whatever you read with a grain of salt.
The HODL Gospel: What the True Believers Preach
First things first, let's break down what the HODL gang is selling. For the uninitiated, HODL stands for "Hold On for Dear Life." It's a typo that turned into a backronym, because crypto folks love their inside jokes almost as much as they love their gainz. I mean gains.
The HODL philosophy is simpler than a two-piece puzzle as you can see below:
Buy your crypto of choice (Bitcoin, Ethereum, or whatever shitcoin is flavor of the month).
Hold onto it like your life depends on it, no matter what.
Wait for the price to skyrocket.
Profit. Maybe. Eventually. Hopefully.
Sounds easy, right? It's the "set it and forget it" of the crypto world. Buy, HODL, Pump, Dump and then, lambo. Rinse and repeat.
The HODLers will tell you it's foolproof. "Time in the market beats timing the market," they'll sagely advise, usually right after they've finished telling you they're "in it for the tech."
And to be fair, they've got some compelling stories to back it up.
We've all heard about the Ethereum early adopter who's now so rich, they use real ledgers as paperweights. Or the guy who bought Bitcoin in 2010 and is now the proud owner of a private jet and sipping his Pina Colada on a summer beach while reading "How to be a successful Entrepreneur" books.
These crypto tales are the lifeblood of the HODL mentality. "Just HODL" they say, "and one day, you too can be a crypto millionaire."
It's a beautiful dream. Problem is, it might be just that – a dream. For most people.
Why HODLing Might Be a Load of Bull(isht)
Now, I know what you're thinking. "But wait," you splutter "HODLing has to work! All those influencers with their Lambos and yacht parties can't be wrong!"
The reason why its not a foolproof strategy, is because of the following reasons
The "Always Up" Fallacy
HODLing assumes that crypto only goes up. Newsflash: it doesn't. Remember 2018? 2022? Yeah, those weren't fun times for the HODL gang. Some will argue that crypto "has its down and up". "It will eventually goes up".
Let me paint you a picture. It's December 2017. Bitcoin is touching $20,000, and you're feeling like a goddamn genius. Fast forward to December 2018, and your precious BTC is worth less than your vintage Beanie Baby collection. But hey, HODL, right? The current price is hovering around 3x more. Not for most altcoins and memecoins though.
If you have no need for the money, then great! But if you do..that's another story. Perhaps "Just invest what you could afford to lose" advice made much more sense.
The truth is, crypto is about as stable as a three-legged chair. It goes up, it goes down, and sometimes, it goes to zero. Just ask the LUNA boys how that HODLing worked out for them.
The Currency That's Not a Currency
Secondly, HODLing ignores the whole f**king point of cryptocurrency. Wasn't this supposed to be a currency? You know, something you use?
Imagine if we all decided to HODL US dollars. Just buy 'em and stick 'em under our mattresses. The economy would grind to a halt faster than you can say "bubble burst."
But nah, let's just treat crypto like digital Beanie Babies instead. Because that worked out so well in the '90s, right?
Let's forget about any paper money, they are what they are. But it still a fact that for an economy to prosper, the currency has to flow, one way or another, to create demand and supply. There. Economy 101.
Perhaps dumping creates more flow than that of hodling. Interesting isn't it?
The Bag Holder's Lament
Lastly, HODLing creates bag holders. You know, those poor saps still clutching their LUNA tokens like it's going to resurrect from the dead. Or the guys who are still waiting for BitConnect to make a comeback.
Here's a hard truth: Not every crypto is going to make it. For every Bitcoin, there are a hundred BitconnectX's. HODLing doesn't discriminate between the wheat and the chaff – it just tells you to hold on and pray.
A Crazy Idea: Actually Using Crypto
Alright, now that I've thoroughly pissed off the HODL brigade, let's talk alternatives. Here's a crazy idea: What if we actually used crypto?
I know, wild concept, right? Using a currency as... a currency. Mind-blowing stuff.
Instead of HODLing, how about we focus on adoption and utility? You know, the stuff that might actually give these magic internet coins some real-world value.
Let's break it down:
Use Cases Matter
Look at the projects that survived the crypto winters. Ethereum, Chainlink, Polygon. What do they have in common? Actual f**king use cases.
Ethereum isn't valuable because people are hoarding it. It's valuable because people are using it – for DeFi, NFTs, smart contracts, you name it. It's the difference between collecting rare stamps and actually mailing a letter.
Economics 101
And let's talk economics for a sec. What gives a currency value? Hint: It's not a bunch of people hoarding it in digital wallets.
It's circulation, baby. The more a currency is used, the more valuable it becomes. It's like a snowball rolling down a hill, picking up more snow as it goes. Except instead of snow, it's adoption and value.
Viral Adoption
Plus, using crypto exposes more people to it. Your local coffee shop starts accepting Bitcoin? Boom, new users. Your freelance gig pays in ETH? More adoption. It's like a virus, but the good kind (too soon?).
The more people use crypto, the more normal it becomes. And the more normal it becomes, the more valuable it gets. It's a virtuous cycle, unlike the vicious cycle of HODLing and praying.
But What About My Gainz?
It's gains.
Now, I can hear the HODLers in the back, screaming about their precious gains. "But if we use our crypto, how will we get rich?"
First off, if your only goal in crypto is to get rich quick, you might as well head to Vegas. At least there, you get free drinks while you lose your shirt. No offense to those folks, at least they are having fun.
But here's the thing: Using crypto doesn't mean you can't invest in it. It just means you're contributing to its actual value instead of treating it like a digital Ponzi scheme.
Think of it like this: You can invest in Amazon stock, right? But you probably also use Amazon to buy stuff. It's the same with crypto. Use some, invest some. It's not rocket science.
The HODLer's Counterargument
Sorry.
I know some of you HODLers are reading this, fists clenched, veins popping, ready to defend your beloved strategy. So let's address some of your likely counterarguments:
"But Bitcoin has always gone up in the long term!"
Sure, so far. Past performance doesn't guarantee future results, as they say. Just ask the folks who invested in Pets.com during the dot-com boom how that "always goes up" strategy worked out.
Not trying to rain on your parade, but be careful with your investment, that is all.
"HODLing protects you from making bad trading decisions!"
Fair point. If you're as good at trading as a monkey throwing darts, maybe HODLing isn't the worst idea. But here's a wild thought: Maybe learn and researching about the tech you're investing in? Crazy, I know. Don't expect a 100% win rate if you involve with something that is volatile.
"Using crypto is too complicated/expensive/slow right now!"
Yeah, and the first computers were the size of rooms and less powerful than your smartwatch. Tech improves. By using it, we drive that improvement. HODLing does jack sh*t for advancing the technology.
So What's a Crypto Enthusiast to Do?
Alright, I've ranted enough. Time for some actionable advice. Here's what you can do instead of blindly HODLing:
Use Your Damn Crypto. Stop treating your coins like they're rare Pokémon cards. Use them. Buy stuff. Pay for services. Be the change you want to see in the financial world.
Invest in Utility, Not Hype Look for projects with real utility, not just hype and promises. If a project's only selling point is "number go up," run for the hills.
Practice functional hodling. For example, I hodl through staking my coins. In Bulb, while I stake, I get multipliers for my daily activities too. Awesome isn't it.
Spread the Crypto Gospel And I don't mean by posting rocket emojis on Twitter. Actually transact with crypto. Show people how it works. Be the crypto ambassador you wish you had when you first started.
Educate Yourself For the love of all that's holy, stop listening to every YouTuber screaming "HODL!" like it's a magical incantation. Learn about the tech, the economics, the use cases. Knowledge is power, and in crypto, power is money.
OMG I CANT SAY THIS ENOUGH, DIVERSIFY WISELY. Don't put all your eggs in one crypto basket. Spread your bets. And maybe, just maybe, consider having some investments outside of crypto too. I know, blasphemy, right?
The Bottom Line
Being in crypto myself for almost 7 years now, I myself found a way to hodl that suit my risk preferences. My sleep, has never been any better ever since.
Remember, the goal isn't to die with the biggest crypto stack. It's to be part of a financial revolution. And revolutions don't happen by sitting on your ass and HODLing.
Crypto has the potential to change the world, to democratize finance, to stick it to the man. But that's not going to happen if we all treat it like digital gold, to be hoarded and never used.
So next time someone tells you to HODL, ask them this: "What the f**k are we HODLing for if we never use it?"
And if they can't give you a good answer, maybe it's time to rethink your strategy.
Because in the end, the true value of crypto isn't in your wallet balance. It's in what it can do, how it can be used, and the change it can bring to the world.
So go forth, use your crypto, and maybe, just maybe, we can turn this magical internet money into something truly revolutionary.
Stay savvy, crypto cowboys and madams. And remember: The best investment you can make is in your own knowledge.
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