3 Parallels That Crypto and Online Gambling Share in Terms of Volatility and Risk
Although two very different worlds, both cryptocurrency and online gambling have some commonalities when it comes to risk. Just like with fiat currencies, crypto is subject to fluctuations in value and sometimes those can be quite extreme. For those holding onto a certain coin, the picture of value from one day to the next can be drastically different.
Online casino gambling comes with risks as well. White it’s absolutely recommended to choose the safest platforms based on reviews of all casino sites by Legalbet.uk or other expert services that analyse and compare gambling operators, there still will be risks involved as volatility plays a heavy hand.
Volatility Equals Risk
Anytime there is volatility, there is risk. Volatility simply means how much variation there is in the value of a commodity over a certain time. For crypto, this is the ongoing price of a particular coin, where unpredictable drops in value can cost or make someone a lot of money.
In casino games, a slot machine with a higher volatility means that it will pay out less frequently, which makes it a higher risk game to play. Lower volatility games means more frequent payouts, but of lesser value, so there is always that balance in play.
As with everything in life, risk boils down to a battle of “Go Big Or Go Home” and a “Steady Eddie” approach. But risk underpins everything involved with both crypto and online gambling and is also why it is an important concept to understand. The following is a look at how the two worlds collide when it comes to risk and volatility.
1. Risks of High Reward Potential
People have no direct, foolproof way of knowing how the value of cryptocurrency is going to react. Fluctuations can happen in the blink of an eye, but the reason why investors get on board in the first place is because of the lure of potential rewards.
The value of new meme coins for example can grow very quickly, so anyone getting in on the ground up can potentially see their early backing reap a lot of reward down the line. But the inherent risk of putting a lot of money up front, is that the coin won’t be taken up by as many people as projected and it remains a low value currency.
This is very similar to what gamblers experience. When a gambler sits at a slot, it’s most likely the lure of the jackpot prize that was the initial hook. Slots and games of pure random chance like roulette may offer substantial payouts, but they are difficult and highly risky to go after.
Many big jackpots for example are only won by playing rounds of maximum bets across maximum paylines, so require a heavy risk investment up front. Nonetheless, it’s the potential that keeps people interested.
2. Risks of Sentiment
Another common factor that crypto and online gambling have in common is the uncertainty of outcomes. This is perfectly highlighted by streaks of outcomes because in the world of crypto, market sentiment could take successive hits due to anything from social media trends and political news to technological developments.
In gambling, players will go on losing streaks that can feel like never-ending. A player may keep betting on black after a run of red on roulette, for example, but still end up losing. That’s because of the volatility and there being no set outcomes due to the inherent unpredictability.
Such streaks can be extremely taxing and it’s where being responsible in both is imperative. Knowing when to walk away from a slot machine that continues to eat up stake, or knowing the right time to sell a coin, both require a very calm, objective head that can keep emotions at bay.
3. Uncertainty of Volatility
Volatility means high degrees of uncertainty. The performance history of a crypto coin, or tracking results of blackjack hands, can tell players what has gone before. But there is still no accurate way to account for what will happen next as future volatility can’t be pinned down.
Volatility is defined by unpredictability. In gambling that’s having random chances fall on your side, even after putting a gambling strategy to work. In crypto that’s seeing the markets react in exactly the way that you expected them to, but there was never actually any guarantee that they were going to.
Risk
Managing risk is part and parcel of any venture that includes financial output up front and in the above ways, crypto and online gambling share many similar features. Volatility always feels higher in short periods, when for example a meme coin price skyrockets in one day. But looking at the same coin over a month, the price may not have varied much from its starting point. Still, risk, whether short or long-term, means financial and emotional consequences which in turn, needs firm management.