Shikhar Vaibhav on November 20, 2019
HODL (Hold On for Dear Life), started as an enthusiastic misspelling on the internet is not just an investment strategy in the crypto space. Wikipedia says, “Hodl (/ˈhɒdəl/ HOD-əl; often written HODL) is slang in the cryptocurrency community for holding the cryptocurrency rather than selling it.” For practitioners of this strategy or ‘HODLers’, as they are known popularly, it has transcended to a lifestyle of accumulating crypto over a long period. For them, securing their crypto-investments in the best way possible has become imperative. The usual behavior here is — never touch your private keys but just accumulate the holdings over time.
During the last major bull run in December 2017, Bitcoin reached a price of ~$20,000. Those who were able to sell at that price made some good gains. The strong rise in price saw some enthusiasts making wild forecasts about the high prices down the road.
A few months later, the predictions on the opposite spectrum turned out to be true. The price movement maintained a downward trend for most of 2018. Some people kept averaging in hoping to break even, while some forgot about Bitcoin and cryptocurrency market while it was being ravaged by bears. HODLers did not care, they either kept adding to their portfolio or simply didn’t look at their portfolio. You may wonder, why?
Should you HODL?
Bitcoin’s price movements can scare any non-seasoned investor. If the cryptocurrency were a stock, people would run away from the market to never return. For this article, we will consider Bitcoin’s price movements.
If we take a look at Bitcoin’s price history, after every major bull run we see almost eighty percent decline in its price, so those who could not trade right, loses. This is where the concept of HODL comes to the rescue. If we look at Bitcoin’s price movements over a yearly time frame, it becomes clear that even after the ~80% downfall, Bitcoin forms a higher low every major cycle. So technically, if a regular person who can not spend their time trading actively bought Bitcoin in 2016 would still be in profit even in the lows of the 2018–19 bear market. This is the reason why HODL becomes an attractive option for long-term cryptocurrency investors. Similar movements can be seen in the charts for good altcoin projects.
Not to be biased, an investor should consider both bullish and bearish scenarios which becomes clearer as the crypto project makes progress over time.
With the interest in cryptocurrencies rising along with widespread discussion and adoption, more people are flocking to the space. For them, it becomes a necessity to learn about the best practices to HODL or just store their cryptocurrency safely. You can refer to this article to learn about the best methods for HODLing cryptocurrency safely.
Cryptocurrency prices have been on a rollercoaster ride, since the inception. As an investor, the easiest method to make good profit is to identify good projects and invest in them for long term (HODL). Practice the best methods to store cryptocurrencies and never lose private keys/mnemonic phrases for your wallet. Cypherock X1 is the best method to safely store your funds for long term HODLing and recover your seed phrases in the times of need.
Shamir Secret Sharing Scheme is used in Cypherock X1 to create cryptographic shares of the recovery phrase of the crypto wallet to ensure that it is split among different tamper-resistant devices to have an effective mechanism for wallet recovery and fund storage. Using the device, you can geographically distribute the cyCards which have the encrypted shares or give it to a trusted set of people without worrying about getting hacked or losing their funds since each card has PIN protection just like your hardware wallets. If you are someone who prefers a single-sig wallet like a hardware wallet for HODLing, Cypherock X1 will be useful to secure the seed phrase of the wallet. Infact, it can secure multiple seed phrase of different wallets in a single product. But if you are someone who wants similar security properties of a multi-sig wallet but find multi-sig daunting or if multi-sig does not support the Blockchain asset that you want, then Cypherock X1 can be used to secure the assets with similar security properties of an onchain multi-sig.
It intends to solve the key management problems with cryptocurrencies and wants users to have the same peace of mind and confidence in holding their own Crypto that they have (*assume to have) with their fiat money in the banks.