Amid discussions around the uncertainty involving long-term HODLing, an XRP community pundit has shared the safest way to protect one’s XRP tokens from premature sales.
One central theme around crypto investments is the regret some investors face when an asset grows to impressive heights before they have the opportunity to gain exposure.
However, software engineer Vincent Van Code has suggested that most investors would have sold before the big breakthrough even if they entered the market early. He highlighted that while some community members anticipate an XRP run to $1,000, most will sell to take a profit even before XRP reaches this price.
Van Code confirmed that this would be due to an inherent human trait. Interestingly, in response to this, Tony Valentino, another XRP community pundit, shared what he believes could be the safest way for XRP investors to avoid this temptation of selling too early.
According to him, XRP proponents could leverage the inbuilt escrow feature within the network to create personalized escrows in which they store their XRP tokens. When creating these escrows, investors could set up a timeframe for when they want the system to release their holdings, like 2030.
XRPL Escrow Feature
For context, the XRP Ledger’s escrow feature lets users safely lock XRP or compatible tokens, such as trust line or multi-purpose tokens, until certain conditions are met. It makes it easy to send conditional payments without relying on a middleman.
There are three types of escrows: time-based, which releases funds after a particular period; conditional, which releases funds when a cryptographic preimage-SHA-256 condition is verified; and combination, which uses both methods.
When someone creates an escrow, the funds first enter a “Held” state. Once the system meets the conditions, the funds move to “Ready” or “Conditionally Ready.”
The process ends in one of three ways: “Finished,” when the recipient receives the funds; “Expired,” when the system can cancel the escrow after the set time; or “Canceled,” when the sender gets the funds back. Token escrows must include an expiration date, but XRP escrows don’t always need one.
The sender must reserve some balance to create an escrow, and conditional escrows come with an extra fee that depends on the size of the fulfillment data. Market participants looking to learn how to create escrows more easily can follow the guide from XRP Toolkit.
The Agony of Long-Term HODLing
Valentino’s latest remarks come on the back of a growing issue among investors. While these investors regret not entering certain markets early, they likely would have sold before the assets hit ambitious heights. A classic instance is Bitcoin.
For an asset that changed hands at just $2 in November 2011, Bitcoin’s current price of around $110,000 means the crypto asset has gained by a massive 5,499,900% over the last 14 years. To put things into perspective, any investor who bought $100 worth of BTC in 2011 would today be sitting on $5.5 million.
Multiple market participants have regretted not entering the market early. However, in his commentary, Vincent Van Code suggested that even if these market participants entered the market that early, they would have sold at prices such as $100 or $1,000, as most of them would not have been able to hold until now.
He claimed this trend is likely to play out with XRP, especially amid recent ambitious price predictions. To handle this issue, investors could leverage the XRPL’s escrow feature.
DisClamier: This content is informational and should not be considered financial advice. The views expressed in this article may include the author’s personal opinions and do not reflect The Crypto Basic opinion. Readers are encouraged to do thorough research before making any investment decisions. The Crypto Basic is not responsible for any financial losses.