MetaMask Co-Founder Says Crypto Investing Is ‘Gambling’

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There is a big difference between gambling and investing, although both involve risk.

Important points

• The MetaMask founders say crypto investing can be dangerous and highlight the number of bad actors in the industry.
• Short-term trading and speculation can quickly become more akin to gambling than investing.
• Investors manage the risks they take and have a long-term perspective.

It is not uncommon to hear critics label crypto investing as gambling or call it a Ponzi scheme. But it’s rare to hear industry insiders use those words, as the MetaMask founders did in a recent Vice interview. MetaMask is one of the most popular crypto wallet options and has attracted millions of users. MetaMask founders Aaron Davis and Dan Finlay talked about how the industry has evolved and what might happen next.

The cryptocurrency market has struggled this year. Some top cryptos fell 90% or more from their all-time highs, several platforms have collapsed, and more may follow. As a result, many crypto investors are facing significant losses or are underwater on their investments.

One of the issues the two founders touched on in their wide-ranging interview was the way people have been encouraged to spend their savings in crypto — a choice Davis called “extremely dangerous.” He said: “It feels too little too late, but putting your money into cryptocurrencies is gambling.”

The pair also discussed security, NFTs and the recent crypto crash. Both raised concerns about the number of bad actors and scam projects in the market. “We can’t stop people from making Ponzis on blockchains,” Finlay said. “It’s by definition impossible for us to wrap it all up in a uniform arc and enforce it in one direction.”

MetaMask is looking at ways to tackle some of these issues, including making it harder for questionable players to gain exposure. But they also pointed out that the investors also have a certain responsibility. Projects that often seem too good to be true are — and given that there is very little investor protection in crypto, we all need to be careful.

Nevertheless, the pair is optimistic about the future of crypto. But it’s more about ideology than money. For example, Finlay would like to see it solve global problems such as climate change or social inequality.

Is crypto investing related to gambling?

There may be some similarities between gambling and investing, whether in crypto or stocks. Both involve risk, and you can lose money on both activities. But investing is about building a solid portfolio that you believe will create long-term wealth. Gambling is all about luck and playing the odds.

Crypto investments are risky, but that doesn’t necessarily make them gambling. It depends on how you invest. For example, there is a lot of speculation in the crypto market. It is also easy to buy and sell crypto on various exchanges, which can lead to quick trading rather than thoughtful decisions. Day trading and highly speculative investments can quickly take you into gambling territory.

In contrast, long-term investors scrutinize each project carefully and plan to hold the assets for five to ten years. They invest because they believe there is long-term value. There is still risk involved, as there is much we don’t know about how the crypto market will develop – it could collapse completely. But it’s the kind of calculated risk that’s often part of a broader investment strategy.

This is why it is advisable to only invest money you can afford to lose in crypto – that way you benefit if it succeeds but don’t face financial ruin if it fails. If you understand the risks, take the time to buy coins or tokens that you think will outperform, and plan to hold for a decent period of time, you are making a smart investment. It’s very different from what you would do in a casino.

The bottom line

Investing in cryptocurrency can be risky. There are a number of bad actors in the market, with relatively few restrictions on how they can behave. In last year’s crypto frenzy, prices seemed to only go up and platforms seemed to be able to pay astonishingly high rewards. This climate encouraged gambling rather than investing – people felt they could do no wrong.

Unfortunately, this year has shown that crypto investments can lose money and platforms can fail. As a result, many people have lost money. But if you keep your eyes on the long term, manage the risks you take on and avoid platforms that overpromise, you can avoid crypto gambling.