Is Bitcoin gambling : How is Investing in Crypto Similar to Playing at a Casino?

Ever since Bitcoin skyrocketed into popularity in 2017, traditional investors have continuously compared buying the coin to gambling. They point to its volatility, unpredictability and novelty as the main reasons why people are better off putting their money on safe investments instead of buying hyped up coins.

Are these comparisons accurate? Is Bitcoin a form of gambling? There’s a morsel of truth in their statements. When you buy Bitcoin, you don’t know what the outcome of your investment will be, much like in gambling. However, that’s where their similarities end. The two are more different than they are similar and in this article, we’ll answer the question ‘Is buying Bitcoin gambling?’

Who Said Bitcoin is Gambling?

Back in 2017 when Bitcoin gained traction and surged in price, skeptics from the established financial system voiced their negative sentiments about Bitcoin and likened it to gambling. One critic, the then Governor of the Bank of Canada, Stephen Poloz, said this about cryptocurrencies: "What their true value is may be anyone’s guess — perhaps the most one can say is that buying these things means buying risk, which makes it closer to gambling than investing."

Despite his warnings, no one was able to stop interested investors from joining the hype. The best Poloz could do was advise people to read the fine print first and make sure they know what they are getting into before buying Bitcoin.

Another Bitcoin dissenter, Jim Cramer, likened Bitcoin to Monopoly money and gambling. The host of CNBC’s Mad Money said, "What’s the difference between Bitcoin and trying to figure out the Super Bowl? I mean, it’s gambling."

At that time, Bitcoin broke through the $12,000 mark for the first time and people were excited about its potential. Today, Bitcoin's price is many times that amount, showing significant growth over the years despite its volatility​.

What Makes Crypto Investment Different from Gambling?

Though their concepts may sound similar, the difference between gambling and investing in Bitcoin lies in the number of elements that affect their outcomes.

In gambling, there’s no way of predicting the result of a game, and gamblers are always more likely to lose because of the house edge. This refers to the cut that casinos take from the player’s overall wins as a commission for their services.

On the other hand, traders consider plenty of factors when buying Bitcoin so they can make informed decisions that can result in favorable outcomes. Institutional investor activity, market favor, and current news are just some determinants that cause Bitcoin’s price to fluctuate.

As of 2024, Bitcoin has seen several significant developments and changes that further distinguish it from gambling:

Regulatory Environment

In recent years, the regulatory environment surrounding Bitcoin has evolved significantly. Countries like the United States have introduced more comprehensive regulations aimed at protecting investors while ensuring the legitimacy of crypto transactions. The European Union has also moved forward with its Markets in Crypto-Assets (MiCA) regulation, which is set to standardize and streamline crypto regulation across member states. These regulatory changes have contributed to a more stable and secure investment environment for Bitcoin​

Institutional Adoption

Bitcoin has continued to gain traction among institutional investors. Major financial institutions, including banks and hedge funds, have increased their exposure to Bitcoin as a hedge against inflation and a potential store of value. Companies like MicroStrategy, Tesla, and Square have also added Bitcoin to their balance sheets, further legitimizing it as an investment asset​ ​.

Market Performance

Bitcoin's market performance has remained strong despite occasional volatility. The market capitalization of Bitcoin has also increased, solidifying its position as a leading digital asset in the cryptocurrency market​ .

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Crypto Investing Is All About Research

Research is key to successfully investing in Bitcoin, something unnecessary when gambling. This isn’t exclusive to cryptocurrency investing. No matter the asset you’re investing in, the more you know, the bigger your advantage. An uninformed investor is no better than a gambler who relies on luck when betting on the 50/50 outcome of a game.

To gain information, traders use two different kinds of analysis: fundamental and technical. These help them gauge an asset’s performance, predict the chart’s movement, make informed decisions, and gain great returns.

How is crypto investing like gambling? 

Still, it’s no coincidence that many crypto traders also happen to play casino games, and that many casino enthusiasts also dabble on the side in a trade or two.

Why? Because in many ways, the thought processes of trading and casino gaming are very similar.

It's not all risk-taking

While there is an element of luck to playing at a casino, there is also a large amount of skill involved. The elements that the player has in their own control can be manipulated in a number of ways to make a game more or, in some cases, less likely to go your way.

Investing has much of the same factors surrounding it. Many people feel that doing well in investments, and certainly crypto investments, is completely down to luck. While some people who got rich from the Bitcoin boom in 2017 were lucky, there were also a lot of people who had followed the market and had a good idea that something along those lines was going to happen.

Both gambling and investing require a sharp mind and the ability to subtly evolve your strategy on the fly.

If you want to know how closely crypto is related to bitcoin poker, for example, watch the pros and see how they go about their business on the felt.

There’s a noticeable period of time when they are weighing up their decision. Do they call, raise or fold? It’s tangible how they weigh up their options and make their call.

They are working out which is the percentage play, and which offers “positive expectancy” based on the cards on the table and also the probabilities of them receiving the flop that they need.

When the psychological equations have been calculated, that’s when you’ll see the player pull the trigger.

Crypto investors oftentimes have a similar approach, doing their best to ensure that their investment is well thought out and has the maximum chance of being a success.

Research your choices

When investing, the very best traders will spend a great deal of time researching where the best crypto is to place their money. They will also dedicate their time to finding out the best time to do it. This is something that many players at a casino don’t do. Often, they just choose a game that they enjoy and then will start playing it.

In order to make money when playing at a casino, choosing your favourite game to play is not always the right choice. Take video slots, for example. When comparing them to how a trader looks at cryptos, your favourite slot might not be the right choice for you to play. If there is a slot that you do not like as much, but it has a 3% better RTP, then it makes sense to play that one instead. No trader on the market would invest in a crypto that had a 3% worse chance of turning a profit. If you are playing to make money, then it makes sense to think like a trader.

Know when to fold ’em

The glamorous preconception about trading life is that it is all buy, buy, buy and then the money comes rolling in.

In truth, the most successful traders all have one thing in common: knowing exactly when to sell and/or cut their losses.

Occasionally, it’s a hunch that instinctively lets a trader know that the time is right to call it a day with a certain asset, but usually its studying market signals and sentiment that leads to the understanding that a currency’s price is about to drop and eat into their profits.

In the bitcoin casino, a similar psychology should take hold. Whether you’re sat on 16 at the blackjack table and don’t know whether to hit or stay, or you’ve got a bad feeling in your gut at the poker table that calling, rather than folding, will lead you into trouble, take the easy way out: it might just be a bankroll saver.

Kenny Rogers sang about knowing when to hold ’em and when to fold ’em – and you’re not going to go against what Kenny Rogers says, are you?

The Difference Lies in the Investor

Even though buying Bitcoin and gambling are not the same, an uninformed investor may not recognize the difference. If you’re investing without any knowledge whatsoever about an asset, then you’re no better than a gambler, and the best you can do is hope that its price grows in the future. Knowledge is your most important tool in navigating the world of crypto investing. The more informed you are, the more you reduce the risk of losing your invested money. So even if Bitcoin crashes, you’ll still have profit to take and you won’t be on the losing end.

In conclusion, while there are elements of risk in both gambling and investing in Bitcoin, the ability to conduct research and make informed decisions significantly distinguishes investing in Bitcoin from gambling.

Things to keep in mind before investing in cryptocurrencies

Even with fiat, people are following tips that can ensure the growth of their investments. The same thing applies for digital assets. You can’t immerse yourself in the world of crypto investments without guidelines that will safeguard the future of your assets. Here are a few tips you can follow before investing in cryptocurrencies:

• Always check the transactions you make 

It’s easy to send your crypto funds by mistake if you’re not careful. That’s why it’s important that you double check every transaction you make using your coins, especially when you’re purchasing something online.  

• Check the markets 

Cryptocurrency is also susceptible to  changes in value. Always remember that the price of cryptocurrencies cannot be determined by rules, theory, or any government intervention.

The supply of these coins are solely determined by supply and demand, so don’t be surprised if you see the value of your coins at an extreme high or low. The best strategy for this is to buy coins when the prices are low then sell them once the prices are high. 

• Secure your wallet and private key 

Keeping your crypto wallets safe should be your top priority when you’re investing. Always make sure that your funds are secured by activating 2FA and backing up your wallet. Be mindful of the sites you visit because you can easily fall prey to online threats like phishers and hackers. 

How to secure your crypto investments

Cryptocurrency is inherently impossible to breach because the blockchain technology that it runs on is difficult to hack. Blockchain is protected by strong cryptography that would require an immense amount of energy. The only time a wallet or private key can be accessed by hackers is by sheer carelessness. 

Here are a few tips to keep your crypto investments:

Always secure your device 

Keeping your devices safe should be your priority especially when you use web wallets and software wallets. Make sure that the devices you’re using contain updated antivirus and firewalls. Another thing you should remember is to avoid downloading sketchy files and apps that could give your devices malware. 

Create a unique password 

One way to protect your crypto investments is to create a unique private key that will be difficult to crack. The best way to do this is to combine lowercase and uppercase letters. It will also be helpful if you add numbers, characters, and symbols. 

Limit usage of public wifi 

Using public wifi is risky because it's unprotected. It can direct the browser you’re using to a page that can replicate your exchange or wallet. Once this happens, it can access the information on your wallet along with your password.

The best way to counter hacks like this is to secure your browser by using VPN or don’t connect your device using a public hotspot. 

Invest in a hard wallet 

The safest place to store your crypto funds is by using a hard wallet. Since this wallet is not connected to the internet, it will be difficult for hackers to get hold of your assets. If you’re using crypto for payments, just allot a budget that you can keep in your wallet. That way, all your credit funds are secured and well-budgeted. 

Be wary of phishers 

Phishers are very common in hacking crypto addresses. One of the most common scams these phishers are doing is creating a fake web wallet and using it to mail links to crypto users. The emails they send are usually convincing and lures investors to log in with their information. To spot these phishers, always verify if the link displayed on your browser matches the one in your exchange wallet. 

Don’t store your funds in one wallet 

One of the best strategies to protect your funds is keeping them in separate wallets. Divide your funds and assign them in different wallets so you can avoid spending them all. Always keep two wallets where you can store your funds for investment and for daily expenses. 

Cryptocurrency has the power to change the world and launch a revolution that can change the traditional banking system as we know it. With its ability to make everything swift and seamless for people, the medieval financial system we are used to might be replaced and improved for the better.

To fully benefit from these promises of digital assets, you have to do your part by being responsible and gathering enough information before delving into the world of virtual currencies.

Five tips for the crypto investment newbie

Just like in every investment in life, you have to consider the risks that come with it. You’ll have to commit fully to it and this requires a lot of time and patience.

While this applies to all kinds of investments, there are more aspects you should consider when it comes to investing in cryptocurrencies. Since its market is still relatively new compared to other markets in the world, there is a lot of room for volatility. Its prices can spike up in a matter of days and drop in just a second. 

Similar to other markets, it’s hard to predict how the movement of prices will go. As a precaution to this uncertainty, it’s safe to say that when buying cryptocurrencies, you should only invest money that you are willing to lose. 

It could be the extra bucks you saved for a rainy day or the bonus you received for your excellent performance in the office. No matter what, don’t invest money that you’ve set aside for emergencies. In the simplest words, losing the money you have invested in digital assets should not result in your life collapsing into shambles.

1. Research

One of the most important things to do is to research cryptocurrencies. You don’t have to delve into the intricacies of the industry for this. What’s important is that you understand the underlying technology that makes the system work. 

• Whitepaper 

To get a better understanding of the coin you’re planning to invest in, you can check its published whitepaper. They’re all available online for free, so check them out. If it's too incoherent or doesn’t present a strong case, you might want to rethink investing in that specific coin. 

The whitepaper explains what the project is all about including its vision and solution to real-world problems. Sure, there’s going to be a lot of technical jargon in it. But if the vision isn’t crystal clear then it defeats the purpose of letting the public know about the project and what it stands for.

• Market Capitalization

A lot of people consider a coin’s price as the deciding factor when investing. While this may sound true, there’s also a lot of things you should check aside from the price. One of these is market capitalization which is the product of the coin’s price multiplied by the total number of coins in circulation. 

This gives you an idea of how many people are using it and if more coins are added to the circulation after transactions are verified. More coins in circulation means more verified transactions. If people and businesses are confident enough in using this coin in their everyday transactions, then it’s a good sign.

• Utility

Aside from the market capitalization, it’s also of utmost importance to know about the coin’s utility. Right now, there are more than a thousand altcoins in the market. Each coin is different in one way or another as long as they follow the fundamentals of a decentralized coin that is not governed by any central authority and is kept in a public ledger. 

Each coin serves a different purpose and you have to understand the utility it’s offering to the system. What makes it different from others? Do you vouch for its vision? Do you see it being resilient and surviving turbulent times? 

Examples of coins with specific utilities are Ethereum (ETH) and Ripple (XRP). Ethereum introduced the idea of Smart Contracts where not only currencies are verified in the decentralized blockchain but also other assets such as services and products. Ripple, on the other hand, focuses on elevating the Jurassic banking system into a modernized position to keep up with the times. 

2. Diversify your investments

After you’ve done your homework and you’re just one educational vlog away from being an expert, it’s time to narrow the scope of your research. When people hear ‘cryptocurrency’, the first thing that comes to mind is Bitcoin and rightfully so, since it’s the best digital coin in terms of price, market cap, and overall performance. It’s also the most popular. 

When it comes to investing in cryptocurrencies, the general public tends to invest solely in bitcoin. While that’s good and all, there’s another opportunity for growth in other coins. Investing in more than one coin increases your chances of having more return. Additionally, it’s a savvy move to invest while the prices of altcoins are still low.

• Altcoins: Learn all about ‘em

There are plenty of other coins with huge potential that are waiting for their deciding bull run just like how bitcoin had its own in 2017. Research is key! There are plenty of options waiting for you in the crypto market. Who knows? Your next coin could skyrocket.

• Starting Small

Once you’ve decided which coins to put your money into, you can now proceed to buy them. You can do this in exchange sites where your fiat money is exchanged into your desired coin. 

Now the next question is, how much should you spend on your investment? Test the waters first and start small with a few coins here and there. Once you’ve got the hang of it or you’re satisfied with how things are progressing, you can slot in more bucks and increase your investment.

Again, you should consider the volatility of the crypto market. It’s better to be cautious with your money so start small and wait patiently for its price to increase.

3. Be Secure

Once all that is settled, it’s time to make sure that your investments are secured and padlocked in safe wallets. You might be thinking, isn’t the blockchain already tamper-proof? Why do you have to take extra precautions with your coins? The answer lies in exchange sites. 

While blockchains provide reliable security that makes sure all transactions cannot be altered, exchange sites are not as safe. There have been cases before where exchange sites such as Bithump, Bitfinex, and Bitstamp were compromised and details about its customers were leaked. As ironic as it might sound, an exchange site is a vulnerable place to leave your valuables at. 

However, crypto exchanges are still the safest place to buy crypto. Trusted sites such as Coinbase and Binance are recognized as indomitable exchange sites. The next best thing to do to counter cyber hacks is to invest in wallets where you can safely store your coins. So after exchanging fiat money into your desired coins, you can immediately transfer them into your own wallet. 

• Hot Wallets vs Cold Wallets

Even with wallets, there is a safe and even safer option because you can never be too cautious especially when it comes to money. Enter the hot wallet vs cold wallet debate. In a nutshell, they both serve as storage for your coins. The difference lies in whether they are connected to the Internet or not.

Hot wallets are the ones that are accessible through the Internet. This is the more common option because it offers easy access to your coins where you can instantly transfer them after making an exchange. If you plan on using your coins for everyday transactions, this option is recommended. 

This does come with a risk though. Hot wallets are linked to the internet and as with all things that are connected to the Internet (except the blockchain), it can still be prone to hacks. Note that hot wallets are third-party apps that are independent of the blockchain which means you should choose them wisely.

For a more cautious person, a cold wallet is the only way to go. It comes as a hardware device like a flash drive. This means it’s not on the internet and is immune to cyber-attacks. A cold wallet provides the highest level of security for your coins and it makes sure that only you have access to your private keys. 

The only downside is it’s not as accessible compared to hot wallets. Overall, however, it still provides high security that would make you sleep peacefully at night without worrying over your digital investments.

4. Track your progress

After all that hard work is done and your eggs are safe in their hot or cold baskets, all that’s left to do is to see how the market changes. Since the crypto market is highly volatile where prices can change in a matter of seconds, it is of utmost importance that you keep track of how your coins are doing in terms of price.

Luckily, there are mobile apps that aid you in checking your investments wherever you are and whenever you want. Some of these are Blockfolio and Delta.

The most popular option is Blockfolio. It has a useful option where you can be alerted when a coin reaches a certain price. This way, you won’t even have to check every minute. Blockfolio offers a wide array of features such as a news feed to keep you up to date.

Delta is a faster option. Compared to Blockfolio, it updates the prices faster and more accurately as well. However, it doesn’t offer the diverse features that the latter has. 

5. Know when to sell

When it comes to reaping the fruits of your investment, there is never a perfect time. It depends mostly on your situation and the price of the coin. The common answer to the question of when you should sell your coins is when the price is high. 

If you’re looking for instant returns, then go ahead and sell your coins. If you’re looking forward to seeing where the market may go, hold onto your coins first and see what happens.

The temptation to make short-term gains with digital coins is always there especially during a bull run because you never know how long it’s going to last. People find it easier to exit once their investment reaches the price they want and that’s okay, too. . 

Pros and cons of investing in cryptocurrency

Investing in cryptocurrency is fit for long-term investors who can wait years to profit from their assets. This involves buying a crypto asset like Bitcoin (BTC) and Ether (ETH) and waiting for its value to increase over time.

Most crypto investors tend to do the ‘HODL’ strategy which is a slang term that means ‘hold on for dear life’ onto their assets no matter if the price drops. Rather than being swayed by volatile price changes in the crypto market, these types of investors choose to hold onto their coins and wait for the right time to sell them.

Know more about the pros and cons of investing in cryptocurrency below so you can choose if this is the best option for you. Here’s all you need to know:

Pros

• This can be done passively

Investing in cryptocurrency can be done during your spare time without having to be fully active on the market. All you have to do is buy a performing crypto asset and see how its prices move within the next few months or years.

• Suited for long term goals

Investing focuses on long-term profit or gains that are often bigger compared to trading. Price drops don’t concern investors for long term investments in cryptocurrency since they look at the trends in the long run and know that prices can rise again in the future.

Cons

• Results take longer to earn

Like most investments, cryptocurrencies also don't pay out overnight and it can be difficult to predict when with the market’s volatility. Along the way, you might be faced with doubt or impatience of profiting immediately. However, if you keep track of your assets’ performance through market predictions by experts and look at things from a long-term perspective, you can potentially gain substantial amounts from your investment.

• It has a higher risk

The crypto market is known for being highly volatile and therefore, risky. And while the famous saying goes ‘high risk equals high returns’, this also means the possibility of losing big money. Additionally, your investment can still result in zero return no matter how long you wait for it to appreciate if it’s not doing well in the market. So, make sure to choose your investments wisely. All you can do is try to protect your crypto from market volatility as best you can by being open-minded, cautious and knowledgeable of the pros and cons of investing in cryptocurrency.

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Words by: Leann Padilla