Holding a cryptocurrency, also known as "HODLing," refers to the practice of buying and holding digital assets for an extended period, rather than actively trading them. This term originated from a misspelled post on a Bitcoin forum in 2013 and has since become a popular term in the crypto community. Here are some key aspects to understand about holding cryptocurrency:
### 1. **Why Hold Cryptocurrency?**
- **Long-Term Gains**: Many investors hold onto their crypto assets with the belief that their value will increase significantly over time. This is often the case with popular cryptocurrencies like Bitcoin and Ethereum, which have historically experienced substantial price increases over the long term.
- **Market Volatility**: Crypto markets are known for their extreme price swings. Holding can help investors avoid the emotional decision-making that often occurs during market downturns.
- **Belief in the Technology**: Some people hold cryptocurrencies because they believe in the underlying blockchain technology and its potential to revolutionize industries like finance, supply chain, and more.
### 2. **Types of Wallets for Holding Crypto**
- **Hot Wallets**: These are online wallets that are connected to the internet, making them easy to access and use. Examples include mobile apps and web wallets. While they are convenient, they are also more vulnerable to hacking and cyber-attacks.
- **Cold Wallets**: These are offline wallets, such as hardware wallets (e.g., Ledger, Trezor) and paper wallets. They provide a higher level of security because they are not connected to the internet, making them less susceptible to hacking.
- **Custodial vs. Non-Custodial Wallets**: Custodial wallets are managed by third-party services (e.g., exchanges), while non-custodial wallets are managed by the individual, giving the holder complete control over their assets.
### 3. **Benefits of Holding Cryptocurrency**
- **Security (When Done Right)**: If stored in a well-secured cold wallet, holding crypto can be safe and immune to cyberattacks.
