Bitcoin: gambling or investment?
The converging worlds of cryptocurrencies and online gambling have resulted in the emerging world of crypto gambling, which by the way is transforming the scene of the world’s gambling industry. This industry is growing so fast that it seems only yesterday that bitcoin was first introduced, while by now it is taking over the entire cryptocurrency market.
For some, the ultimate manifestation of the bitcoin application is seen in the gambling industry, where users get to gamble on crypto casinos, crypto slots or crypto betting sites, such as the one analyzed at CryptoGamblingTV. For others, cryptocurrencies are in fact part of the gambling industry. Yet, others see cryptocurrency as being itself a form of gambling. So, what is it? How to tell the difference?
Is bitcoin gambling or investment?
One very interesting thing to note is that an asset can reside on both sides – it can be an investment and it can be a gamble, always depending on the strategy that accompanies the action and the associated planning. It is important to make a distinction between gambling and investment in order to derive meaningful conclusions for the ‘nature’ of bitcoin.
So, if someone buys bitcoin just to sell it right away at a bigger value and get a short term win, all the way by making a profit, then this could be regarded as gambling. Note here, that selling it right away or generally rather quickly does not guarantee profit – the price might go down and so profit making can go down the drain as well.
But if someone buys bitcoin after having done some kind of risk tolerance analysis, return on investment analysis or any other planning that fits to the long-term commitment of the resources for future earnings, then this is more regarded as investment.
And besides the strategy and planning, it is also the time horizon focus that signifies the difference between gambling and investment. Gambling has a short term orientation, whereas investment has a long-term focus. So, investing in bitcoin is not gambling in that sense, especially if someone treats cryptocurrencies as assets that of course have risks entailed, but which can also accumulate greater value in the long-term horizon.
Yet, another very important feature of cryptos is that they are volatile. Volatility has to do with the changing price value of the asset over time or even from time to time. Thus, someone who buys bitcoin, for example, becomes exposed to the risk that this volatility brings to the crypto. This feature, according to many people, is what more profoundly distinguishes investment from gambling when cryptocurrency is concerned.
So, based on the above brief discussion it becomes clear that cryptos on their own are not forms of gambling – they are investments, but they can be treated as gambling in cases, where the strategies and planning are more aligned with the nature of wagering.
What about the other way round?
But then again gambling can be approached with a more sophisticated, well-devised strategy that extends beyond the more simple win or lose outcome totally rendered to chance. As a matter of fact, professional punters get to develop gambling and betting strategies that are moving away from the mere acceptance and assumption that everything in gambling has to do with chance and/or luck.
Such betting strategies are followed by bettors with the purpose of generating long-term profits – instead of just attaining to short term wins. Further, such betting strategies are developed by punters in conjunction with other strategies such as money management, risk management, bankroll management and so on. This effectively means that there is an entire system of practices, actions and approaches that comes much closer to what investment is than to what gambling is.
So, it could be that gambling itself can take the form of investment and within this framework, the overall question whether bitcoin is investment or gambling becomes irrelevant by definition!