Crypto Staking vs. Crypto Casino Gambling: Understanding the Odds

Do you often wonder if positioning your money in cryptocurrency is a sensible move? In the digital era, you can approach this in different ways. You can hold, you can trade, you can back ICOs (Initial Coin Offerings), you can mine, you can stake or even gamble away with cryptocurrency. 

Given the particularities of the crypto market, there is no easy answer to the best move. However, the ROI of all the investments options above relies heavily on cryptocurrencies' volatility, which some will compare directly with gambling.

Cryptocurrency Investment: Staking vs. Gambling

Terms such as gambling with crypto or stake cryptocurrencies are relatively new in our lives, as most investment vehicles position your savings against products related to or dependent on cryptocurrencies.

When you use your savings to stake cryptocurrencies, you block them for some time so they can be used for the blockchain operation. And the generation of more crypto. Just like in traditional banking; where you restrict your funds in a savings account so that the banks can use them to fund loans. And in exchange they pay you back some of the money they make from borrowing.

Some people see this as traditional gambling, but others define this as an investment. Like investing in the stock market, this can be an endless discussion where no outcome will be produced.

Understanding Crypto Staking: Mechanisms and Opportunities

If you have an account with one of the big wallets, they have most likely already offered you the opportunity to get involved in crypto staking. The wallets will lock some of the crypto you hold (you define the amount and the timeframe of the locking) to fund the operation of creating and verifying new blocks that are added to the blockchain. To understand this fully, some basic knowledge of the blockchain mechanism is needed.

Some coins use the proof-of-stake mechanism to produce new blocks. This mechanism requires members of the network to approve (validate) the new blocks and receive a reward for them. Your staking will be used for this reason. Since this is a concept based on a specific mechanism, you can only stake in coins such as Cardano (ADA), Ethereum (ETH), Solana (SOL), and a few others.

In most cases, the wallet where you keep your crypto will send you notifications every time a new staking pool is created. You will be invited to participate, and you will be presented with the token required from your side, the lock time, and the potential reward.

However, like everything related to cryptocurrencies, volatility can affect your staking. Some stakes were corrupted by their own validators, resulting in losses (or smaller profits) for those who staked.

Analyzing Returns: Staking Rewards vs. Casino Winnings

Although the crypto industry is relatively new, and there is no real in-depth analysis of the risks and opportunities it can create, some interesting data supports it as a reasonable investment. According to data from the top-staked assets globally, the average yearly ROI on staking crypto assets is over 10%, which is better than holding your money in the bank (since even savings accounts won't pay that much interest these days).

On the other hand, if you play live blackjack with crypto or decide to play casino games online on one of the crypto websites, you can expect higher yield and potential losses, which can extend further due to the volatility of the currency you used to deposit. If you win $100 when you gamble with crypto, this amount can be $120 the next day if the crypto prize increases.

Although many people love comparing these two funds management decisions as two forms of gambling, we believe each has a different philosophy and strategy. Therefore, it would make sense if you read and understand their mechanism before deciding where to switch your money.

Evaluating Volatility: The Impact on Staking and Gambling

And what about volatility? How can it affect the profitability of your investment in staking compared to your crypto casino winnings? This is a great question. It doesn't mean those who stake crypto assets cannot benefit from playing crypto casinos or sports.

As a general rule, coin volatility can hit you regardless of where you position your money. The fact that staking involves locking your money in an account for a longer period means that you might not be able to protect your investment in the event of a sudden collapse of the markets, like the one that happened in 2022. In a few weeks, most currencies lost most of their value, while others were wiped off completely.

In the case of casinos, you have more immediate control over your money. But again, you play against the house, which always has an edge, which means it's more likely to win in the long run. However, some argue that when trading or staking crypto, you can first digest information from analysts, other traders, forums and news websites regarding future developments in this field. This can only sometimes happen with a casino since the algorithm decides when the money is paid to players. Access to information and predictability are the two main arguments for investing in crypto staking tools.

Making an Informed Decision: Balancing Risk and Reward

It seems that there is no definite answer to which is a better choice for your money. Most experienced traders and casino players would balance the risk by exposing themselves to more than one activity related to their cryptocurrencies. Spreading the risk is always a wise piece of advice, and it can also apply in this case.