Should investing in stocks and financial instruments like cryptocurrency be considered a form of gambling? This has been the centre of heated debate for decades and it figures to be debated well into the future. That is especially true as investors continue moving towards investing in cryptocurrencies like Bitcoin and Ethereum.
For the folks who believe investing in cryptos is gambling, the focus always seems to turn towards the volatility of crypto markets. The folks who believe crypto investing is investing and not gambling is always quick to respond that the volatility of an investment holds no place as a gambling argument.
For the purposes of the writing, we are going to side with the notion that investing in cryptocurrencies is not gambling. We believe our reasoning (five (5) reasons) will provide a viable argument that warrants serious consideration as the debate ensues.
Five Reasons Why Investing in Cryptocurrencies is Not Gambling
Prior to laying out why investing in cryptocurrencies should not be considered gambling, it would seem prudent to provide definitions.
Investing Definition: “Investing is the act of putting money into assets like stocks, bonds, real estate, or commodities – anything where value can go up over time and generate more money over time.”
Gambling Definition: “the activity or practice of playing at a game of chance for money or other stakes.” Note: No assets are transferred. Also, sports betting qualifies as playing a game of chance because the outcome is totally unpredictable when placing the bet.
Here are five (5) reasons that investing should not be considered gambling.
1. Crypto Investing is Not Currently Regulated Like Gambling in the UK
For UK investors and gamblers, the issue at hand can be viewed through a regulatory lens. As the UK’s top gambling regulatory body, the UK Gambling Commission (UKGC) is charged with setting regulations related to gambling in the UK. They do this to protect UK gamblers from bad actors who might set forth to cheat gamblers out of their monies.
In no way is the UKGC charged with regulating cryptocurrency trading/investing. That’s a hint regarding how the UK government views crypto investing. It’s not gambling to them. The fact they don’t regulate these activities is evidence that they don’t fear the possibility of nefarious activities from crypto sites in the same way they view gambling providers.
2. No GamStop Self-Exclusion Requirements for Crypto Investment Sites
Since the crypto industry is not currently regulated by the UK government, they are under no mandates to protect investors. That means they are not required to abide by any mandates related to responsible gambling programs like GamStop.
In the future, the UK government will likely regulate cryptocurrencies as both an investment option and a means of exchange. At that point, the UKGC might be called upon to create regulations. Is it possible that crypto investment sites will someday be required to offer customers access to a program like the GamStop self-exclusion scheme? As a Casino Wise team reviews casinos with no GamStop exclusions, would no GamStop crypto investment sites also be included in the process? Both of these things are possible.
By the way, the GamStop Self-exclusion scheme allows UK online gamblers to voluntarily ask to be blocked from accessing licensed UK online gambling sites. It’s also the gamblers who get to determine the length of their self-exclusion period.
What’s very interesting is that GamStop gamblers will sometimes use cryptocurrencies as a way to avoid GamStop exclusion should they have a change of heart about not gambling. Still, the practice of using crypto for gambling is more about cryptos as a means of exchange, not an investment option.
3. Investing in Cryptocurrencies Involves the Acquisition of an Asset
In the two definitions provided above, they is one very stark difference between the two definitions. While both Investing and gambling require some level of risk, the end results of both activities are quite different.
Gamblers risk money with one of two potential outcomes. They will either lose all of the money they gamble, or they will get that money back, plus any additional amounts they won when appropriate.
Crypto investors purchase digital assets, the coins. If they lose money, it’s only a “paper loss” until they sell their coin or coins at a lower value. No matter how much they lose, they still have the underlying asset until its sold. Likewise, gains or profits are only paper gains and profits until the coin or coins are sold. It’s very likely a crypto investor will lose everything as a gambler will.
4. Long-Term Versus Short-Term Activities
Per the definition listed above, investors invest with the goal of making money over the long term. Most crypto investors will buy coins with the intention of holding their assets until there is an adequate amount of profit for the investor to claim. The long-term timeframe could range from a few days to a few years.
Gamblers are looking for instant gratification in the form of immediate wins. They wager their money on a sports event, a roll of dice, the spin of a wheel/reel, or the turn of the card. As soon as one of those things has taken place, the result is immediately known. While a sports bet might take a few hours for a resolution, casino game wagers are typically resolved in a matter of seconds.
Investing Requires More Time and Effort
When it comes to investing in cryptocurrencies, investors are required to put forth a lot more in terms of time and effort than gamblers.
If an investor wants to invest in crypto, they must first open a “crypto wallet” from which they can move money. To do that, they typically have to go through a very detailed registration process that requires them to provide very personal information, plus detailed proof of that information.
After opening a crypto wallet account, they then must link it with a crypto investment site, which requires a similar registration process. After the accounts are open, investment activities can begin in earnest.
Gamblers face very little in terms of time and effort before they can start gambling. Retail gamblers only need to walk into a local casino or betting shop and start betting. Online gamblers only need to register with a licensed UK betting site, a process that takes two minutes with very little documentation required. After funding their account, it’s go time.
