There's a meaningful difference between casino-style gambling and investing in something like stocks or cryptocurrency.
Specifically, in a casino the odds are known and fixed in favor of the house. If I'm playing roulette at the casino and place $1000 on black, I have a less than 50% chance of winning (18/38) due to the two green spaces on the wheel. Over a long enough period of gambling the house will win and I will lose.
With stocks or cryptocurrency, things are very different. The odds are not known in advance, nor are they controlled by a specific organization. You can have a situation, particularly with stocks, where value is actually created and there is a net increase in wealth - this is not possible in traditional gambling, which is explicitly zero-sum.
Can't you also have a situation where value is a lost and there is a net loss in wealth?
I think it's mostly about how predictable the risk is. In a casino, the odds are stated and known. In stocks, (in the US) companies are supposed to file statements with the SEC to honestly report the risks to their best extent. With crypto, no one seems to have to report any risk evaluation.
I guess the other difference is that in casinos, the bet typically goes to zero faster than with stocks and sometimes crypto, as it seems rare that those will zero out, so people may not lose 100% of a bet but sure can lose 99%.
But I agree with OP, that it mostly depends on whether someone likes it whether they see it as gambling, less so in actual definitions of what gambling is.
That's not the same thing as value being destroyed.
Indeed, Japanese companies have on the whole been profitable throughout that time and have passed on some of those profits to their owners, so value has been created.
The stock market bubble bursting didn't destroy value, it simply revealed that some investors overpaid
If a company pays no dividends and its stock goes to zero, it's a complete loss. Not sure if there's any value created. If a company takes investment money and never sells a product and then runs out of money, I suppose you could argue maybe value is created for others in the spending of that investor money, but that argument may apply for casinos as well.
But maybe I'm missing the point you're trying to make.
Surely crypto has always been zero-sum? People put their money into the pot, and then take it out at different times, in proportion equal to when they originally put their money in.
Crypto seems to be negative sum, due to the large amount of equipment and energy expenses that go into operating the whole infrastructure. (Obviously this is technically true of almost everything, but in case of cryptocurrencies I think the relative operating cost is much higher than, e.g., stocks or bonds or casinos).
It depends on the currency, some have transaction fee mechanisms that pay existing holders, meaning there’s at least some amount of revenue (holders are selling transaction slots to transactors). Holding the currency is essentially a bet that revenue will increase
Bitcoin can be considered zero sum since the only way to get money out is to trade with someone putting money in, and there is no other income stream. There are no plans to change this.
The real difference with traditional gambling is that there is no plan to ever end the game. As long as it continues, the players can believe they will come out ahead, even though if you stopped the game at any time, losses by people who didn't exit would match gains by people who did.
"The game ends now" values current holdings of Bitcoin at zero since there is nothing in the pot, but it's unclear if that will ever happen, and no sign that it will soon.
I always assume you don't create value at all when you are a speculative investor like buying a stock. The value creators are the company you invest in.
There's also a theoretical difference between trading stocks and trading cryptocurrencies.
Speculation, or the assumption of existing risk, or investing in creation with an expected return is not the same as gambling (which is 0 sum game and creates risk to shift money around).
That being said, in the real world today, this appears to be a distinction without a difference.
The most problematic gambling is where the bookie also provides credit. A guy putting $100 on a game in Vegas and losing it is nothing compared to the guy who puts $10k on a game he doesn’t have, and then is out stealing from his employer or committing insurance fraud to cover debts and vig.
There is another important distinction. For some of these (equities, fixed income) risk taken may be compensated by the risk premium. Others (FX, cryptocurrencies) have no risk premium, so risk taken is uncompensated. Finally, sports betting, casino games, lotteries), there is a house edge, vig, such that the buyer pays to take risk and has a negative expected return.
Wait the guy had an addiction, and the way he lost is money was that he was too busy being obsessed with trading that he lost the ADDRESSES? This makes it seem like cryptocurrency is a better outlet for gambler's addiction than horseracing, anyways.
Options are terrifying. I don't think retail investors should be allowed to short stocks. Very few people understand the concept of an unlimited downside.
sounds like you don't understand it either. put options let you sell short a fixed amount of stocks without the unlimited downside. other types of options with unlimited downside are heavily restricted by brokers (b/c of underlying regulation) and not available to the average user without going through trading approval processes where they make the risks very clear.
I understand options, and certainly using puts to cover the downside. I'm just paranoid about accidentally f*king that up and taking a bath to end all baths.
It's clearly you who is not understanding how shorting with options works, since the downside is limited and NOT unlimited as you wrongly claim.
Buying puts for let's say $500 let's you short a stock, now if the stock moves up, you can lose 100% ( if it doesn't come down within expiry ) but you can't lose a single cent more than that. One way to have unlimited downside is naked shorting.
100%. however, naked or uncovered calls and puts are almost always put past level 4 trading approval. counter to GP's claim, there's no way you can accidentally stumble into trading these.
I'm game. As long as retail means everyone except institutions. So, it doesn't matter how much wealth you have, what credentials you tout, if you're a GS alumni, or if you're Nancy Pelosi's husband.
Because a financial regulation where retail was something other than an euphemism for lower classes would be a world first.
Meta: The guardian is privately funded. They have neither shareholders nor customers to flatter. So they could do really hard hitting pieces. Long form. Actual investigate journalism.
Instead it's all just the equivalent of badly researched reddit comments.
Noooo ... you can't just make money outside of the inflation-driven fiat system! Crypto is BAD because you'll be an ADDICT! How do people still believe this bullshit or pay any mind the "Guardian"? It's clear and obvious propaganda.
I'm working on an automated crypto trading system. The goal is to prevent serious loses by using rules that should be safer than the way most people trade. I don't want to make something that fuels an addiction, but instead is skill-based.
Interested in your thoughts on how most people trade.
Also curious what the ruleset will do, along the lines of existing risk management strategies? (Limit % of account per trade and % per day or strategy to a certain level of loss?)
If it's automated, I think it probably circumvents the more "addictive" type behaviours as they tend to be more prevalent in scalping or day trading strategies. What sort of timeframes are you targeting?
From what I know it's partially based on what others are saying (e.g. Twitter), partially emotion based (fear/greed/etc), and otherwise based on luck. Some will pick a hyped coin and hope for the best.
Risk management will be a big part of it. I was even thinking of enforcing %s to limit risky behavior, but users would probably just leave if I did that.
Yes the idea is that automation reduces trades that aren't well thought out. I want to target as many timeframes as possible, but will likely start with 12H and 1D for the MVP.
This assumes that you have the option of not gambling. However, you are forced to use the roulette table by fiat currencies. How much will USD be worth in 5 years? Who knows. It's less risky than other options, but a sure loser in net worth with inflation. The only way to not lose is to adopt some type of more risky position (AKA gambling).
The government massively depreciated the purchasing power of the dollar, trading is one of the few ways to get ahead. And the secret is it’s not always as hard as the professionals claim, especially when the government is money printing
Believing this is the biggest trick the finance industry ever pulled. Many people are capable of consistently making money, poker is gambling but some people always win over long enough variance
This is just nonsensical. Are you familiar with the famous bet made by Buffett that a basket of hedge funds would be outperformed by the market over 10 years? He was right, they were outperformed, so how does it follow that a basket of hedge funds with massive budgets cannot consistently make money trading - but the average person somehow can? Are they intentionally handicapping themselves to "trick" everyone?
However, people will generally only use the word for types of gambling they disagree with.