If you’ve been one of our readers for a while, you may have heard us mention a theory where you hodl for at least 210,000 blocks. Well, this isn’t just some arbitrary number. There’s actually some science behind that number. Here’s why we’ve chosen 210,000 and why you should check some of your own bitcoin transactions on-chain.

The 210,000 Block HODL Theory

The 210,000 block HODL theory is the idea that you should hold any given bitcoin for at least 210,000 blocks from when it was transacted because as of today’s date (April 7th, 2019), there are no transactions with a lower fiat valuation 210,000 blocks after that transaction is sent.

For example: If you received a bitcoin payment in Block 500,000 then you should hold it until block 710,000 and see whether or not it has a higher fiat valuation than in block 500,000.

As far as we have been able to observe, every single satoshi that has ever been mined or transacted has a higher fiat valuation 210,000 blocks after it was mined or transacted.

Understanding The Block Reward “Halvening”

The primary reason why Bitcoin has value is because it is scarce digital money. What makes Bitcoin scarce is the block reward halvening that takes place every 210,000 blocks which is approximately every 4 years. Every 210,000 blocks, the number of newly mined bitcoins is cut in half. This sort of math controlled inflation is what makes the supply of bitcoin predictable.

This math based inflation is also what keeps the upward pressure on the price of bitcoin and incentivizes savings. This type of saving is called hodling by bitcoiners.

Testing The Theory

In order to see how well this theory has performed historically, we did some basic backtesting and the results are amazing. 100% of bitcoin transactions ever sent have a higher fiat valuation after they are 210,000 blocks old. Every…single…transaction.

There are two basic methods to test this theory. In traditional finance, they’re called backtesting and forward performance testing. Allow us to explain both in more detail.

Backtesting

Backtesting is for transactions that are not yet 210,000 blocks old. You can only look at a transaction and go backwards 210,000 blocks to see the fiat valuation of that much bitcoin. You cannot backtest for any transactions that were mined in the first 210,000 blocks since there were no blocks that existed 210,000 blocks before.

For example: If you just sent 1 bitcoin last week, it will be a few years before that transaction is 210,000 blocks old. To test this theory for such a transaction, you would need to subtract 210,000 blocks (go 210,000 blocks backwards) and see how much 1 bitcoin was worth then and see how well you would have done if you had sent that same transaction 210,000 blocks ago.

So, what if a transaction is already 210,000 blocks old? We would test forward performance for that transaction.

Forward Performance Testing

Forward Performance Testing is for transactions that are already 210,000 blocks old. You look at the transaction and add 210,000 to the block number to see the fiat valuation.

If you would like to do forward testing on a transaction that was mined in the last 210,000 blocks, you will need to wait until that transaction is at least 210,000 blocks old to see if this theory will stand the test of time.

For example: If you received a transaction in block 350,000 then you just need to look at the valuation of bitcoin in block 560,000.

Testing In Both Directions

Some transactions can be tested in both directions so you can see the difference in fiat valuations more than once if you want. If you were to take a transaction after block 210,001 and at least 210,000 blocks before the most recently mined block, you can see the 210,000 block hold theory in practice more than once with a single TxID.

For example: A transaction from the block 350,000 can be tested in both directions since you can look at block 130,000 as well as block 560,000 and see the fiat valuation for the transaction at each block.

You’ll be pleasantly surprised by the results of both.

How To Test The Theory Yourself

One of the most beautiful things about the blockchain is that it’s 100% public and transparent so you don’t need to trust us. You can verify all of this yourself. If you follow these steps, you can check any transaction on the blockchain and verify whether or not this theory holds true.

1. Pick a TxID. Anyone will do but we suggest looking up a TxID for bitcoin that is under your control. It’s more fun when you begin to see how much you could have made if you bought bitcoin earlier. It’s even more fun when you see the percentage gains that you have actually made.

2. Depending on what block that TxID is from, add or subtract 210,000 from that block number and look up that block on the blockchain.com block explorer. As far as we know, this is the only block explorer that allows you to look at both the current fiat valuation as well as the fiat valuation when the transaction was sent.

3. Click on the green box so that a fiat valuation is showing. This is what that bitcoin is currently worth in relation to the fiat currency that you’re set to. It’s probably USD by default.

5. If you hover the mouse pointer over this same box, it will show a small popup with the fiat valuation of that bitcoin when it was sent.

6. You can calculate the percentage gains by dividing the current valuation by the valuation when it was sent. For 1 bitcoin today that would be $5,000 and like $500 210,000 blocks ago. That would be a 1,000% gain. Not too bad for some magic internet money.

If you are able to find a transaction that doesn’t have a higher fiat valuation 210,000 blocks after a transaction was sent, let us know ASAP and we will take a closer look at it. So far, we haven’t been able to find a single transaction that has a lower fiat valuation after it is 210,000 blocks old. Not one single transaction.

Final Thoughts

No matter if you’re new to bitcoin or a veteran who has been in the space for years, we’d like to encourage you to look up some transactions on the blockchain and compare fiat valuations with a 210,000 block difference. We are sure that you’ll be pleasantly surprised by the numbers.

Like we’ve stated a couple of times already, we haven’t been able to find a lower fiat valuation after 210,000 blocks. If you can’t find any either, maybe you ought to set some bitcoin aside for at least 210,000 blocks and see what the outcome is.