When I tell normies that crypto is the future of gambling one counter argument I hear is that the volatility of crypto makes it unsuitable for gambling. The argument goes that you could have a winning month betting bitcoin, but during that month the price of bitcoin could fall so much you have less in government currency equivalent than when you started.
The concern is exemplified in this otherwise good piece in Bitcoin Magazine with quotes from non crypto users who are stuck in old government currency mentality such as
“Bitcoin currently doesn’t allow for adequate bankroll management. Any long term profitable gambler will tell you that keeping careful control of how much you’re risking is key to long term success”
Of course crypto allows for bankroll management and staking plans, they just have to be denominated in crypto, the currency you are gambling with making it the obvious thing to use.
“UmeJack suggested that Bitbooks guarantee the bettor’s payout in fiat:
“If I was promised that if I bet 100$ worth of bitcoins (however many that might be when I place the bet) I would be given 100$ worth of bitcoins on a win (no matter how many bitcoins that is at the time of the payout)….I might consider using bitcoin.”
If some people find this useful it could be done with stable coins or smart contracts.
However people who actually have crypto would hate if the payout of our crypto bets were pegged to government currency. We are making bets with crypto because we believe in it and value it more than government currency. We want to build our crypto bankroll, thats why we are betting in crypto.
Who is crypto volatility a problem for?
I agree crypto volatility could be a problem for professional gamblers with no other income who are living month to month off of their gambling and think the price of the crypto is more likely to go down than up. That is less than 0.1% of gamblers and crypto volatility is not problem for everyone else!
I will divide everyone else into a few groups and explain why crypto volatility is not a problem for them.
The vast majority of gamblers are playing for fun, entertainment and the mental challenge of winning. They are not expecting a gain in their purchasing power from gambling so they are not worried by volatility.
Crypto true believers
Real crypto users value the idea of crypto more than government currency. We want to increase our crypto holdings and are not concerned about the price against government currency. We accept the volatility and are used to it.
People who think the price is more likely to rise than fall
Those who are bullish on the price say bring on the upward volatility!
Bitcoin volatility in general
Volatility is reducing over time
In the 10+ year history of bitcoin every year has seen less volatility than the previous year and this trend will continue for the following reasons
- The market keeps getting larger and more mature.
- Bitcoiners keep becoming more diverse with diverse reasons for when to buy and sell.
- Bitcoin derivatives and instruments such as ETFs keep getting more popular.
Any big discovery that is only 10 years ago would be volatile
At the moment finance types don’t know how to value crypto because it does not fit into one of their preconceived asset classes such as currency, commodity, technology et cetera. Crypto is a new and unusual thing that people find hard to value.
It would be the same if crude oil or silver or salt was just discovered 10 years ago, their price would be just as volatile. Greater understanding will continue to bring greater stability.
It’s mostly upward volatility, government currency loses 3% or more every year
The majority of bitcoiners’ experience of volatility is the price going up over time. Whereas we know the USD loses about 3% of purchasing power every year due to inflation, and some currencies lose much more.
Anyone who has bitcoins to gamble with is aware of the volatility and accepts it, the price is the least interesting thing about bitcoin.
Volatility is more than offset by other advantages
Crypto gambling is such a quantum leap in an industry that, up until now, has been very high friction. Perceived disadvantages of volatility are well outweighed by the real advantages of betting with crypto such as.
- Global and unrestricted, all players are welcome no matter where they are.
- Free and instant deposits and withdrawals of any amount 24/7.
- Operators save so much in banking and compliance that they can give higher payouts.
- Betting anonymously makes it
- Impossible for an operator to limit you for winning too much.
- Impossible for an operator to sell or misuse your personal information.
- Easier to avoid legal restrictions and taxation.