Facts about Addiction to Cryptocurrencies such as Bitcoin, Ethereum, Ripple & Litecoin
Compulsive betting on cryptocurrency markets such as Bitcoin is a fast-growing, worldwide problem.
This web page provides & describes the cryptocurrency terms needed to discuss the problem with someone who may be addicted.
If you think you might be addicted to the trading of cryptocurrencies, or you have a loved one you’re worried about, you can get in touch with us for a confidential discussion.
What is a cryptocurrency?
Cryptocurrencies are digital currencies that are not backed up by a government authority like the Bank of England. They are traded all over the world via the internet (anyone with a smartphone can trade). The first cryptocurrency was Bitcoin and other popular ones include Ethereum, Ripple & Litecoin.
How are cryptocurrencies addictive?
People who obsessively watch the prices of cryptocurrencies such as Bitcoin can become addicted to the process.
The price of these new digital currencies can fluctuate wildly and those who have invested in them can get hooked on watching these minute-by-minute changes as they are reported via the internet.
Our research shows a typical user who compulsively checks prices online and monitors media for reports of price surges or crashes. Cryptocurrency users talk of FOMO – the Fear of Missing Out – and the need to monitor news and prices constantly. It can take over a person’s entire life and result in them spending their life savings, salaries and even stealing.
This article provides a vivid description of the process: Are You Addicted To Cryptocurrency Trading? Or simply passionate?
Is it like a gambling addiction?
Yes. Addiction to cryptocurrencies is similar to gambling addiction and other behavioural addictions. It can be treated in the same way, by clinics like Castle Craig that have the resources and experience to treat gambling addiction.
Dr Mark Griffiths, a professor in psychology at Nottingham Trent University, and one of the leading experts in behavioural addictions told Castle Craig that: “Addiction to cryptocurrencies is really just a sub-type of online day trading addiction. I see these as akin to gambling addiction.”
The American Psychiatric Association’s Diagnostic and Statistical Manual of Mental Disorders, Version 5 (DSM-5) recognises gambling (Gambling Disorder) as a diagnosable addiction subject to certain criteria. Cryptocurrency addiction treatment is covered by this.
Is it like addiction to day trading?
Yes – according to Dr Mark Griffiths, Professor of Behavioural Addiction at Nottingham Trent University and director of the International Gaming Research Unit.
What is day trading?
Online day trading is the buying and selling of stocks, shares and other financial instruments within the same day. Traders take advantage of small price moves and constantly monitor the change of value, via the internet. It can become addictive. Another type of investment that can be both exciting and addictive is ‘spread betting’ — where the buyer makes a bet on a share price, or other financial instrument, going up or down.
Before the internet, all stocks and shares were bought by stock brokers or other financial experts in a physical location such as the Stock Exchange in London. Investors would look to the newspapers for updates and news. The internet has changed all this and now anyone with a smartphone can download an app and begin trading immediately; they can keep an eye on the price fluctuations 24/7 and do it in the comfort of their own bedroom.
How many people are addicted to cryptocurrency trading?
We have not found any current estimates of how many people suffer from cryptocurrency addiction. Our research suggests there are currently 13+ million people in the world today who are actively trading in cryptocurrencies.
How many people are addicted to gambling?
In 2015 the UK’s Gambling Commission found that more than two million people are either addicted to gambling or are at risk. Online gambling is one of the fastest growing addictions in the world today.
Is denial a common feature for someone addicted to cryptocurrency trading?
Yes. Denial is one of the most common features of all forms of addiction and addicted people are often experts at making excuses and justifications.
A cryptocurrency addiction can be easier to deny than other forms of addiction as it is a practice that most people don’t know anything about, and it can appear to be a legitimate investment activity.
Are gamblers attracted to cryptocurrencies?
Yes. Our anecdotal research shows that gamblers are attracted to trading in cryptocurrencies because it offers a similar promise as gambling but doesn’t carry the same social stigma.
“The high risk, fluctuating cryptocurrency market appeals to the problem gambler. It provides excitement and an escape from reality. Bitcoin, for example, has been heavily traded and huge gains & losses were made. It’s a classic bubble situation.” Chris Burn, a gambling therapist at Castle Craig Hospital.
This contributor to Reddit says the “cycle of destruction that comes with gambling addiction is on par with the greatest of natural disasters…Some statistics suggest nearly 80% of all Bitcoin’s in circulation are used for online gambling. They are the ideal currency for such gaming activities – anonymous, instant and can be broken down into payments both big and small.
Can it be treated like other addictions?
Yes. Addiction to cryptocurrencies and day trading can be treated in the same way as gambling addiction, in clinics such as Castle Craig with the capacity and experience to treat behavioural addictions.
Where can I get treatment for this addiction?
Any rehab clinic with experience of treating gambling addictions, like Castle Craig, and other behavioural addictions, can offer treatment. If you are concerned about a possible addiction please get in touch.
PART TWO – UNDERSTANDING CRYPTOCURRENCIES
What are cryptocurrencies?
Cryptocurrencies are digital currencies. Each unit is a unique computer code that can be traded all over the world via the internet. Anyone with a smartphone can trade.
Cryptocurrencies are based on a network of connected computers known as a blockchain.
Bitcoin was the first and is currently the biggest cryptocurrency. Other big cryptocurrencies include Ethereum, Ripple, Stellar, NEO, Litecoin and NEM.
Unlike ordinary currencies they are not backed up by governments, like the US Dollar is backed up by the Federal Reserve. Cryptocurrencies are sustained by their users.
The Cambridge Centre for Alternative Currency defines cryptocurrencies as “digital assets using cryptography to secure transactions between peers without the need for a central bank or other authority performing that role…”
To read more about the background of cryptocurrencies see this article: What are the Philosophical Underpinnings of Bitcoin?
How do cryptocurrencies work?
All transactions are done on the internet. Each unit of cryptocurrency is made up of a unique computer codes that can be bought and sold.
Cryptocurrencies are bought and sold through specialist exchange companies, where each account holder has an electronic ‘wallet’.
Cryptocurrencies function in a similar way to stocks and shares and other financial instruments.
You can’t withdraw cryptocurrencies from an ordinary bank, but some retailers do accept them as payment.
What is a blockchain?
Cryptocurrencies are built on an IT system called blockchain, which is essentially a database of linked computers. All transactions are recorded on all of the linked computers and cannot be deleted.
Wikipedia defines a blockchain as a ‘continuously growing list of records, called blocks, which are linked and secured using cryptography.’
Who runs cryptocurrencies?
Unlike ordinary currencies there is no central authority, such as the Bank of England, behind cryptocurrencies.
Instead of a central (or national) bank there are thousands of IT experts, known as ‘miners’, whose job is to verify transactions and release more crypto-coins into the market. The Bitcoin miners use a system called blockchain.
They are sustained by their users, who believe the value of their digital currencies will increase (or at least remain the same).
How many people use cryptocurrencies?
Our research shows that there is anything between 13 and 28 million active users of cryptocurrencies in the world today.
According to a 2017 study by the Cambridge Centre for Alternative Finance, an estimated 3 million people around the world actively use cryptocurrencies – this has since grown exponentially with an estimated 24 million Blockchain wallets users today (according to this statistical analysis by statista.com)
How many cryptocurrencies are there?
Cryptocurrencies are relatively easy to set up and, according to Wikipedia, there are over 1,384 different types. The biggest ones are Bitcoin, Etherium, Ripple, Cardano and Litecoin. This academic study into cryptocurrencies by Cambridge University in April 2017 looks into 144 cryptocurrencies.
What is the global value of cryptocurrencies?
According to an article in UK Business Insider the total value of all cryptocurrencies in January 2018 was almost £500 billion.
Their value can fluctuate wildly; in December 2017 the value of Bitcoin plunged by a quarter.
What is Bitcoin?
Bitcoin was the first (and is the best known) decentralised online currency. It was launched in 2009 and by 2018 had a 72% share of the global cryptocurrency market.
At the time of writing (April 9th 2018) one Bitcoin was worth £ 4,762. It is possible to buy a hundredth of a millionth of a single Bitcoin, known as a Satoshi.
How many Bitcoins are in circulation?
According to The Statistics Portal, in March 2018 there were 16.95 million Bitcoins in circulation.
The maximum number of Bitcoins that will be released is 21 million, by the year 2140. Every year a limited number are released and this process is controlled by IT experts known as miners.
The control of the money supply (scarcity) is an important part of the cryptocurrency system.
What’s the difference between cryptocurrencies and the money on bank cards?
Money on ordinary bank cards is backed up by governments and can be used in almost any situation.
Cryptocurrencies can only be bought and sold via special exchanges although there are certain vendors who accept payment in, for example, Bitcoin.
Is it safe to invest in cryptocurrencies?
Mainstream investment advisors tend to advise against it and high street banks refuse loans against assets held in cryptocurrencies.
Warren Buffett, the 87 year old investment guru, says that buying Bitcoin is gambling not investment: “If you wanna gamble somebody else will come along and pay more money tomorrow, that’s one kind of game. That is not investing.”
Bitcoin lost much value in December 2017 when three Asian governments cracked down on cryptocurrencies. Facebook banned all cryptocurrencies from advertising on its platform in early 2018, further driving down their value.
However, the cryptocurrencies are still functioning and advocates say they represent the future of currency.
Do criminals use cryptocurrencies?
This is perhaps the most controversial point about cryptocurrencies.
This article in Forbes says that criminals use cryptocurrencies because of its anonymity, but law enforcement is not far behind.
Advocates for cryptocurrencies say that criminals use all banking systems and especially offshore tax havens.
Is there a cryptocurrency or Bitcoin slang?
Yes. There are over 30 terms used by cryptocurrency users, for example: FOMO (Fear of Missing Out); FUD (Fear Uncertainty and Doubt); HODL (Holding onto your money or Hold on for Dear Life); ATH (All Time High); Pump and Dump (the tendency for prices to boom and bust); ALTCOIN or FIAT (their term for ordinary, non-crypto currencies).
What are government regulators doing about cryptocurrencies?
Three Asian governments have cracked down on cryptocurrencies (China, India and South Korea) but in the EU the digital currencies are unregulated which means individual investors have no protection.
This investigation in Taiwan shows the type of concerns that governments have about cryptocurrencies.
Britain’s Financial Conduct Authority (FCA) announced on the 9th of April 2018 that is working on a cryptocurrency guidelines for cryptocurrencies, with the Bank of England and the Treasury. These could be the first cryptocurrency regulations in Europe.
What is the future of cryptocurrencies?
The future of Bitcoin and the cryptocurrencies is uncertain.
Many governments consider them a threat to their own financial systems and demand regulation and control. The blockchain technology behind cryptocurrency is widely appreciated and may get adopted by governments and the financial industry. To find out more see this academic paper by Jan Lansky of the University of Finance and Administration in Prague.
Where can I find more information about cryptocurrency addiction?
- You can find out more information about cryptocurrency addiction in our Help page
- One of the leading experts on behavioural addictions in the UK is Dr Mark Griffiths, Professor of Behavioural Addiction, International Gaming Research Unit at Nottingham Trent University. Dr Griffiths wrote this useful article following our correspondence on the issue.
- This article at Fortune.com gives an insights into the risks involved: Bitcoin Investing can takes its toll on your Mental Health
- A useful source of background information about cryptocurrencies is the Global Cryptocurrency Benchmarking Study by Cambridge University’s Centre for Alternative Finance.
- To find out more about Bitcoin ‘miners’ (the IT experts who authorise payments and release new Bitcoins onto the market) you can see this documentary by the online magazine VICE.
CRYPTOCURRENCY NEWS & ANALYSIS WEBSITES:
Castle Craig does not recommend any of the following websites or have any connection to them. They are simply some of the most popular sources of news and analysis websites about cryptocurrencies.
- Bitcoin Market Journal is a source of news and feature articles about cryptocurrencies.
- News Bitcoin is arguably the largest cryptocurrency news website
- Cointelegraph offers the same style of reporting and analysis as News Bitcoin
- Bitcoin Warrior has analytical-type articles cryptocurrencies
- News BTC This website offers technical analysis and future forecasts for cryptocurrencies.
RELEVANT SOCIAL NETWORKS
Castle Craig does not recommend any of the following social networks websites about cryptocurrencies.
- One of the most popular online forums for cryptocurrency users is Reddit
- Twitter is a lively location for traders, enthusiasts, news and spammers
- Instagram has many pages offering advice and views, for example @CoinCoachMedia
If you would like to find out more about cryptocurrencies or the related addiction please get in contact with us.