According to a new study 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 function 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 best known cryptocurrency, was created in 2009. Since then, cryptocurrencies have become increasingly popular. But prices can fluctuate rapidly and investing in cryptocurrencies carries substantial risks.
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 could play an important role in using cryptocurrency. Additionally, little is known about cryptocurrency users who also gamble
“Since beginning my research journey in 2015, my research topics have included blockchain technology, cryptocurrency, and gambling. It made sense for me to start investigating the intersections between these topics,” said said study author Fred Steinmetz, co-founder of the nonprofit 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 cryptocurrency use and gambling engagement over the past year. The data was collected in 2019.
The participants were classified into four distinct groups: there were 1,844 non-users (who have neither gambled nor used cryptocurrency), there were 1,312 the players (who had played recently but had never owned cryptocurrency), there were 708 crypto-users (who at one time owned a cryptocurrency but hadn’t played recently), and there were 435 crypto players (who at one point owned cryptocurrency and had also been playing recently).
Crypto gamers reported having significantly higher levels of knowledge about blockchain technology as well as higher levels of trust in cryptocurrency. Crypto gamers were also much more likely than regular crypto users to consider their owning cryptocurrency to be ideologically driven.
“Cryptocurrency is not just about trading alternative financial assets. In differentiation with, for example, stock trading, cryptocurrency users experience a different mental implication, which relates to the narratives and ideologies that permeate industry,” Steinmetz told PsyPost. “Cryptocurrency users with an affinity for gaming are more mentally, proactively, and financially involved than non-gaming users.”
Additionally, crypto gamers tended to be younger, more likely to be male, better educated, and better off financially than non-gaming crypto users. “The profiles of crypto gamers resemble those of skill-based gamblers and stock traders, but differ in terms of young average age,” Steinmetz wrote in his study.
The crypto-gamers were then divided into three separate groups. One group consisted of individuals with a high ideological motivation and belief in cryptocurrency and a moderate level of financial investment who used their cryptocurrency for the purpose of speculating relatively infrequently. The second group had high ideological motivation and confidence, a high level of investment, and frequently engaged in cryptocurrency speculation. The third group consisted of crypto gamers with low ideological motivation and low confidence, low levels of investment, and low levels of cryptocurrency speculation.
“Among crypto users who also gamble, I identified a group that includes heavy users, who are highly engaged and potentially considering cryptocurrency and gambling substitutes,” Steinmetz told PsyPost. “The interrelationships between the studied variables suggest that high levels of mental engagement among crypto users who also gamble induce higher engagement in terms of owning more cryptocurrencies and speculating more often.”
The second group of heavy users made up a significant portion of crypto gamers. “A share of around 35% of heavy users among all cryptocurrency users who also play was not expected. This warrants further research into the area,” Steinmetz said.
“The results suggest that instead of focusing solely on cryptocurrency trading frequencies, researchers should broaden their focus by recognizing the importance of mental involvement of cryptocurrency users, e.g. such as perceptions of trust, proclaimed knowledge about cryptocurrency, and ideological motivation,” the researcher said.
The study, “The Interrelationships of Cryptocurrency and Gambling: Findings from a Representative Survey,” was published online on August 22, 2022.