What’s Better: Hodling, Staking, Or Lending Bitcoin?

The terms holding, staking, and lending are all different strategies. Bitcoin holders use it to earn profits from their Bitcoin investments. They all have their benefits and shortfalls. But to understand which strategy will be best and most profitable for you, it’s important to understand their different meanings.

Hodling

Hodling is a unique term in the crypto industry used to describe an investor’s decision to own an asset and keep it over time.

It entails investing in the purchase of Bitcoins at low prices and keeping it until the value of the Bitcoin appreciates for you to make good returns.

Bitcoin investors who HODL their Bitcoin last year and waited until this year to dispose of them would have made themselves a little fortune. The strategy is simply a means of keeping your Bitcoin until a later date before selling them.

Staking

Staking on the other hand is a process of acquiring Bitcoin or crypto-assets and keeping them in a wallet to gain rewards of profits. It is similar to HODL, but the only difference is that the staked amount is blocked and cannot be used freely until its date of maturity. Here, you will be receiving a certain amount as annual interest while your Bitcoin remains in the wallet until the expiry date of the staking.

Most blockchain networks that offer staking features do so to support their blockchain operations and security. In exchange for locking your cryptocurrencies, you will be receiving rewards from the custodians.

Lending

Whereas lending in the Bitcoin and cryptocurrency world has the same meaning as lending in the mainstream financial sector. It simply involves lending your Bitcoins to investors and earn passive interest in return.

Some decentralized finance (DeFi) firms offer this service. They provide the platform where you can lend your digital asset to other investors and traders to facilitate their trading. Your lent crypto asset will be generating passive income on a quarterly or annual basis, depending on the term of the agreement. Companies like Compound, AAVE, and Maker offer such services.

Comparing the strategies

From the above explanation, the three strategies offer the option of making profits from your Bitcoin. Both lending and staking will prevent you from using your Bitcoin until the agreed staking or lending period has elapsed. But both also offer the opportunity to earn higher returns. When you lend your Bitcoin, it will generate passive income until the expiry date of the deal. The same thing applies to staking.

But some Bitcoin holders may prefer Hodling since it allows them to sell off their coins anytime they prefer. In a very volatile market like the Bitcoin market, Hodling could allow you to make a huge profit when the market is at an unprecedented hike.

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