What Is Bitcoin Cash?
Bitcoin.com Block Explorer: How to Use
How to Buy Bitcoin Cash (BCH) with a Credit Card
How to Get Started with Bitcoin
How to Buy Bitcoin Online
Calculating Bitcoin Core Mining Profitability
What is a Bitcoin Mining Pool?
Bitcoin Cash is Bitcoin
How to Use the Bitcoin.com Wallet
Bitcoin Whitepaper: A Beginner’s Guide
Who Developed Bitcoin?
How to Buy Bitcoin Cloud Mining Contracts
Differences Between Bitcoin Cash and Bitcoin
How is the Bitcoin Blockchain Different from Banking Ledgers?
How to Create a Shared Bitcoin Wallet
How to Import and Export Bitcoin Private Keys
What is Bitcoin?
A brief visual lesson on the shared history of Bitcoin Cash and Bitcoin Core
The benefits of Bitcoin
Merchants: Learn how to accept Bitcoin Cash in minutes
Why Bitcoin Cash is Bitcoin
How to stay safe and keep your Bitcoin secure in a public world
It’s true: Bitcoin saves lives by bringing economic freedom to the world
Bitcoin adoption continues as more around the world buy and use it as cash
Here are several reasons why Bitcoin Cash (BCH) has the best traits of money
Bitcoin Cash (BCH) outperforms all other payment methods
What is the Blockchain?
How to Avoid Bitcoin Fraud
What is Bitcoin Double Spending?
Ver on The Rubin Report: How Bitcoin Works
Bitcoin Cash Compared to Bitcoin Core: Infographic
How to Setup Bitcoin Cold Storage
Bitcoin Glossary
How to Choose the Best Bitcoin Wallet
How to Choose the Best Bitcoin Exchange
Bitcoin Cloud Mining, Is It Worth It and Is It Safe?
How to Access Your Bitcoin Cash (BCH)
How Bitcoin Transactions Work
Roger Ver on the Economic Code of Bitcoin
Can I Shop, Travel, or Gamble with Bitcoin?
How to Setup a Bitcoin ASIC Miner
What is Bitcoin Mining?
  • Home
  • Guides
  • Why HODL is Bad for Bitcoin’s Growth

Why HODL is Bad for Bitcoin’s Growth

In this guide, we’ll describe how to create a healthy, utility-based Bitcoin economy and why the “hodl” mentality is seriously flawed.

What is HODL?

Within the Bitcoin Core (BTC) community there is a 4-letter meme, “hodl”. This mantra encourages users to “never spend” and “never sell” their BTC. It originates from a 2013 drunken post which mistakenly misspells the word “hold.” At the time, the price was crashing and the poster was attempting to calm his fellow Bitcoiners and prevent them from panic selling. While well intended, this cautionary plea for users to consider the long-term growth potential of Bitcoin ironically degenerated into a “never use Bitcoin, ever” attitude which is extremely harmful to the growth potential of the cryptocurrency.

Despite the humor of this meme, keeping a hold-only and never spend mentality for your Bitcoin stifles the adoption as a currency and prevents onlookers and users alike from seeing this powerful medium-of-exchange as anything other than a speculative asset.

bitcoin-whitepaper-title

The title page of the 2008 Bitcoin Whitepaper shows that Bitcoin is primarily a currency and not a speculative asset.

Hodling is nonsense and limits growth potential

Instead of hodling, the way to create an economy that fosters adoption and helps grow the network is through a spend and replace strategy.

For example, let’s look at a Bitcoin user named John who has $100 worth of Bitcoin Cash (BCH). Using the spend and replace strategy, he:

  1. Spends $50 worth of BCH to buy something online.
  2. Uses fiat currency to purchase an additional $50 worth of BCH, replenishing his holdings to the amount he began with.

With this method, John is able to both use Bitcoin Cash (BCH) and hold the currency for future gains. He is continuing to build his portfolio while using Bitcoin as the digital currency it was intended to be.  This main benefit of this strategy is that it incentivizes businesses and individuals to adopt Bitcoin while helping the network grow.

In a recent talk by Swedish Pirate Party founder Rick Falkvinge, he talks about how “hodling” is detrimental to the Bitcoin economy,

“The whole idea is to grow the economy to a point where you no longer need to change cryptocurrencies back into central bank money and back again into cryptocurrency. The point was grow the economy where you receive your wages in Bitcoin, paid your rent in Bitcoin, paid your food in Bitcoin, shopped online with Bitcoin; where you no longer needed central bank money for anything where you would cut fiat entirely out of the loop. Once your only receiving new money in cryptocurrency and your using this cryptocurrency, then your on the path to a new monetary system.”

Recycle: Buy, Spend, and Replace

Spend and Replace: Bitcoin Recycling

Spend and replace is the way to continue building the Bitcoin economy and ecosystem. Another way think about it is by recycling. By actually using Bitcoin, you are helping to create utility. By creating utility, it will make others want to use it too.

Bottom line: spending your Bitcoin Cash creates value which increases the total price of your portfolio.

An easy way to begin recycling is to initially buy Bitcoin Cash (BCH) with fiat currency. If you unable to buy Bitcoin Cash (BCH) online then find a local seller or a friend to sell you some. Then if you buy something online, replace the coins you spent by buying more. You should also try to get your employer to pay your wage in Bitcoins so you can earn more. There are other ways to earn Bitcoin too, such as buying a mining contract.

We hope this guide has cleared up why stashing away your coins and never spending them is not only bad for your investment in the long-term, but also bad for the ecosystem in the short-term.

Download the Bitcoin.com Wallet to get started using Bitcoin Cash (BCH) today!

Bitcoin Knowledge Base


Bitcoin News