Conservative investors of the old-guard, like Jim Cramer, claim that buying cryptocurrencies like Bitcoin (BTC), Ethereum (ETH), Litecoin (LTC), and Ripple (XRP) is the same as gambling in Vegas. I'm going to make the case that buying cryptos is the exact opposite of that--literally, the opposite.

Gambling at a casino is a losing venture

Casinos are for-profit businesses designed to earn more money than they pay out. In 2016, the casino gaming market globally returned revenues of $155 billion USD. In the U.S. alone, gambling had $73.1 billion in revenue. Millions of visitors bet money at casinos with the hopes that they'll walk away with more money than they came with. Statistically, the vast majority of these people will lose money. Estimates say that on any given day, you have a 30% chance of walking away from a casino with more money. The bad news is the longer you play the worse your odds. Of gamblers who place the highest number wagers, 95% walk away losers. If you want to learn more, read this fantastic article on the science behind casino profits.

Why do so many people still gamble at casinos?

People think they're going to win a lot money. That's it. It's fun to play a game where you think you're going to win a lot of money. Even if the statistics say you're more likely to lose money, a person's perception of gambling brings them to the table. We are irrational. We succumb to the Gambler's Fallacy which essentially says that we're terrible at understanding true odds.

People continue to gamble at casinos because a small number of people end up with a lot more money. The chance of winning $100,000 or $1,000,000 is so thrilling that people will continue to lose money for that low probability chance. It's the same reason buy lottery tickets. Your odds may be 1 in 292 million or 0.00000029%, but you play anyway because you actually think you might win.

1. Most people lose and the more you play, the more likely you are to lose money overall.
2. A small percentage of people win a lot of money.
3. People play because they think they'll win.

Buying cryptocurrencies

Cryptocurrencies are digital currencies that can be purchased and traded online at exchanges like Binance.com, and GDAX.com which is the sister site of the popular site Coinbase.com. The total market capitalization of the cryptocurrency market is over $600 billion (as of Dec 2017). Since the explosion in popularity of Bitcoin and other cryptocurrencies in 2017, more and more people are investing money in this new technology with the hopes of walking away with more money than they invest.

How are cryptocurrencies the opposite of casinos?

Cryptocurrencies like Bitcoin are designed to be deflationary. This means that instead of losing value over time, they will increase in value of time. There is a limited supply for most cryptocurrencies. There will only ever be 21 million Bitcoins. There are currently around 97 million Ethereum coins and starting in 2018 will follow a 1% inflation model which is less than the US average inflation rate of 3%. Ripple was created with an initial ledger of 100 billion XRP. All of this to say that the limited supply and increasing demand of cryptocurrencies leads to their increase in value.

Put more simply: unlike gambling, you're more likely to walk away with more money if you buy cryptocurrencies.

Why are people afraid to invest in cryptocurrencies?

Because they don't understand it.
Because they're afraid they'll lose money.

1. Most people win and the more you buy, the more likely you are to gain money overall.
2. A small percentage of people lose a lot of money.
3. People don't buy because they think they'll lose.