Cryptocurrency: What is it, and is it linked to gambling?
July 29, 2022
In this post, we explain what cryptocurrency is, and its connections to gambling.
Cryptocurrency is an increasingly visible and mainstream product. It’s endorsed by celebrities, and is heavily promoted by influencers on TikTok, YouTube, and other social media. It’s also popular with young people – nearly a fifth of 16-24 year olds report owning crypto. However, cryptocurrency is also poorly understood and controversial.
Here we give a brief explainer of what crypto is, and its connections to gambling and gambling harm.
What is cryptocurrency?
Cryptocurrency is a digital form of money that uses encryption to keep transactions secure. Cryptocurrency is also sometimes called cryptoassets or simply ‘crypto’. There are many different forms of crypto. The most popular are transferrable coins like Bitcoin, Ethereum, or Ripple.
Cryptocurrencies are not regulated in the UK. This means that you are unlikely to have any protection if something goes wrong – for example, if the platform that holds them or exchanges them goes out of business.
The value of cryptocurrencies can rise or fall sharply. The marketplace is also a target for fraud and scams. As a result, the Financial Conduct Authority (FCA) considers crypto investments to be very high risk and have said:
“If you invest in cryptoassets, you should be prepared to lose all your money.”
Cryptocurrency and gambling
So how are crypto and gambling connected?
- Many people think of cryptocurrency as gambling
Trading crypto is very high-risk, but crypto apps can make it feel easy and exciting in a similar way to gamified online gambling apps. Recent research conducted by Gamban and Solent University found that over half of adults (56%) consider crypto trading as a form of gambling. This makes sense as crypto and gambling – especially online gambling – have some similarities:
- High speed
Both crypto and some online gambling products are fast-paced. The value of crypto is volatile, and can boom or bust quickly.
- High event frequency
For example, people can stake money on crypto or slots relatively quickly.
Checking in on crypto value changes on the apps can be habit-forming.
Buying crypto is very high-risk. For example, values can change a lot based on unpredictable factors like influencer tips.
- 24 hour availability
Unlike traditional trading, crypto (and online gambling) is available 24/7.
- High speed
- People may use crypto to gamble online
Cryptocurrency is increasingly used in ‘crypto casinos’ to gamble online, which allows players to remain anonymous and means no banks are involved. As a result, it’s also difficult to regulate these forms of gambling, and to protect players from experiencing harm.
- People experiencing gambling harm are more likely to trade crypto
Unfortunately, trading cryptocurrency is ‘strongly associated with problem gambling severity‘. This means that people already experiencing some level of harm from gambling are more likely to engage with crypto.
Want to learn more?
This summer, we’re offering a special topic webinar on ‘Cryptocurrency and Gambling’. We’re also hosting a Scottish Gambling Education Network meeting on ‘New Technologies in Gambling’, including cryptocurrency and potential harms. Visit the Hub’s Eventbrite page to learn more and register your free place!