Is crypto trading similar to gambling?

Most people understand the basics of cryptocurrency but not all its elements. Already, there are over 68 million blockchain wallets. The crypto market is growing, with more cryptocurrencies being introduced into the market. Is trading cryptos gambling? 

This is the one thing that most people ask themselves. While it is often clear that crypto trading is just like handling any other investments, it tends to have some similarities to gambling. Is it based on luck or strategy? Well, this question is often complex to answer. 

Establishing the connection between crypto trading and gambling will help you understand the two better.

Is trading cryptos gambling?

Crypto trading and gambling have both similarities and differences. The similarities may make the crypto trade seem like gambling while it is an investment.

The similarities

Several similarities exist between gambling and trading cryptocurrencies. 

1. They feature huge risks 

One of the things that may make trading cryptos gambling is that they both feature huge risks. The volatility of digital currencies is what makes trading them a risk. Unexpected changes in the market often cause significant price shifts, leading to a significant drop or increase in value.

As much as the trade is attracting the attention of governments, the market is still unregulated, which poses yet another risk. Cryptocurrencies are also affected by hard forks and discontinuation, which often attract price volatility. 
Just like in gambling, it is essential to understand the risks associated with trading cryptos.

2. They involve strategy

Depending on the game, a gambler must have a strategy. Players must think critically to establish what their opponent might be holding. In some games, you must establish which ones pay the best. What makes trading cryptos gambling is the fact that plenty of strategies is involved. 

Cryptocurrency traders’ strategies are determined by what their goals are. That is whether it is making profits in the long term, reducing risk, and much more. 

3. Discipline is a key factor

To thrive in the gambling world, you must have discipline. When it comes to gambling, which is often considered entertainment, it is easy to get carried away and be addicted. Gamblers end up spending tons of money with the hopes of making big wins. Unfortunately, misery follows.

While the crypto market does not necessarily have addicts, often, investors end up pumping too much money into it. Being a highly volatile and risky trade, it can be considered irresponsible to over-buy cryptocurrencies. 

Traders and investors need to maintain discipline when dealing with cryptos to avoid such losses. Dollar-cost averaging is among the strategies that traders use to remain responsible when dealing with cryptocurrencies. 

While there are tons of similarities between gambling and cryptos trading, the most outstanding ones include risk. While the returns may be impressive, there are associated risks that the traders need to be aware of. 

Like gambling, cryptocurrency trading requires a high level of strategies for satisfactory outcomes. The risk involved may also tempt investors to buy more digital assets than they should. This makes discipline critical. 

Speculative traders exhibit discipline in their actions, unlike traders who practice cryptos gambling.

The differences

For people who are yet to understand how cryptocurrency trading works, the question “Is trading cryptos gambling?” may be hard to answer. This is mainly because drawing the line between the two becomes challenging. But is trading cryptos gambling? The answer is no. 

Not that the market determines the success of cryptocurrency trading. That is unlike in gambling, where random variables often decide it. When it comes to gambling, prediction is almost impossible.

In cryptocurrencies, predicting the markets is difficult, but some level of analysis can be done to help with predictability. A cryptocurrency trader is subjected to market demands. They are also required to buy assets. This is different when it comes to gambling; you only take chances by playing a game.

By comparing the similarities and differences, it is clear that cryptocurrency trading leans more on the side of being an investment rather than a gamble. This is also because the repercussions of over-exerting yourself in both are just as dire. 

Note that while both require strategy, you do not need special skills to be a cryptocurrency trader. Whether or not you are skilled, there is no guarantee that things will go your way. 

Are you doing cryptos gambling or speculating?

While it is easy to confuse crypto trading and gambling, they are far from being the same. However, traders often find themselves gambling instead of investing or trading. How do you know that you are a crypto gambler?

If a trader takes action based on a tip he or she saw on a random flyer somewhere, then he is gambling. If a trader is using all his roll to add leverage on a single trade believing he will score, then it can be considered gambling. Trading with the fear of missing out is also gambling.

Are you a speculator in the crypto market? Note that traders use information, process, and thinking to transfer or assume risk in their moves speculating crypto. Speculative traders do not operate in an emotional playground as gamblers do. 

They also do not rely on tips to make their moves. They also do not bend to the fear of missing out when making decisions. Note that they exist in an imperfect environment where they get conflicting information. They then process this information and think to come up with a plan. 

Speculators are considered valuable in the crypto world as they provide the market with liquidity. Often cryptocurrency traders can be thought to be gambling, but what they are doing is speculating.

It is vital to research and read about cryptocurrency trading. This way, you will avoid finding yourself in the middle of cryptos gambling. You need to spend time learning about cryptocurrencies and get as much knowledge as possible before venturing into them. It would help if you also found out which cryptocurrencies are worth investing in.

As much as there is risk in gambling and trading cryptos, doing high-level speculation can hedge it. Proper knowledge creates some level of stability.