This is a packed paragraph with many different ideas. Let’s unpack it…
- Holding tokens (of any sort)
- Flow of financial instruments
- Investment in an organization
- Opportunity Cost and FOMO
All these ideas need to be unpacked and discussed separately. They are not necessarily all tied together…
Definition: Maintaining a large amount of some crypto token in the hopes of the token value rising exponentially… aka Mooning.
HODLing is possible with any coin or token. It is generally a very risky as an investment strategy since most tokens have extreme volatility and almost universally decline in value after an initial burst of FOMO (fear of missing out) purchases by the general crypto public.
Flow of Crypto
Many tokens have a discrete supply set at the time of token contract creation. The tokens are generally offered for sale to investors at a certain price based upon expected market demand of the tokens. This set price is a tricky variable to set correctly. But for the most part, it seems to be loosely based on the amount of cash the organization wishes to raise.
However, it should probably more correctly set on the expected revenue of the company set against the amount of cash needed to develop the platform or product. The long term price of the token will be based on the long term incoming revenue after product/platform release… because basic “economics”.
The flow of the token starts from token creation to ICO to HODLers to exchanges to end-users or SNOs as appropriate… but the valuation of the token is only loosely set by the velocity of the tokens. It’s really based on the revenue of the organization set against the number of tokens in circulation. The fastest way to increase the price of a token is to burn it… aka sending a lot of them to a
0x00000 address. This takes those tokens out of circulation and increases the value of the remaining tokens…
However… if an organization is not bringing in expected revenues, the price may not rise.
Investment in an organization
In the crypto world, this would be accomplished through purchase of large amounts of tokens during the ICO sale… typical purchases are minimum $10,000 USD of tokens. But the tokens themselves don’t give anyone a particular share in the organization in any legal sense. And after the original ICO, purchases of the token from an exchange do not support the organization at all… that purchase would be a HODLer purchase… aka investment in the token not in the company.
Opportunity Cost and FOMO
One only has limited time/money/assets/knowledge and so forth. One can not do everything at the same time. So, one must choose to do something rather than something else.
If I spend my money on purchasing STORJ tokens, I will have less money to purchase BTC. But, I may believe that STORJ will rise from $0.10 to $1.00 in 6 months, so my FOMO mind set will lead me to purchase $200.00 in STORJ at an exchange hoping for a nice $2,000.00 6 months from now.
All four of these things are separate issues and all of them are independent of the title of this thread.