Investing in Cryptocurrency - HODling and Staking

HODling

The term HODL originated in the online cryptocurrency community BitcoinTalk in December 2013 following Bitcoin price going down at an extremely rapid rate, when a reportedly drunken user revealed “I am HODLING” (they meant to say HOLDING). The misspelling since then stuck and has only become an increasingly popular term throughout the crypto industry.

Essentially it means the same thing as regular holding (similar to holding stock shares in a publicly-traded company) but with a crypto-centric twist. Holding, or HODLing in this case, recommends that a crypto investor avoids selling assets during, especially large or scary price corrections.

The reason it has become so popular over time is due to Bitcoin’s notorious price volatility. When Bitcoin price crashes, it can get especially violent so investors are encouraged to HODL their rare BTC strong. With HODLing, you can only make money on the market when it is going up, versus when it is going down.

There is no way to make money when cryptocurrencies crash or go down with HODLing. For this very reason, HODLing is recommended as a long-term approach (2 to 3 years) especially for the 2 most popular coins, Bitcoin and Ethereum, which are considered the gold and silver of crypto. By holding your Bitcoin or Ethereum in a wallet, you take advantage of its long-term appreciation in value over time.

To start HODLing, all you need to do is sign up for an exchange like Coinbase and buy your crypto there. You may then store it in a crypto wallet of your choice.

Staking

Staking generally refers to the holding of your cryptocurrency funds in a wallet that earns interest like Nexo.io or Celsius.Network and hence supporting the functionality of a blockchain system. The cryptocurrencies are being locked in their wallets by the stakeholders. They are then rewarded by the network in return. Staking provides a way of making an income.

Staking is a process similar to having a savings account with your bank and earning interest on the deposits except the rates can be anywhere from 6% to 12% depending on the network (or decentralized bank) you are using and the coins you stake. Staking is a great addition to the cryptocurrency space which offers notable applications. Staking also brings the aspects of familiarity, engagement, and reward into the ecosystem. This makes the investment all the more worthwhile.