Is Cryptocurrency Investing a Form of Gambling?
If you have been following crypto for any length of time, you have heard it referred to as gambling. Many people will refer to investing in cryptocurrency on the same level as playing online casino games. We’ve even seen some people claim that playing pokies are more profitable than investing in Bitcoin or altcoins.
Today, we will take a look at whether investing in cryptocurrency is a form of gambling.
Cryptocurrency is Not Backed By Tangible Currency
The first thing to remember about all forms of cryptocurrency, even Bitcoin, is that it is not backed by any form of tangible currency. It is a digital currency that is the product of complex algorithms and equations.
The value of a cryptocurrency is based on what individuals are willing to pay for it. If you took your Bitcoin wallet to a bank, you cannot exchange it for a USD equivalent. However, the same can be said about fiat currency now. Originally, the US dollar was backed by gold or silver. That’s no longer the case. You can exchange fiat currency for coins or coins for paper currency, but you cannot exchange it for gold or silver.
Exchanges Do Not Control The Price of Crypto
Contrary to popular belief, Bitcoin exchanges do not control the price of a cryptocurrency. They act as a transfer agent the same as the New York Stock Exchange, London Stock Exchange, or NASDAQ does. An exchange profits based on fees charged for transactions. Generally, the amount of money made by an exchange is not directly tied to the price of a currency outside of the increased volume.
You can’t say that with a casino. Casinos can control how much they make based on the games offered. The house edge of games is where a casino makes its money. Games with a higher house edge or RTP will bring in more money.
Values Fluctuate But Are Never Zero – Usually
How many times have you made a deposit at an online casino and lost it all? On average, that does not happen when you invest in cryptocurrency. When you invest in established currencies, you will see fluctuation in prices, but the value is never zero. Generally, you will not lose your entire investment.
That’s not to say it cannot happen. Many newer cryptos fail. Some never get off the ground enough to be traded on an exchange. You can have 1 million HarveyCoin, but if nobody will buy HarveyCoin, then your crypto is worthless. However, there will almost always be a demand for Litecoin, Bitcoin Cash, and even DogeCoin.
Casinos Don’t Go on Bull Runs
Just look at how much Bitcoin has risen in price over the last year and tell me if you’ve ever seen that at an online casino? Probably not. Sure, there are people that have won on progressive jackpot pokies, but those are individual cases. Everyone playing Mega Moolah doesn’t win when the progressive jackpot hits.
When Bitcoin goes up, everyone holding the coin wins. Furthermore, when there is a bull run on Bitcoin, there’s generally a bull run for altcoins. Just look at the price of Litecoin and Ethereum to see what we mean. Just like in the stock market, a bull run can benefit many investors.
Cryptocurrency is a Volatile INVESTMENT – Not Gambling
No matter how people like to spin it, the bottom line is that investing in cryptocurrency is still investing. It is a much more volatile form of investing than stocks or bonds. However, it can also produce profits much more quickly than one could ever imagine.
Crypto investing is not for the faint of heart. If you cannot stand volatility or seeing your investment drop 70% before making a bull run, crypto is not for you. For those that are risk-tolerant, crypto investing could be a great way to diversify your portfolio.
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