Holding Cryptocurrencies: what it is, advantages, disadvantages and how to do it

In the world of crypto there are a large number of terms that, when you are new, can be difficult to identify. One of them is HODL, HOLD or holding cryptocurrencies .

Simply put, it is a word in English that its translation means "Keep". But what does it mean to hold cryptocurrencies? I will explain it to you below, as it is a term that you will hear frequently.

 

 

What is HODL or holding cryptocurrencies?

The word HODL means “Hold on For Dear Life”, The term is actually misspelled, and for years it has been like a meme in the crypto world, since it is really spelled HOLD.

Now, when a person says that they are going to hold cryptocurrencies or HOLD, it means that they will not move their bitcoins or cryptos for a certain period of time . In simple words, she will buy them and keep them in her wallet for a long time, in order to make a profit in the future when it has increased in value.

It's an easy way to profit from the volatility of cryptocurrencies . However, it is a strategy that is only applied by those who believe that they can increase their price in the future; a fact that, if it occurs, will end up leaving a high profit margin.

To summarize, it can be said that the hold is a type of strategy that consists solely of keeping your cryptos for a long time. However, there is also a term that you will see frequently and that is staking . This can be very attractive because of the benefits it offers, since it has a similarity to the hold . For this reason, I will show you which is more profitable.

Staking or HODL: what is better to get profitability?

First of all, it must be defined that staking is a form of mining , which basically consists of blocking your funds in the blockchain of a specific project. While you may benefit, your cryptocurrencies are likely to be vulnerable.

Despite the fact that these are blocked on the network and benefit its security, on many occasions there have been attempts to hack the platforms; some frustrated or others with success. This means that your cryptos will be at risk, while in case of holding cryptocurrencies your funds will be in a cold wallet .

It can be said that you will also be holding, but on a blockchain and with risks; although it is a way to achieve greater profitability in the short term. Also, it rewards you with cryptos for locking your funds, while holding will not multiply your tokens .

For this reason, when defining the decision that you will make, you must establish your priorities; if you want to keep your cryptos for a long time or if you want to get more profit in the short term.

Advantages and disadvantages of holding cryptocurrencies

Holding cryptocurrencies is one of the best ways to take advantage of their volatility in the long term. Although you should know that, just as you can benefit in the long term, holding can also bring some disadvantages. For this reason we tell you the positive and negative aspects of it, starting with:

Advantages of holding

• Great benefits in the long run.
• It is a safe way to invest in cryptocurrencies .
• You can start and end whenever you want, but it is suggested that the holding period is long for greater benefits.
• You will not have to worry about fundamental or market changes that may affect the value of the digital currency.
• You will always have guaranteed profits .

Disadvantages of holding

• Its benefits begin to be noticed after months or years.
• You must be persistent and not abandon the strategy.
• If you choose an alternative cryptocurrency to Bitcoin you should evaluate the project before holding , as it can be a scam, which means that you could end up wasting your time.
• If you are a newbie, it is likely that you have bought the crypto at an ATH (all-time high), which means that surely when you start holding cryptocurrencies you will have losses.
• Market dips can play on your emotions, making you want to sell and stop holding. That is when you must have a cool head not to sell.

How is crypto holding made?

To make a hold you simply have to buy cryptocurrencies and store them in a cold wallet . However, if you want to do it and that its benefits are more notable, you must establish a strategy like the following:

• Choose the cryptocurrency you want to hold ; It is suggested that it be Bitcoin, Ethereum or you can take a look at this list with the best cryptocurrencies to invest in the long term , always remember to investigate each one.
• Buy the token or a fraction of it on a regular basis . You can do this every 7, 15 or 30 days; as best suits your budget.

By completing those 2 steps you will already be holding cryptocurrencies. Although the most important thing is that you also comply with these 3 rules: maintain the strategy over time, buy if the price falls and do not sell when the price is low .

Important: In case the market falls, we suggest having liquidity, in order to buy twice what you would buy when the price is high.

It should be noted that when investing it is advisable to diversify. If you want to do it with your portfolio while holding, the most recommended thing is that you do a complete investigation of each crypto in which you want to invest.

Why not hold on a hot exchange or wallet?

A very frequent question when you are starting to hold cryptocurrencies is, why not do it in a hot exchange or wallet? The question has a simple answer, and it is: risks .

Unlike a cold wallet, cryptocurrency exchanges and hot wallets are connected to the network. This means that your tokens or cryptocurrencies will be vulnerable to: hacking, server crashes, data loss, the closure of the exchange, among others. Therefore, under no circumstances should you hold cryptocurrencies on the aforementioned platforms .

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