Cryptocurrency users who also gamble tend to be more mentally involved compared to their non-gambling counterparts, according to new research published in Computers in Human Behavior. The new study provides insight into some of the psychological patterns that characterize heavy cryptocurrency users.
Cryptocurrency is a digital asset designed to work as a medium of exchange that uses strong cryptography to secure financial transactions, control the creation of additional units, and verify the transfer of assets. Bitcoin, the first and most well-known cryptocurrency, was created in 2009. Since then, cryptocurrencies have become increasingly popular. But prices can fluctuate rapidly and investing in cryptocurrencies involves substantial risk.
The risk-taking aspect of cryptocurrencies has led researchers to examine the potential link between cryptocurrency trading and problem gambling. Study author Fred Steinmetz noted that trust in cryptocurrency and ideological motivation might play a substantial role in the use of cryptocurrency. Furthermore, little is known about cryptocurrency users who also gamble
“Since the beginning of my research journey in 2015, my research topics included blockchain technology, cryptocurrency, and gambling. It was only logical for me to start investigating the intersections between these topics,” said study author Fred Steinmetz, co-founder of the non-profit Blockchain Research Lab and author of “Blockchain and the Digital Economy: The Socio-Economic Impact of Blockchain Technology.”
For his study, Steinmetz analyzed a representative sample of 3,864 Germans regarding their use of cryptocurrency and engagement in gambling over the past year. The data was collected in 2019.
The participants were categorized into four separate groups: there were 1,844 non-users (who neither gambled nor ever used cryptocurrency), there were 1,312 gamblers (who had gambled recently but never owned cryptocurrency), there were 708 crypto-users (who at some point owned cryptocurrency but had not gambled recently), and there were 435 crypto-gamblers (who at some point owned cryptocurrency and had also gambled recently).
Crypto-gamblers reported having significantly higher levels of knowledge about blockchain technology along with higher levels of trust in cryptocurrency. Crypto-gamblers were also much more likely, compared to regular crypto-users, to consider their ownership of cryptocurrency to be ideologically motivated.
“Cryptocurrency is not only about trading alternative financial assets. In differentiation to, e.g. trading stocks, cryptocurrency users experience a different mental involvement, which relate to the narratives and ideologies which permeate the industry,” Steinmetz told PsyPost. “Cryptocurrency users with gambling affinity are more involved mentally, proactively and financially than non-gambling users.”
In addition, crypto-gamblers tended to be younger, more likely to be male, better educated, and better off financially than non-gambling crypto-users. “The profiles of crypto-gamblers resemble those of skill-based gamblers and stock traders but differ in terms of their average young age,” Steinmetz wrote in his study.
The crypto-gamblers were further broken down into three distinct clusters. One cluster consisted of those with high ideological motivation and trust toward cryptocurrency and a moderate level of financial investment who used their cryptocurrency for the purpose of speculating relatively infrequently. The second cluster had high ideological motivation and trust, a high level of investment, and frequently engaged in cryptocurrency speculation. The third cluster consisted of crypto-gamblers with low ideological motivation and trust, low levels of investment, and low levels of cryptocurrency speculation.
“Among crypto-users who also gamble, I identified a group which comprises the heavy users, who are highly engaged and potentially consider cryptocurrency and gambling substitutes,” Steinmetz told PsyPost. “The interrelations among the investigated variables suggest that high levels of mental involvement among crypto-users who also gamble induces higher engagement in terms of owning more cryptocurrencies and speculating more often.”
The second cluster of heavy users accounted for a sizable share of crypto-gamblers. “A ~35% share of heavy users among all cryptocurrency users who also gamble was not expected. This warrants further research on the domain,” Steinmetz said.
“The results suggest that rather than focusing solely on trading frequencies of cryptocurrency, researchers should broaden their scope by recognizing the importance of mental involvement of cryptocurrency users, e.g. trust-perceptions, proclaimed knowledge about cryptocurrency and ideological motivation,” the researcher said.
The study, “The interrelations of cryptocurrency and gambling: Results from a representative survey“, was published online on August 22, 2022.