Cryptocurrencies are the latest technological phenomenon that shook the world and turned many people into investors or gamblers. Even though Bitcoin, a pioneer of the crypto industry, was released more than a decade ago, it seems like the world finally noticed its benefits in the past couple of years.
Due to the massive adoption of cryptocurrencies, mainly Bitcoin and Ethereum, their market prices rocketed, making everyone consider them an investment opportunity.
In only a couple of years, Bitcoin managed from $9,000 to $65,000 per coin, making many people millionaires.
However, the downside of crypto is that the market is still very volatile. This means that even though the value of each of these cryptocurrencies increased significantly, there is no guarantee that they will maintain this trajectory.
In fact, in most cases, these cryptocurrencies go through market corrections, but these are far more severe than other investments like stocks just because the value of each coin can drop 80% and even more in hours. So, you might get a Bitcoin bonus in a crypto casino, but the Bitcoin’s value can oscillate daily.
So, there is a chance that you’ll earn a lot of money, but there is also the risk of losing all your money. It seems like investing in cryptocurrencies is very similar to gambling since nobody knows whether or not the price of these coins will go up or down.
Therefore, is investing in cryptocurrency gambling or investment? Well, let’s find out more.
How Risky Are Cryptocurrency Investments?
If we look at the entire crypto market in general, we can see that many people have earned a lot of money, and many people have lost money. So, how risky are cryptocurrencies?
Well, it depends on your strategy. Cryptocurrencies are the latest technological trend that has brought many opportunities to the world. However, with every new technology, there are many drawbacks and scams where people are trying to take advantage of the new trend.
So, for example, investing in new and untested cryptocurrencies that might drop to a value of 0 makes cryptocurrencies really risky. But on the other hand, investing in more stable cryptocurrencies like Bitcoin or Ethereum brings lower risk.
Cryptocurrencies are Investments in the Long-Term and Gambling in the Short-Term
Since the crypto market is very volatile at the moment, it is expected to see big price movements in the industry resulting in a volatile asset with higher risk for the short term. Even though cryptocurrencies are more than a decade old, it is still considered to be a relatively new technology that many different factors can influence.
For example, new regulations towards cryptocurrencies can affect the asset’s value, and even tweets from Elon Musk can draw so much attention to certain cryptocurrencies that will increase in price.
However, if you are a true believer in the technology behind cryptocurrencies and are here for the long-term, it is wise to consider it an investment. Cryptocurrencies come with different uses. In other words, they are created for solving some real-world problems. The technology behind them brings security to the highest level making them virtually unhackable. They are decentralised and can be stored or transferred easily.
If you believe in these real-world benefits that come from cryptocurrencies, then you’d know that the price of these assets will only grow in the future.
It is All About Taking Calculated Risks
Gambling is considered every activity where the outcome is unknown. However, people can speculate about the future and make predictions with their investments. This means that most of our decisions in life can be considered gambling.
The goal with every investment is to take calculated risks. Like in gambling, people want to make the bets with the highest probability but still get a decent reward at the end of the day.
The idea behind investing in crypto is that you should know more about the market. Learning what crypto is and its usefulness will help you manage your risks and make better decisions in the future.
So, one of the best strategies is to dollar-cost-average and invest a small portion of your budget regularly without trying to time the market.
It is Important Where You Invest your Money
Investing in Bitcoin or any cryptocurrencies is very similar to other investments and cannot be generalised as gambling or not. For example, investing in a blue chip stock like Apple is less risky than investing in a new tech company that just started its operations.
The same goes for cryptocurrencies. It is essential where you invest your money since the entire crypto space is full of different digital coins that might sound like a get-rich-quick idea at the beginning.
However, it is best to stick to the cryptocurrencies that are the longest on the market and avoid any new coins that might not reveal much about their history and goals.
Any investment can be considered gambling just because there are risks involved in the process without a clear idea of the outcome. However, even though cryptocurrencies might look like gambling at the moment, it doesn’t mean that this will not become the future of our finances.