Tim Draper entered the cryptoasset market on 27th June, 2014 when he purchased close to 30,000 bitcoins on an online auction. He received wide coverage for his purchase of seized bitcoins from the Silk Road marketplace website.
Who is Tim Draper?
Timothy Cook Draper is an American venture capitalist and founder of the firm Draper Fisher Jurvetson in the year 1985. He is also the founder of Draper Associates and Draper University. With investments in Skype, Hotmail and Tesla, he has a net worth of around 1 billion dollar. Tim Draper has predicted that the market value of bitcoins would touch $250,000 by 2022.
What is “HODLing”?
The term “HODLing” was coined in 2013 in a bitcoin chat forum, by an investor who was watching bitcoin’s price fall sharply but decided not to sell. He wrote a post titled, “I am HODLing,” meaning to write “HOLDing.” HODLers are crypto investors who buy and hold their positions regardless of price. Whether the market is up, down or sideways, these folk stay invested, confident in the long-term value of crypto. The term “HODL” was turned into an evocative acronym: Hold On for Dear Life describing the huge volatility associated with the cryptoasset market.
One of the most rational approaches for investments as volatile as bitcoins is holding, because trying to time the market for such an investment is nearly impossible. If we take 5 out of top 10 cryptoassets in Jan 1, 2017 and compare them on Jan 2, 2018 we would get the following result –
BTC — $963.00 to $16,460 — total $17,092
ETH — $8.26 to $878 — total $106,295
XRP — $0.0065 to $2.41 — total $370,769
LTC — $4.37 to $255 — total $58,352
DASH — $11.26 to $1,160 — total $103,019
So, for an investment of $5000 a person would have got a return of $655,527. With this example it highlights why holding is one of the best strategies for the cryptoasset market.
Tim Draper is one of the prime proponents of the “HODLING” strategy in the cryptoasset market. He expects that in five years, bitcoins will be one of the primary methods of payment and it would be holistically integrated in our everyday life.
He is an ardent believer that bitcoins will be bigger than the internet someday. His strategy of holding or “HODLING” is based on the following principles:-
- You should believe in the blockchain technology.
- Patience is the key, look for long term gains over short term ones.
- He believes that the peak of the bubble is still far away, and cryptoasset might be bigger than the internet.
- Since the prices are not too high right now, it could be the best time to experiment and take risks
- If you are not sure what to do regarding your investments, you should hold on and wait
- If you are unable to keep pace with the changing scenario, hold and wait
Indian Market Scenario
In India, holding bitcoins or other forms of cryptoassets is legal. The finance minister during the Union Budget 2018 speech said, “The government does not consider cryptoassets legal tender or coin and will take all measures to eliminate use of these crypto-assets in financing illegitimate activities or as part of the payment system.”
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However, the Indian government has recognized blockchain and said that a “distributed ledger system or the blockchain technology allows organization of any chain of records or transactions, without the need of intermediaries. The government will explore use of blockchain technology proactively for ushering in digital economy.” The government’s acceptance of the blockchain technology has come as a breather for the large number of investors in the cryptoasset market. In the future there is ample scope for the inclusion of cryptoassets in India as well with better safety and security measures hence for the Indian investors it is best now to “HODL” and hope for government acceptance as bitcoin and cryptoassets continue to rally world over.