Holding Eco-Friendly Coins is Greener and More Profitable

We have talked extensively about the carbon footprint of bitcoin and other cryptocurrencies. Earlier this year, we even had a post on the greenest cryptocurrencies in the world. If you are concerned about sustainability, then you are going to need to seriously consider the implications of making the wrong choices as a cryptocurrency owner.

It can be ethical to invest in cryptocurrencies like bitcoin. However, it is important to choose the right cryptocurrencies and not sell them more often than necessary.

You will leave a lower carbon footprint investing in bitcoin and other cryptocurrencies if you don’t sell them more often than necessary, since the global carbon footprint of cryptocurrencies was over 47 Mt in 2017 alone. The good news is that holding cryptocurrencies can also be good for your wallet as well as the planet.

Holding Cryptocurrencies Can Be Both Good for the Planet and Profitable

The term “hold” refers to the strategy of long-term holding of cryptocurrencies in order to benefit from their future growth in value. All that is required is to buy cryptocurrency for fiat money, ERC-20 USDT or other stablecoins and store it in your wallet, hoping that its price will increase over time.

This approach helps investors avoid the risks associated with short-term cryptocurrency price fluctuations and focus on its long-term growth. The hold strategy is widespread among investors, including owners of cryptocurrencies, stocks, bonds, and gold. It can also be an eco-friendly cryptocurrency investing strategy. While prices can fluctuate a lot over the course of a long-term holding, many financial instruments end up generating significant returns.

What is FOMO and FUD

These two acronyms and the phenomena they stand for are well known to traders and investors.

FOMO (Fear of Missing Opportunity) refers to the worry of missing out on the opportunity to benefit. This is the same feeling that a market participant experiences when an asset that has had a low value for a long time suddenly rises in price rapidly. Sometimes, due to FOMO, spontaneous decisions are made to convert BTC to XMR to enter the trend, but instead of rising, the asset may start to decline.

FUD (fear, uncertainty and doubt) is a combination of three factors. The uncertainty of the market situation causes fear and uncertainty when making decisions about transactions. This may interfere with active market participants in making a profit.

The hold helps alleviate the anxiety associated with FOMO and FUD. If you are in the mood for a long game, short-term price fluctuations are not so scary.

When is it profitable to hold

First of all, this strategy is used for Bitcoin, but it is also relevant for altcoins from the TOP 50. The cryptocurrency market is fundamentally growing, and the main projects are growing along with it. This is due to the increase in the number of market participants and the expansion of the scope of cryptocurrency.

Criteria for choosing a coin for long-term storage

The main selection criterion is the usefulness of the project. If it is aimed at solving significant problems, the likelihood of its success and growth in value is higher.

• It is not superfluous to familiarize yourself with the white paper and the roadmap of the project. These documents highlight the technical details and plans for further development. Of great importance is not only the roadmap itself, but also the dynamics of the implementation of the plan.
• It is important to pay attention to the team behind the project. Openness and extensive experience of developers do not guarantee success, but at least you will weed out suspicious and clearly fraudulent projects.
• Liquidity and trading volume are important as an indicator of a coin’s popularity. These two parameters help to get an idea of the ability to quickly sell an asset if you need it.
• Collaboration with other companies, projects and government structures is a good sign. This is an indicator of the reliability of the project and the prospects for its further development.
• Pay attention to the number of active wallets and the number of cryptocurrency holders.

Additional features

Coins can simply “lie” on the wallet in anticipation of a rise in price, but they can also work. Proof-of-Stake (PoS) blockchain assets can be staked, that is, take part in supporting the operation of the network and receive a reward.

Coins can also be stored in liquidity pools. By the principle of functioning, they resemble the banking system. You deposit your coins, they are loaned to other users, and interest is charged to you. All transactions take place on the blockchain.

Advantages and disadvantages of the strategy

Risk is an integral part of any activity, even if it comes down to owning an asset.

The main advantages of the holding:

• Owning a cryptocurrency does not require special equipment and specialized knowledge.
• Due to the low threshold for entering the market, you can start investing with very small amounts and gradually increase the volume.
• A well-balanced crypto portfolio can bring more profit than traditional financial instruments.
• The accumulation of liquidity stabilizes the functioning of the cryptocurrency ecosystem.

The strategy also has its downsides. Perhaps the main, but not the only risk for a long-term investor is the possible closure of the project. In addition, the following are possible:

• Loss of profit due to unsuccessful diversification.
• Profit loss when staking, as locked coins cannot be used until the expiration of the contract.
• Increasing the vulnerability of the wallet used for staking.