Updated 22 Apr, 2021

Holding Bitcoin: A Beginners Guide to HODLing

HODL Bitcoin

Key Takeaways

  • What is HODLing and how it works?
  • Why people should HODL
  • Steps in a holding strategy

For many BTC is a holding (HODLing) game. Hodlers hold the asset for longer periods with the aim of earning from its growth potential. In fact, people will hold until the supply of coins runs out in the hope, they will be sitting on a small fortune that they can either sell or trade and make a hefty ROI.

However, what is HODLing and how does it work?

What is HODLing?

HODL is derived from the incorrect spelling of ‘hold’. In the context of bitcoin and cryptocurrencies, it refers to the buy-and-hold strategy. The newbies who are not sure of the market and might lose currency or make fewer profits; tend to hold on to their bitcoins for a longer time span.

The people who hold cryptocurrency get rid of the prognostication and volatility. All they believe in is simply HODLing. They HODL to the point where they come across two destructive tendencies such as the fear of missing out (FOMO) which pushes a person to buy at higher rates. Another being fear, uncertainty, and doubt (FUD) which leads to selling the bitcoins at a lower rate. This is also known as SODLing.

The determined believers of the cryptocurrency, HODL is more than just a strategy of bringing out profit-eroding emotions such as FUD and FOMO. Their reason behind HODLing is that they believe the digital currency is bound to replace fiat currency, so they are storing it for future uses. The digital currency will form the foundation of the future economic structures irrespective of the exchange rate.

How Does HODLing Work?

When the cryptocurrency rates go high, people tend to profit from it and buy more. When the rates go down, they tend to decrease and cause losses to the people. The whole increase and decrease in the rate and when the people should HODL all depends on the three basic drivers such as low interest rates, inflation, and geopolitical instability. These drivers shower light on how everything works and how things will progress in the future.

Also, the holders keep on HODling their bitcoins irrespective of the ups and downs of the prices. They tend to focus on a broader spectrum than the everyday goals. They believe a change of system will occur in due course and the people will be bound to make use of bitcoins. So HODling will provide them long-term benefits.

The bitcoins work on the three major principles which are the decentralized network, demand and supply, and cryptography. All this works together to remove a single authority and offer benefits and control to everyone, unlike the previous banking system. The banks were the sole authority who will be asked for permission to allow or reject any transaction. No matter what the case, they had the right to block the systems and freeze all accounts if required. Therefore, there was a need for the system which reduces the game of single authority and gives all monetary independence to the people who own that currency. This helps the people who hold in the long run as they solely are responsible for everything they own.

The Benefits of HODLing

The major benefits of Bitcoins HODLing are as follows.

Hassle-Free

Firstly, our participation in the Cryptocurrency market will be hassle-free. By owning cryptocurrencies for a longer period, you will always be in the market and not worry about buying and selling, paying your dues, and other cost-cutting activities. But you must also be sure that your currency is stored in hardware wallets and is safe from stealers. You must also keep your private keys in safe hands.

Dollar-Cost Average Bitcoin Strategy

Secondly, you can make use of the dollar cost average bitcoin strategy. In this way, the users do not have to add all the money to the Bitcoin wallet. Instead, they could add some of it, daily, weekly, or monthly depending on the rate of the cryptocurrency or the demand. You will not have to purchase with all your funds in this way.

Reduced Stress

Lastly, it does help in reducing stress most of the time. Being aware of the fact that you have funds in your wallet, and you do not have to check the charts every time, will save you from the hassle. Analysing the charts and wishing them to go down is always stressful. If you have been handling up the bitcoins, you surely are in a safe spot!

Steps in a Holding Strategy

The HODLing strategy is about buying Bitcoins or any other cryptocurrency which offers long-term returns on investments. The steps involved in holding a bitcoin strategy include:

Joining a Bitcoin Exchange

There are many bitcoin exchanges that process transactions. There is no such company as Bitcoins, there are exchanges that facilitate them. A person will have to choose from them and join an exchange of their choice. A few of these exchanges include Coinbase, Bitfinex, and others.

Step 1: Bitcoin Wallet

For the purchase of a coin, you get a wallet. All the cryptocurrency is stored in a wallet. The wallets are of two types such as cold wallet which is of the cost of the hardware and the safest one. Another is the hot wallet which is under the crypto exchange company or the provider. You can access your wallet with the help of software.

Step 2: Connect your Wallet to your Credit/Debit Card

Once you get your wallet, you can link it to your card. This means linking the company exchange account to the bank account. This will ease the process of buying and selling the bitcoins easily.

Step 3: Place your Bitcoin Order

Once you have everything in place, you can buy the bitcoins from the crypto exchange company of your choice, but the question is how much. Since the bitcoin business is a very risky one, you must make sure to get the right amount. Initially, you can buy as low as $25, to begin with. You can get as much as you want. Some transactions are so big at times that the companies don’t allow a complete transaction but only a fraction.

Step 4: Managing the investment of Bitcoin

After purchasing the bitcoins, the next step is thinking about what it is you want to use them for. You can store them to make transactions online, you can also hold them for future use in buying and selling of coins or you can trade with your coin daily with other bitcoin owners.

Zeply is the right choice for all your Bitcoin endeavors. Buy, store, exchange whatever you wish you can do in an instant. Not only that it is a custodial wallet granting users higher security and access to their account with no chances of losing their funds in the case of private key loss.