Headline: Can you become addicted to trading cryptocurrency?
Body: I don’t know about you, but there are a few things I probably addicted to. First, there are bananas. Love, those bananas. Then there’s coffee, probably less than pathological addiction to each, but, I will go out of my way if I am out of these items. You might have your own addictions, perhaps it’s a cigarette after dinner, maybe it’s going to Thrift stores to find first edition books. Whatever it is, it makes you feel somehow complete, and if lost, you are left somewhat bereft. (I am developing an addition to online Scrabble playing too, so, yeah, I feel your pain.) These already mentioned are minor, and will not kill you ever, or at least for decades. But, some addictions have FAR more deleterious effects (e.g. alcohol, drugs, gambling). As we always hear warnings about these, there is one more I have to add to the list. It IS possible to become addicted to trading cryptocurrency. At first I was skeptical, but I think a pretty good case has been made. But, you be the judge.
What is cryptocurrency trading addiction?
Sternlicht defines cryptocurrency trading addiction as the “persistent or recurrent pathological compulsion and obsession to engage in the behavior of investing in or trading cryptocurrencies despite negative consequences to personal and/or professional areas such as financial loss, disruption to relationships, career problems, mental health issues, and other such negative consequences.” It seems that the group most at risk is the group of people who consider themselves to be financially knowledgeable. They feel that they MUST know more than the person next to them, and thus can make REAL money on this trading thing, and only then realize how vaporous cryptocurrencies can be and how incredibly volatile the pricing can be.
Why is this such a dangerous thing?
This is simply my theory, but it seems to me that trading cryptocurrency can supply (to some) the rudiments of the other addictive behaviors. That first hit of smack can probably make you feel quite powerful and in control of your environment, and be very exciting at the same time. Make a good trade on cryptocurrency and you obtain many of the same feelings. Adrenaline junkies are effectively the same; They will do some pretty dangerous things in search of that BLAST of epinephrine and the elation of not being killed, while doing something that likely very few have ever done. The price volatility involved in cryptocurrency can serve as a very good stand -in for a cliff or high bridge from which one can bungee jump. I can hear some arguing that “This is NOT the same!!” Well, I’m afraid it is, as it has already been repeatedly seen in people who day trade stocks. What makes cryptocurrency even worse, potentially, is that they can be traded 24/7 and the only apparatus needed is a phone or computer. (The side effects can include other addictions too. Many addicts really love the 24/7 action, and many start to use amphetamines to allow themselves to be awake far longer. This can create its own problems.)
But, wait, there’s more!! There are now a plethora of stars and celebrities behind the hocking of cryptocurrency. Matt Damon has promoted Crypto.com and Tik-Tok “Finfluencers” can be found by the score, each one explaining how they became rich using memecoins. Many of them even have a helpful study course you might purchase from them. How nice!!
What can be done to prevent addiction?
Cryptocurrency should be seen as an investment activity, and investing SHOULD be boring. The research done should take a respectable amount of time (commensurate with the amount of money being placed at risk, of course.) But, in my reading, most of those addicted read about the projects funded by these altcoins, as they were scrolling social media. This seems to be the maximum extent of the research done by most. So, I have a few ideas.
- Have an accountability buddy and see if your “investment idea” passes the smell test with them.
- Read the whitepaper associated with each currency.
- When done reading, sketch out the reason that the currency is being created, and why each member of the management team is important to its success.
- Sleep on it. If it’s a good investment today, it should be a good investment 1-2 days from now.
- Keep most of your cryptocurrency and other digital assets in a cold wallet NOT connected to the Internet.
So, what can be done for the addict?
First, there is a monitoring regimen setup over their access to bank accounts and credit cards. (Some even have access modified to allow only transactions permitted by their therapist.) Counseling sessions (one on one) are useful, but it seems that this is a particularly good use of group therapy techniques. The group is a particularly powerful paradigm because each group member can have their feelings validated by other members of the group, and the patient can realize that he is certainly not alone.
A word of caution here. The APA has not yet come up with a diagnosis for crypto trading addiction , so getting coverage from your insurance company could be tricky. But, it is very much akin to gambling addiction. The symptoms are very similar, the triggers are nearly identical, and the treatments are largely the same.
The Verdict
This can be a real thing, and cause REAL harm to real people. But, then again, so can almost anything taken to extremes. (Did you know that you CAN be killed by too much water in a restricted period of time? It takes A LOT but, it can be done.) There is a point of perspective though. I have taken material from 4 different publications that I find to be credible. When reading each in depth (don’t do it, it’s not worth it) one quite quickly can see that each article (remember, these are the CREDIBLE sources) always 4/4, mention the same protagonists, a husband and wife therapist. Ostensibly, as they are positioning themselves as the go-to experts, they are likely going to see much more revenue in their pockets. I might be a cynical member of GenX, but, as one reads the literature, this one tidbit should be borne in mind. The threat is real, for some, but for all, it can be avoided or treated. In the interim, just do what you can to be observant of the changes in behavior of those you love. Check in with them, and really find out how they are doing. And, in Loving Memory of Jerry Springer, Be good to yourselves, and each other.
REFERENCES
https://www.washingtonpost.com/technology/2022/04/29/crypto-addiction/
https://www.ft.com/content/f8670d81-2632-498f-8b18-4d2ba14101f7
Editor’s Note: Please note that the information contained herein is meant only for general education: This should not be construed as Tax Advice. Personal attributes could make a material difference in the advice given, so, before taking action, please consult your tax advisor or CPA.