Question: What is the difference between a bitcoin and a casino chip?
Answer: Nothing. Both are virtual currencies that represent a private equity, tradable for specific markets, given a value that is set by the house and can be bought and sold only by using real regulated currencies.
Bitcoins value is a by-product of supply and demand, in the recent exponential growth, “punters” are willing to pay exorbitant fees for the coin. They do not buy into the coin for life value; they invest in it as a gamble to make expected large amounts of profit over a short period of time. Although bitcoin is not a regulated and legal currency, it is being traded for goods and services, and there are over 100,000 merchants around the world that will accept bitcoin payments for things ranging from beer to boats. In this instance, the seller is gambling with income in the hope that the fee paid will increase in value exponentially. In many cases, this has happened, and over the past 5 years, anyone that has invested and kept their currency has made a great profit. However, not everyone has wisely invested.
Credit Cards are one form of buying cryptocurrencies and investors are willing to pay the credit card fees associated with cryptocurrency trades even when the fees include the interest of up to 45%. In fact, in one recent small survey, most Americans that bought Bitcoins were not interested in the debt they accumulated when buying bitcoin with a credit card.
This is similar to investors that take a bank loan to buy stocks, and in bitcoins case, taking a loan to buy casino chips. While most stocks do tend to stay within an acceptable profit and loss range, the vulnerability and volatility of the cryptocurrency market can wipe out an investor as if they had put their money into binary options.
The only time a credit card backed bitcoin investment is sound is when the money being used to buy the coin is a percentage of savings. The moment you take an actual loan out to buy bitcoin, you are basically gambling with money you don’t have and don’t own.
In one recent article, the author stated that Bitcoin was settling into a price zone between $11,000 to $17,000 which means that investors are willing to take a risk in a volatile commodity that is not regulated or controlled. The market value is literally a gamble, just like placing a bet on the card table, only in the casino the house always wins.
Personal point of view: A lot of people have become very rich through cryptocurrency. ICO’s are happening in a more regular fashion, and people are happy to receive “coin” rather than “stock,” in other words, you are willing to lend money for a virtual coin but not for a legally defined stock. The greed and rush for riches will always lay waste to a larger percent of losers than winners, and at the end of the day, the biggest gamble is, will privately own cryptocurrency become legal tender, or will national banks create their own legal version of cryptocurrency that is linked directly to their national currency?
When I discuss “bitcoin” I am referring to every cryptocurrency out there, including Ethereum, Steam, Litecoin and a whole plethora of private coins.
After all, a bitcoin is only a “bit of data” not linked to anything but the dream of success.