HODLing: Mastering Step 1 of the Bitcoin Revolution

The world of Bitcoin is constantly evolving, and as more people begin to understand the potential of this revolutionary technology, the movement is growing stronger by the day. If you're a Bitcoin believer, then you already know that there are many different ways to get involved and help support the Bitcoin revolution. That's why we've put together this series of blogs on the 7 steps in the Bitcoin revolution. From HODLing and educating to using, building, organizing, coordinating, and disrupting, we'll explore each step in detail and offer tips and insights on how you can get involved and help support the cause.

“Our favourite holding period is forever.”

Warren Buffett

The term "HODL" is derived from a misspelling of the word "hold" in a 2013 post on a Bitcoin forum message board. The original poster, who went by the name GameKyuubi, explained that he had made a bad investment decision by selling his bitcoin. He urged other forum users to HODL Bitcoin, which he saw as a revolutionary technology with long-term potential. The HODL acronym came to mean ‘Hold on for dear life!’ The term caught on and has since become synonymous with holding Bitcoin for the long term, regardless of market conditions. For Bitcoin investors, HODLing is a way to weather the volatility storm and emerge victorious in the long run.

Warren Buffett, widely considered the most successful investor in history, sums this up: “Our favourite holding period is forever.” Don’t worry if you purchase a local top and the price drops – people have been doing this since Bitcoin was first traded on exchanges in 2010. With time and HODLing, they have always been rewarded. Because Bitcoin ultimately has no top – remember that as a deflationary currency, its purchasing power will always increase over time - your investment will reward your HODLing. In this way, it is the ultimate savings technology. Don’t think about selling Bitcoin for a fiat currency. If you hold it to the point where you have created real wealth, you will have entered the next stage of the revolution. This is where Bitcoin becomes widely accepted medium of exchange to purchase anything.

The safest way to acquire bitcoin is to dollar-cost average. Dollar-cost averaging is an investment technique that involves buying a fixed dollar amount of a particular asset on a regular schedule, regardless of the asset's price. The goal is to reduce the impact of volatility on the overall purchase price. By buying bitcoin regularly, investors can effectively "average out" their purchase price, mitigating the effects of price fluctuations.

Additionally, dollar cost averaging can help to mitigate the risk of making impulsive investment decisions. By buying bitcoin in small increments over time, investors can avoid the temptation of "chasing" price increases or making panic-driven decisions during market downturns. In short, dollar cost averaging is a disciplined and effective investment strategy that can be used to acquire bitcoin whilst its price remains volatile. The other golden rule in acquiring bitcoin is never to invest more than you can afford to lose and see it as a long-term investment. It’s best to hold Bitcoin for at least 5 to 10 years, so don’t tie up capital that you might need at an earlier date. Otherwise, you may be forced to sell your bitcoin at a lower price.

Bitcoiners have a saying that ‘You don’t change Bitcoin, Bitcoin changes you’. Because of their inflationary nature, Fiat currencies have conditioned people to have a high-time preference. On the other hand, Bitcoin encourages a low time preference and the self-control necessary for this way of thinking. The difference between a high-time preference and a low-time preference can be best explained by looking at the concept of present bias. Present bias refers to our tendency to overweight the importance of the present relative to the future. This often manifests as a focus on immediate gratification without regard for long-term consequences. Individuals with a high time preference are more likely to display present bias, as they place a higher value on immediate rewards.

In contrast, those with a low time preference are more likely to consider the long-term implications of their choices and make decisions accordingly. The level of present bias displayed by an individual is a proxy for their time preference. As such, those with a high time preference are typically less patient and more impulsive, while those with a low time preference tend to be more patient and thoughtful in their decision-making. A low-time preference is necessary for solid and stable societies where the adults seek to build a better world for their children.

This way of thinking has been momentarily forgotten by a world distorted by monetary systems that cannot store value for the future. Bitcoin promises to restore the ancient wisdom that is still necessary for strong societies. It is perhaps somewhat ironic that modern-day computer code will return us to a character ethic of old captured in the Indian proverb: “Blessed is he who plants trees under whose shade he will never sit.” This noble way of thinking is recognisable in the oldest cultures on earth. It resonates in the African proverb: "He who plants a tree loves others besides himself." This speaks to the power of trees to benefit the environment and the people who plant them. Trees improve air quality, provide shade and shelter, reduce noise pollution, and help to prevent soil erosion. They also profoundly impact our mental and physical health, reducing stress and promoting relaxation. When we plant trees and HODL bitcoin, we are not only benefiting ourselves but also future generations. In doing so, we live up to the proverb's message of love and respect for all. Africans have a word for this: ubuntu. Ubuntu is an ethic or philosophy focusing on people's allegiances and relations with each other. The word ubuntu derives from Southern Africa's Bantu languages.

Ubuntu can be translated as "humanity towards others", but is often used in a more philosophical sense to mean "the belief in a universal bond of sharing that connects all humanity". In Southern Africa, the concept often contrasts with a western worldview that focuses on the individual. Philosopher and theologian Desmond Tutu described ubuntu:

"A person is a person through other persons. My humanity is caught up, is inextricably bound up, in what is yours. We belong in a bundle of life. We say, 'a person is a person through other persons.' It is not 'I think, therefore I am.' It says rather: 'I am human because I belong. I participate, I share."

There is no contradiction to this way of thinking in Bitcoin’s ability to empower sovereign individuals; if we are to look after others, we must first take care of ourselves. It could be argued that Bitcoin promises the most for Africa, where nearly half of the population lives below the poverty line. Yet it is also home to some of the world's fastest-growing economies and most entrepreneurial people. This dichotomy creates a unique set of challenges for African nations, many of which are still struggling to provide basic services like healthcare and education. At the same time, they are also facing increasing pressure to participate in the global economy. Bitcoin can help Africa meet these challenges by providing a way to store the immense value generated by its people and vast resources.

Moreover, it can facilitate transactions outside of the traditional financial system, which has not always served the interests of Africans. In addition, Bitcoin can help to ensure that African nations are not left behind as the global economy continues to digitize. A mobile phone and a cellular signal are all that is needed to bank a continent with the highest levels of unbanked people. Just as large areas of the African continent could leapfrog traditional telecommunications and go straight to cellular technology, so they will be able to circumvent centralised banking systems and move directly to superior monetary technology in Bitcoin. By giving all Africans access to the best form of money, a Bitcoin revolution can help to empower a generation of entrepreneurs and pave the way for the long-awaited African Renaissance. Perhaps the Bitcoin revolution will grow out of Africa, the cradle of humankind.

As we have seen, buying and HODLing bitcoin for future generations is essential to the Bitcoin revolution. It also ensures that Bitcoin revolutionaries have ‘skin in the game’; they are invested in Bitcoin’s success. Everything you then do in encouraging others to learn about Bitcoin and acquire it to protect themselves will benefit you and every other bitcoin HODLer. There is nothing selfish about this, in the same way that being incentivised to protect the environment is not a selfish motivation; it is ubuntu – compassion for self and others. In addition, HODLing bitcoin removes it from the fiat market, increasing the value of bitcoin – the basic economics of supply and demand. And the price of bitcoin is a critical piece of the puzzle on the road to global adoption; as the price rises, people take notice. American broadcaster and filmmaker Max Kaiser summed it up, ‘Come for the Greed. Stay for the revolution.’ 

As part of HODLing, it is essential that you self-custody your bitcoin. Not to do so is not to take advantage of one of Bitcoin’s most important qualities. Self-custody refers to the act of storing your coins in a wallet that you control. This is in contrast to entrusting your coins to a third-party service, such as an exchange or online wallet. Sadly, there have been too many instances of exchanges being hacked or ceasing to trade with the result that people lost all of their bitcoin – don’t make this mistake. Self-custody has become increasingly popular as it offers greater security and privacy. When you control your private keys, you are the only one who can access your coins. You are also responsible for keeping them safe from hacking attacks and other threats. While self-custody does require some effort on your part, it is the only way to keep your bitcoin safe and secure and take advantage of its decentralised properties.

So, step one in the revolution is to acquire bitcoin and self-custody it for as long as you can. Hold on for dear life! HODLing is simple but not easy. However, it is one of the most potent yet peaceful steps you can take towards a more decentralised, equitable world.

Unchained: Why You Can No Longer Afford to Ignore Bitcoin by Adam Richard John is a must-read for anyone who wants to understand the true potential and significance of Bitcoin. It delves deep into the technology, history, and future of Bitcoin, giving the readers a comprehensive understanding of how it can change the world as we know it. Don't miss out on the opportunity to educate yourself about this game-changing technology, pick up your copy of Unchained today!