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Is Crypto At Risk of Becoming a New Form of Gambling Addiction?

Crypto diehards will deny they’re addicted to the highs of chasing financial freedom, but gambling experts disagree

Coming off his third heroin overdose in as many years, Micah drove his “shitbox car” from South Carolina to Michigan, where no one could find him, and gave himself an ultimatum: Get clean or die. “I had $50 to my name and knew that if I relapsed here in Michigan, with no family or ties to anyone, I’d be dead for real this time,” he tells me. 

After a week of suffering through withdrawals alone in his car, Micah, now 32, hasn’t touched heroin in seven years. Lately, though, he’s found something that comes close to it: crypto. “I used to pick up my bundle of H and go home to start my ritual — grab my spoon, lighter, water, cigarette filter and rig — all to escape a past that I’m now at peace with,” he tells me. “Today, I wake up every day at 4 a.m. and go through the motions of my new ritual: Open Coinbase, Uphold, Metamask and, and watch the price charts.”

To be sure, Micah is well aware that he’s replaced one addiction with another. “The exchanges have basically replaced my dealers, the coins are my new rig and the price chart leads to the high,” he admits. “It’s the closest thing to speedballing that I’ve ever found — other than the real thing.” 

Given that cryptocurrency has only recently become a mainstream phenomenon, academic research into its impact on mental health is still in its infancy. So far, however, most research aligns with the sentiment that crypto trading poses a risk akin to gambling addiction. Similar to day-trading perilous “pennystocks,” putting money into high-risk, high-reward cryptocurrencies in hopes of becoming rich presents the same addictive trappings as betting cards, sports or horses.

For instance, a 2019 Rutgers University study that polled 876 adults who gambled in the last year found “trading cryptocurrencies may be appealing to gamblers” who exhibit more compulsive and riskier gambling habits, and it was strongly associated with those involved in trading high-risk stocks. In a comarable, albeit limited study out of Turkey, two percent of 300 polled crypto investors displayed signs of gambling addiction

Paul Delfabbro, a professor at the University of Adelaide who co-authored a couple of the most recent studies on the psychological impacts of trading cryptocurrency, explains that investing in crypto itself is not an addiction. Instead, “it has addictive elements [in that] parts of the market can be like gambling,” he says. “High-risk speculation on meme and hype coins based on limited knowledge is a form of gambling, but buying a diverse amount of the more established, institutionally-backed coins could be considered a lower risk, safer play.”

To Delfabbo, a big issue here is that the technology behind cryptocurrency “enables and facilitates risky speculation,” and in turn, lends itself to addiction. Since that technology has been adopted by some 221 million people with little oversight or regulation, it’s become a massive liability for those who gravitate toward risky behavior and/or exhibit addictive gambling behavior already — a la “placing $10,000 on a meme coin,” he explains.

Unlike gambling and trading stocks, there are essentially no laws dictating how — and to whom — cryptocurrency trading platforms market themselves. “Anyone with a smartphone who spends time on the internet — which is a lot of people — will at some point see lots and lots of ads for all the different cryptocurrencies coming up, and different exchanges to trade them on,” says Tony Marini, senior specialist therapist at Castle Craig, a Scotland-based rehab facility that recently became the first of its kind to treat people with addictions to trading cryptocurrency. “And because of the way they advertised themselves, people who trade cryptocurrency don’t think they’re gambling, they think they’re investing in their future, like it’s the stock market.”

Case in point: “They say you’re going to get lots of money back,” Marini points out, without ever even hinting at the potential for losses. (They’re also flush with the kind of bright colors and inviting language that drew Robinhood criticism back in 2019.) And while brokerage and gambling apps are becoming more widely available and more user-friendly, crypto exchanges are unparalleled in that regard. As Marini says, they require little more than an internet connection and email address to get started, and some, like Coinbase, offer signup and initial-investment bonuses. 

Which is exactly how Micah got drawn in. “My buddy mentioned I should jump in head first with Doge on Robinhood, which I was already on,” he tells me. “Eventually, he sent me an invite to Coinbase where I got a bunch of free coins for joining, and that’s when I really got pulled in.” 

For his part, visual journalist Matt Danzico says he “kept going deeper and deeper and deeper into crypto” over the course of the pandemic until he couldn’t sleep or navigate life without compulsively checking on or thinking about his investments. It was only after he won and subsequently lost a “small fortune of money,” that he realized the grip crypto had on him. “I was struck by a version of myself that was mentally drenched in numbers, charts and graphs,” Danzico explains. “I was thinking about the subject so heavily that I’d catch my own mind passively doing technical analysis on nearly every object in front of me.” 

Through all the sleepless nights, Danzico recalls falling prey to the “suspiciously optimistic” and often zealous enthusiasm within coin-specific crypto communities online. Almost every single crypto coin — from Bitcoin to the Shiba Inu coin, a year-old “meme” coin with no utility or purpose outside of being a publicity stunt — has an established community on Reddit, Telegram, Discord and Twitter. And within those communities, there is rarely room for anything besides near-oppressive optimism and the belief that the coin is always about to skyrocket in value. As such, these communities often develop the pervasive notion that those who lose money are unskilled or lacking the fortitude necessary to be successful

On the subreddit dedicated to Shiba Inu, for instance, anyone who sells is decried for having “paper hands.” And posts that depict massive losses, such as this redditor who asked what to do about being $12,000 in the hole, are met with advice to “buy more” and “have faith.” 

“It’s in investors’ best interests for others to ‘hodl’ [hold onto their investments, or ‘hold on for dear life’],” Danzico explains. “The trickle-down effect of that mentality is this near-constant, relentless encouragement [within coin-specific communities online].” 

Given that the crypto community has largely evolved to downplay the idea that what it’s doing could be dangerous for some — and without widespread intervention and regulation — Marini believes we’re barreling toward a serious crypto-induced mental-health problem. “This is about more than just losing money; we’re finding that of those who’ve come in [to our rehab program] with a cryptocurrency problem, every single one of them had thoughts of killing themselves because of it,” he says. “If we continue down the path we’re on, I think we’re going to find out that it’s only going to get worse and worse.” 

Micah says he grew somewhat concerned about his cryptocurrency habits when he noticed the return of some old habits. “When I was addicted to H, I used to steal food from grocery stores. I had cash, but not for food because my funds went to H,” he tells me. “And now I sometimes won’t eat lunch at work because I can buy crypto with those funds.” 

That said, he sees no reason to quit now, still convinced crypto will undoubtedly lead to a better life. “One day,” he says, “I dream that some shitcoin will take me to glory, and that I’ll finally be able to say ‘fuck you’ to my 70-hours-a-week job and actually spend time with my two kids.”