Many people who trade crypto indicate that they start out of curiosity. Others say they start because they enjoy it, or because they want to take a gamble. These reasons are very similar to the reasons people give when they start gambling.
The value of crypto can go up or down very quickly in a short period of time. Sometimes it involves large sums of money within a few hours. You never know what will happen, which makes trading exciting, but also risky. That uncertainty, like with gambling, can cause a ‘rush’: a feeling of excitement. Many people want to experience that feeling again and again. In addition, dopamine plays an important role. This is a chemical in the brain that gives you a good feeling. When gambling, a lot of dopamine is released when you win or almost win. That is why it can be difficult to stop. This can also happen with crypto. For example, if you sell just too early or choose the wrong coin. That is similar to the so-called near-miss effect in gambling: you just miss out on the win, which can make you to want to continue.
People who trade crypto often learn a lot about the market. As a result, they get the feeling that they have control on the value of their coins. If the price then rises, it seems as if this is due to their own knowledge. This gives a feeling of control, but often that is not the case. Also in gambling, people sometimes think that they have influence on the outcome because of their knowledge. This feeling of control causes people take to take greater risks more quickly, both with crypto and with gambling.
Research shows that people who get involved in crypto are often more sensitive to rewards and open to new challenges. These are characteristics that are also common in people who gamble. An important risk is being impulsive: you want to trade or bet again to win back your lost money. This is called loss chasing and occurs in both gambling and crypto.
People who trade crypto often say that crypto sometimes feels more like gambling than investing. The fast results, the idea that you can immediately win or lose a lot and the tension are very similar to gambling. Most people only invest small amounts, without taking major financial risks. Yet for some people it gets out of control.
Most crypto owners trade with money they can afford to lose and do not show signs of addiction. About three-quarters of traders do not check the value of their coins daily and most people spend little time on it. But there is a small group that does get into trouble. For these people, crypto is often part of a broader gambling addiction. They see almost no difference between gambling and crypto and experience major problems on a financial, mental and social level.
Trading in crypto may seem more like investing than gambling at first glance. Yet there are many similarities with gambling: the tension, not knowing what will happen, the idea that you have control while that is not the case, the risk of financial problems and addiction. Most people invest small amounts. But for a small group crypto can lead to serious problems, just like gambling.
Are you worried about your crypto trading? Talk about it and contact OpenOverGokken.
Source: research into the risks of crypto – Centerdata
