Staking and holding: which strategy is best for beginners?

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oneprobl4ckMild

August 19, 2024

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The term “HODL” originated from a viral message from 2013 in which someone mistakenly spelled “Hold” instead of “Hold on,” and it has since become a popular concept in the cryptocurrency community. It means holding your digital coins for a long period of time, without selling them even in the event of market volatility.

🔍 What does it consist of? It’s a simple strategy: you buy a cryptocurrency with long-term potential and keep it in your wallet hoping that its value will increase over the years.

✅ Benefits of holding

Easy to apply: You don’t need to know advanced techniques or analyze charts. Less stress: You don’t have to worry about the daily ups and downs of the price. High growth potential: If you choose the right project, you can make great profits in the long run. No operational risk: If you deposit into a secure wallet, you are not exposed to constant exchange rate attacks.

❌ Disadvantages of

It requires patience: it can take months or years to see good results. Risk of prolonged downturns: Some projects may not meet expectations. No Profit While Waiting: Your money sits idle and doesn’t make a profit until you sell it.

🛠️ What is staking? Staking is a way to earn rewards by locking your crypto in a Proof of Stake blockchain network. By doing so, you help maintain the security and functioning of the network, and in return you receive regular rewards.

🔍 What does it consist of? When you stake, you deposit your coins into a compatible wallet or directly into a platform that offers staking. These coins are used to validate transactions on the network, and you receive an annual percentage payout (APY) as a reward.

✅ Betting Benefits

Steady passive income: You’ll earn crypto on a regular basis, such as interest. You support the network: Your funds help keep the blockchain secure and decentralized. No need to sell – your assets continue to grow in quantity during the staking phase. High yields on some coins: There are projects that offer returns of 5%, 10%, or more per year.

❌ Disadvantages of Staking

Your funds are blocked – you usually can’t withdraw them for a certain period of time. Risk of price falling: Even if you gain more coins, if the price falls, you may lose the dollar value. Platform dependency: If you bet on an exchange, you have to rely on its security. Taxation: In many countries, profits from staking are considered taxable income.

How to choose between holding and staking?

The decision depends on your financial goals, your risk tolerance, and the time you want to spend on them.

Choose Participation (HODL):

If you prefer a simple strategy.
If you believe in the long-term growth of a hard currency (such as Bitcoin or Ethereum).
If you don’t want to rely on third parties or take additional risks.

Choose your bet:

If you want to generate a steady income without actively working.
If you have currencies that allow safe staking (such as ETH, SOL, ADA, DOT, etc.).
If you don’t need access to these funds in the short term.

Tips for getting started

✅ Do good research on the project before investing: Look for solid equipment, real usage, and growing adoption.
✅ Use secure wallets like Trust Wallet, MetaMask, or project-native wallets like Cardano or Solana.
✅ If you want to bet on an exchange, choose reputable platforms like Binance, Kraken, or Coinbase.
✅ Be wary of promises of high returns – if it sounds too good to be true, it’s probably a scam.
✅ Consider diversifying: Don’t invest all your capital in one currency or strategy.