The last time I checked with my wife what hodl means, she lifted her eyebrows and shook her head. Yet, I’m sure the four-letter word will soon ooze into the “real” world for daily use.
To ‘amphibians’ who are also living the crypto world, hodling is a household word. Derived from “holding,” it means clinging on to one’s asset, in our particular case here a cryptocurrency, against price volatility–sideways, northbound or otherwise.
We may wonder whether its origin was truly a linguistic accident back in 2013. If it’s a mere “enthusiastic” mistyping of “hold” as reported by Urban Dictionary, the fact remains: “hodl,” instead of “hold,” has been opted for by a group of people to mean precisely what they mean: a refusal to succumb to the temptation of selling their assets. People in general on the social media, too, seem to welcome it. Maybe it’s also due to HODL being an an unintentional acronym for Hold On for Dear Life.
I’d like to share with you why hodl is an apt term and not just another four-letter word. Let me know if you can like it or perhaps agree.
Hodl carries with it something intriguing that actually never existed before throughout the history of money. It concerns the monetary valuation of an economic good, as reflected in the determination of its money-value (price), both intrinsically and relative in relation to the value of other goods. Oh, what do I mean by this; let me explain:
The price of a good (say, your spoon) in any currency (say the US dollar), for instance, reflects the monetary value of that thing relative to the monetary value of any other stuff tradable in the world. So we can see valuation of an economic good is not possible without comparing it to other goods. The price of a good cannot simply be based on production cost, even with some addition in the form of expected profit. One could devise a useless titanium junk by spending many hours of labor using capital-intensive factors of production, but without an intrinsic value attributable uniquely to it, that very thing will stay useless and remain a junk. Besides, some economic goods are simply neither manufactured nor manufacturable, such as popularity or credibility.
Ludwig von Mises once introduced his Regression Theorem. In it he explained the determination of the prices of goods in relation to time. Essentially as I understand it, the value of an economic good such as your spoon above must also have also relied on its intrinsic past values, eg. yesterday’s value and so on. Its yesterday’s value was derived from that on the day before, and so on and so forth.
Thus the regression would take us back to an imaginable point when your spoon would be traded in a barter economy. Its intrinsic value must have relied in the first place on its unique attributes as an economic good. From here, we can conclude that for any good to be an economic good, it must possess its own utility or usability–real or perceived–before it could barter with other economic goods.
When the mother of all cryptos emerged and gained its value appreciation, people had no direct reference of bitcoin’s worth. How could we value something that never existed before? How can we value something whose worth is yet to be discovered?
Nonetheless, that’s exactly what we’ve done. If normally we rely on the past and present value, we have based the valuation on some perceived value in the future. Seen from this specific angle in the perspective of economic theories, bitcoin is phenomenal in that it seems to demand for a more forward-looking way of valuation of something that is still becoming. And we just scratched but one feature of cryptocurrencies. Another no less phenomenal is the finiteness of supply.
People turn ‘amphibian’ by entering the crypto world because they appreciate it for one reason or another.
One feature to appreciate btc and her offsprings is their other utilities. Thanks to bitcoin et all, for the first time in the history of mankind, we are now being presented with the possibility of choosing our own option of cryptocurrencies that are finite in their respective supply. The technology giving birth to them allows us to trust these phenomenal attributes as apodictically, or mathematically, true.
The above crypto attributes allow for a robust, positive economic outlook about the future in general, and especially about the future of the value of money and its governance in particular. In a world that is running the way it has been running, this nature is a one-of-its-kind, perhaps also once-in-a-lifetime, blessing.
I do feel I’m living in a most exciting time in history. Of course I’m being biased here, but I suspect you’re also feeling the same way about this time of our lives. Otherwise, you wouldn’t have read this far.
Back to HODL, it isn’t just another four-letter word. It’s an apt coinage for a happy ‘accident’ that carries with it the many aspects that make today a most exciting time in history.
Back to my wife, soon enough not only will she understand its meaning; she’ll also see and agree.
(Image courtesy of https://memegenerator.net/instance/78857591/300-hodl.)