A chunky 43% of men aged 18-29 had invested, traded or used crypto, compared to 16% of the overall population. Crypto has only been around for a few years, therefore, the dangers are not prominently covered as they are for gambling addiction. But as crypto continues to grow, can we expect the problems to grow?
Trading cryptocurrency can be one form of gambling addiction and young males are more likely to develop this kind of addiction.
“Gambling is a lot like cryptocurrency investments as they both share a degree of risk,” said Max Coupland, Director of CoinJournal. “Once you move out on the risk spectrum into the realm of altcoins with low market caps, murky use cases and anonymous founders, returns can either be outsized or zero (most of these coins eventually go under, some suddenly).”
Coupland said this is the same payoff profile therefore as a conventional bet. It is something that people can find exciting and can draw them into the behaviour. In addition, both gambling and cryptocurrency can involve a degree of skill, and in turn can result in profit.
Crypto is a highly volatile market, which is why it is important never to invest more than you can afford to lose. Make sure you leave yourself more than enough money to live comfortably when deciding how much to invest, and don’t exceed your investment budget without making a thorough reassessment.
If you want to be able to ride out bear markets and wait for a good time to sell, you may need to hold onto your investments for years. Don’t invest any money that you might need to spend in the coming years and it’s wise not to invest your entire budget in one go as better opportunities may arise in the future. Take strategy into account when budgeting. If, for example, you intend to invest every time the price dips, consider what the maximum number of investments you might make is so that you can size each investment accordingly.
You should consider what gives an asset fundamental value before investing in it. This could include the utility and benefits of the token, what influences its supply and demand, the strength of the team behind the project, whether it attracted well-known investors, the importance and profitability of the sector it is in, and whether it has any competition.
Spend some time familiarising yourself with more general crypto concepts so you have a better understanding of how different cryptocurrencies work and how this might affect their value. These topics could include blockchain, transaction speed, scalability, consensus mechanisms like Proof of Work and Proof of Stake, network fees, smart contract functionality, Web 3.0, and DeFi.
As well as crypto and the technology behind it, it is useful to research the platforms and apps you’ll be using to buy, store, and trade your crypto. Make sure only to buy crypto on reputable and secure platforms, store it somewhere safe, and take extra care when transferring it between wallets.
Set aside enough time to conduct the thorough research detailed above before you start investing. Before committing to a particular investment plan or strategy, you should think about what actions it involves and how much spare time you have. For example, active day trading strategies could require a significant time commitment as you will need to regularly monitor the market and conduct technical analysis. If you don’t have a lot of free time, you may prefer to select a less active investment strategy, like buy and hold.
Although you may find some sensationalised stories in the press about crypto turning people into millionaires overnight, you should not think of investing as a get-rich-quick scheme. It’s important to manage your expectations and remember that it can sometimes take years for a major price surge to occur, while some assets might never surge at all.
Before you put any money into crypto, it’s wise to formulate an investment plan and an exit strategy. Think about what your goals are for investing, how you will react if the market moves against you, how you will capitalise on your investments if you achieve your goals, and be realistic about how long this might take.
Dr Nower, Professor and Director of the Center for Gambling Studies at Rutgers University and Dr Weinstock, professor in the Psychology department at Saint Louis University had this to say on the danger of addiction to crypto:
“The cryptocurrency industry should follow the lead of the NYSE and other stock markets in that they promote the idea that money in the market is an investment not a get rich quick scheme. I think they should be better connected with resources to help problem gamblers but, of course, they don’t want their product to be viewed as gambling. It’s well known how volatile the world of crypto is. Prices can spike in an instant but also crash hard – as we have seen this year. For some individuals, the volatility will be exciting and they will chase the thrill of trying to “time” the market. As individuals tie their crypto investment into their identity it affects self-esteem and contributes to depression and anxiety.”
The “addictive cycle” that volatility can foster can cause preoccupation, feelings of withdrawal, the need to buy more to feel the same level of excitement and to buy more to recoup losses. It can completely consume someone mentally such that they neglect people and responsibilities in their lives.
The dopamine chase, the adrenaline rush, and the sense of engagement is all heightened when prices are moving a million miles an hour. In cryptocurrency, there is rarely a quiet day – meaning a rush can be easily obtained.
“Anyone who is aware they may have a gambling problem probably already knows that they should avoid activities such as crypto trading,” said Dr Nower. “If they do decide to get involved then they should be mindful of their own behaviours and thoughts, and look out for red flags such as chasing losses, lying about their behaviour to others, or experiencing guilt or remorse over their actions.”
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This article does not constitute investment advice. Do your own research or consult a professional advisor.
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Posted under Cibercommunity, Technology On By James Steward