In a way, yes—people consider buying bitcoin as gambling because of the cryptocurrency’s volatility. As a financial term, volatility refers to how much an asset’s price varies at any given time. A highly volatile asset means high risk. This is especially true in the case of Bitcoin as this cryptocurrency’s value can swing wildly from one day to the next.
Moreover, Bitcoin (BTC) speculating is similar to gambling in a way that buying stock is also gambling. You purchase stock hoping that the stock’s value will increase at some point in the future, and your gamble will pay off. However, Bitcoin is not quite the same as conventional forms of gambling, like lotteries or casino games. There are crucial differences between Bitcoin speculation and pure gambling.
Gambling, But Not Quite
In conventional gambling, the “house’ always has an advantage; players are statistically more likely to lose than win, especially in lotteries or casinos. Bitcoin differs significantly in this regard. Over the years, Bitcoin has increased its value considerably since its creation in 2009 by Satoshi Nakamoto.
Bitcoin, at the time of its introduction, was only worth a penny per coin. Today (January 2021), one bitcoin is worth USD31,741.00. This increase, however, is far from being smooth. Bitcoin has been involved in a slew of boom-and-bust cycles. In one infamous incident in 2014, Mt. Gox, the Toyko-based Bitcoin exchange, was hacked, and a total of USD460 million worth of Bitcoin was stolen. As a result, the value of Bitcoin went from USD1,200 to USD120.
In 2017, Bitcoin was worth around USD20,000, only to come crashing down to around USD3,000 a few months later. As you can imagine, many fortunes have been made and lost in Bitcoin speculation. Be that as it may, Bitcoin, for all its reputation as being volatile, continues to rise in value over the years. As a result, investors are always on the lookout for the best cryptocurrency exchanges.
The same can’t be said of conventional gambling. You can’t win in most types of gambling long term. You may pick up a win here or there, but the odds are not in your favor. The “house” will always win.
The Odds May Be In Your Favor
Traditional gambling like bingo, lottery, and casino gaming gives the operator an edge. Players ostensibly can beat the house’s advantage by gambling with higher return to player (RTP) and with a bit of luck. But, no person has ever relied on consistent luck and gotten away with it. This is why an inveterate gambler almost always loses in the long run.
With Bitcoins, the “house” doesn’t have an edge. Winners and losers may exist in cryptocurrency trading, but the odds are not stacked against you. Essentially, nobody knows how BTC will end up. Perhaps the nearest thing to a house edge in cryptocurrency trading is the 0.5% fee an exchange might take for every trade.
This token fee should spur you to do better than break even. After all, earning profits is the goal of every business transaction. However, some people can earn guaranteed money because of their skills and insights in making smart crypto trades. First step, however, is to learn how to buy bitcoin.
Some Games Of Chance Are Less Volatile
For many people, Bitcoin is more attractive than any form of gambling in the sense that the chance to make long-term profits is much greater. But, then again, there is more volatility in BTC trading compared with some forms of gambling. There were times when Bitcoin’s value would have a precipitous drop of around 50%, and then rise by another 50%. Those wildly volatile days may be long gone; BTC, however, is still riskier than stock market trading.
Where else can you see your USD5,000 investment drop by 20% the next day? Yet BTC had a reputation like that, earning for itself the status of a gambler’s game. Therein lies the risk of buying Bitcoin. In contrast, some forms of gambling are far less volatile. Some casino games can give you odds of almost 50%, meaning you’d have an even chance of winning. Not only can you win nearly half of the time, but house edges are also low.
But, the other side of the coin is that these casino games, when it comes to potential long-term earnings, can’t compare with Bitcoin.
Gambling Is More Familiar
People are more comfortable with the familiar. Bingo, lotteries, and casino games have been around for hundreds of years, while, as a whole, gambling has existed since hominids in the Paleolithic Era threw the first dice. People are more comfortable with gambling. They know more or less what to expect and can allocate the money they can afford to lose.
Bitcoin, on the other hand, is foreign to an average Joe for BTC has only been around for about a dozen years, and its reputation as highly speculative doesn’t help it either. No thanks to Warren Buffett, who essentially labeled Bitcoin as a form of gambling even after Bitcoin’s value had increased 23 times since his first pronouncements about Bitcoin.
There might be some basis in Bitcoin’s reputation, but people’s fears sometimes border on the irrational, and often the fear-mongering comes from people who have close to zero understanding of Bitcoins. Their unfamiliarity with cryptocurrency drives these fears. So, the proverbial Average Joe feels much safer gambling on games he knows and understands.
Lesser Chance Of Losing Your Shirt With Bitcoin
Bitcoin definitely won’t cut it as currency; it isn’t as stable as some major currencies, like Euros, US dollars, and UK pounds. Its volatility would make it a terrible global currency at this point. It’s this volatility that some of BTC’s opponents use to instill the fear that Bitcoin’s value could reach zero soon. The truth, however, is that you’d have a far greater chance of losing your shirt playing at the casino than with Bitcoin trading.
The house edge would eventually whittle down to zero a gambler’s capital. Lose in Bitcoin, and you could still salvage some of your funds after losing between 10% to 50% of your initial outlay. The prospect of losing in Bitcoin can fill anyone with dread, but you could still recoup some of your investments.
Crypto trading certainly involves gambling, but there are enough differences to set it apart from out-and-out gambling. For instance, you can’t just walk into a chemist’s shop and buy a Bitcoin scratch card. Instead, you get an asset that you can hold on to and hope that it will be worth more later.
If you like to gamble now and then and risk your money in a new way, then perhaps Bitcoin would fit the bill. The rewards are undoubtedly enticing enough. You just have to learn the rules of the game to reap these.
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