Cryptocurrency trading is one of the fastest growing markets in the world. The number of global cryptocurrency users reached 221 million in June 2021.
This blog explores whether cryptocurrency trading is investing or gambling. It explains the potential dangers of cryptocurrency and how to get help for cryptocurrency addiction if you, or a loved one, have a problem.
How does cryptocurrency technology work?
In order to understand cryptocurrency, it’s important to be familiar with the main elements of the technology and how they link together.
What is cryptocurrency?
Cryptocurrency is a virtual currency comprised of digital assets that are based on blockchain technology. The word “cryptocurrency” comes from from the encryption techniques that are used to make the network secure. The first blockchain-based cryptocurrency was Bitcoin; it’s still the most popular but there are now thousands of alternate cryptocurrencies (known as altcoins). One of the main benefits of cryptocurrency is that it’s generally not issued by a central authority which protects it from government interference or manipulation.
What is blockchain technology?
Blockchain is a way of tracking cryptocurrency transactions using a secure digital ledger. As the name suggests, it’s a sequence of blocks (or groups) of transactions that are chained together and distributed among users. Blockchains do not need a central authority to manage the chain – they use a peer-to-peer network. In public blockchains, like Bitcoin, when someone joins the network, they get the full copy of the blockchain transactions which offers end-to-end transparency. Other benefits of blockchain technology include a reduced risk of fraud, increased security and improved efficiency.
What are NFTs?
Non-fungible tokens, or NFTs, are one-of-a-kind digital assets with unique attributes. They are verified and stored using blockchain technology. NFTs are built with the same technology as cryptocurrency but that’s where the similarity ends. Each NFT has a digital signature which makes it impossible to replicate. Unlike cryptocurrencies (which are identical to each other) NFTs can’t be traded or exchanged at an equivalent rate. They can be used for items which are easy to replicate – such as artwork, music and video game items – where blockchain technology gives the NFT a public proof of ownership.
Cryptocurrency: investing vs. gambling
While some people have made millions from trading cryptocurrency, others have lost everything. So, is cryptocurrency an investment or gambling?
1. It depends on the strategy
Cryptocurrency trading can either be an investment or a gamble depending on the strategy. Buying cryptocurrency to get rich quick is more akin to gambling, whereas taking a more long-term approach and holding onto it for a few years can be more of an investment. There’s no guarantee that it will offer a larger return over time but cryptocurrency is often extremely volatile in the short run so a long-term strategy is usually more prudent.
2. It depends on risk
Cryptocurrency trading will always carry some degree of risk and putting your life savings into cryptocurrency is definitely a gamble. However, there are safer and more calculated ways to invest in cryptocurrency to reduce your risk:
- Never invest more than you can afford to lose.
- Don’t put all your eggs in one basket. If you decide to invest in cryptocurrency, make sure the rest of your investments are as stable as possible. Then if it does fail, you still have other investments to fall back on.
3. It depends on where you invest
Some cryptocurrencies are riskier than others and choosing the wrong one could be a gamble. It’s important to do your own research and due diligence before making a cryptocurrency investment. If it sounds too good to be true, then it probably is. If you choose cryptocurrencies based on hype or how much their price has skyrocketed, that’s more like gambling. However, if you do thorough research and choose the cryptocurrency you believe is the safest and strongest, then it’s more of an investment.
Signs of a cryptocurrency addiction problem
While some people engage in cryptocurrency trading without any notable at-risk behaviors, for others it can become problematic. Cryptocurrency addiction is the compulsive trading of cryptocurrencies resulting in negative consequences for the person and their loved ones. It’s a behavioral addiction, similar to gambling addiction, and can cause a range of issues including relationship conflict, debt, illegal acts like theft, employment or educational problems, substance abuse, stress, anxiety and depression. In extreme cases, it can lead to suicidal thoughts and attempts.
Here are some common signs that your cryptocurrency trading may be spiraling out of control:
- Constantly thinking about cryptocurrency and planning when to trade next.
- Spending large amounts of money on cryptocurrency – often more than you can afford.
- Trying to cut down or stop cryptocurrency trading, without success.
- Feeling restless, anxious or irritable when trying to reduce screen time related to cryptocurrency.
- Using cryptocurrency trading to escape from life’s problems or relieve feelings of stress, anxiety or depression.
- Continuing to trade after losing money to recover losses.
- Missing out on education or career opportunities, or activities with friends and family because of time spent cryptocurrency trading.
- Lying to other people about how much time and money is being spent trading in cryptocurrency.
- Taking money unlawfully to fund your cryptocurrency addiction.
- Getting into debt from cryptocurrency trading and asking others to lend you money.
If you, or a loved one, have an uncontrollable urge to keep cryptocurrency trading despite negative consequences, it’s time to seek professional help.
How to get help for cryptocurrency addiction
At Kindbridge, we’re experts in treating a wide range of addictive behaviors, including cryptocurrency addiction.
We can help you decide whether you’re ready to stop or just want to control your cryptocurrency trading. If you’re experiencing severe negative consequences, then you will probably need to consider stopping completely. Our highly-trained therapists will design an online treatment plan to suit your specific goals.
Start your journey towards a happier life today. Get in touch to book a free and confidential 30-minute consultation.