HODL on for Dear Life: The history and meaning of ‘HODL’

Disclaimer: I hold LTC along with several other crypto currencies. None of the following constitutes investment advice. Readers are encouraged to do their own research and to never risk more money than they can afford to lose.

If you’re an active member of any crypto currency community, you’ve undoubtedly seen the term ‘HODL’ on the threads, in memes or on the Slack channels. While most experienced users of crypto currencies know what this means, it can be confusing to newcomers.

I wanted to provide some context for those who have been confused in the past, provide some history for those who don’t know it and hopefully some laughs to the rest of you about the meaning, origins and use of the term ‘HODL’. This is probably even more relevant today because of the downturn the market has taken the past few days.

Origins

The term ‘hodl’ is a misspelling of the word ‘hold’ and was first used by a bitcointalk forum user from Japan with the screen name GameKyuubi in a post entitled ‘I AM HODLING’ [1]. This was back in 2013 and he/she was pretty upset about all the posts of people who had sold before a downturn in the market (again, pretty applicable today). He/she had also been drinking, hence the typos.

What followed was a pretty epic rant about day traders and people bragging about their gains because they had successfully (or at least said they had) predicted the price dip. Sprinkled amidst the profanity are some pretty good points. Namely, that it’s hard to predict dips and spikes in a market and that if you believe in the market overall you should hold on to your coins, because it’s just as easy to hit it right as it is to get burned (I’m paraphrasing, of course).

Some people have also treated HODL as an acronym, attaching the definition ‘Hold On for Dear Life’ to it. This interpretation can be especially appropriate as crypto markets can be rough.

Reception

An extensive thread followed GameKyuubi’s original post that spanned over 130 pages on the bitcointalk forum page, with new comments being added until the summer of 2016. Throughout the thread you can find memes users created to depict the concept of holding (excuse me hodling) your coins for the long haul. My favorite, although it doesn’t actually say ‘HODL’ is included below, and was posted in the original thread by a user with the screen name knightcoin [2].

Credit: bitcointalk user ‘knightcoin’ [2]

Since the thread, ‘HODL’ has shown up all over forums, reddit threads and Slack channels. It is safe to say that the term is here to stay as it is so well established into the lexicon of the crypto community that it merited its own entry in Urban Dictionary [3].

Should you HODL?

Now that you know what the term means and where it came from, the real question is how it applies to you. In other words, should you HODL or not? Unfortunately, I don’t have a yes or no answer for you that will always work, and if I did I’d be a lot wealthier than I am now. It really depends on what kind of investor you are, passive or active (or somewhere in between).

Passive Investing

The passive investor puts a small portion of his/her money into the crypto currency markets, but doesn’t want to spend a ton of time monitoring the markets. For them crypto is a long term bet as they believe that it will someday supplant (or at least partially supplant) traditional currencies. They might spread their money around between the top few coins by marketcap (Bitcoin, Ether, Ripple, Litecoin…) and forget about it for months or years.

Active Investing

The active investor actively monitors the market and tries to make trades weekly, or even daily, as individual currencies dip and spike. For them the gains can be really big, but so can the losses. While some probably have the potential to make more money than the passive investor, they also put their investment at greater risk.  It is worth mentioning that most active investors who swing trade or day trade cryptocurrencies lose money in the long run.  Few are smarter than the market, but many are willing to find out the hard way.

As for me, I’m somewhere in between, HODLing coins for months at a time, but actively monitoring the market and trying to decide if a position should be changed or adjusted. All in all, if you’re like me and you believe the future of crypto currencies is bright, it might be a good idea to HODL and enjoy the ride. For more information about the origins of HODL, check out some of the other forum threads and articles that have been written about it [4, 5, 6].

Sources

  1. https://bitcointalk.org/index.php?topic=375643.0
  2. https://bitcointalk.org/index.php?topic=375643.80
  3. http://www.urbandictionary.com/define.php?term=hodl
  4. https://www.reddit.com/r/Bitcoin/comments/334xdm/hodl_where_does_the_word_come_from_any_deeper/
  5. https://www.reddit.com/r/Bitcoin/comments/2b8t78/whats_hodl/
  6. https://medium.com/dash-for-newbies/whats-the-backstory-on-the-word-hodl-27756392b698
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