Nitrobetting on Nostr: Managing Risks When Betting with Bitcoin Before diving deep into the issue of ...
Managing Risks When Betting with Bitcoin
Before diving deep into the issue of bitcoins and volatility, it's important for us to define exactly what we mean by volatility. The term volatility comes from the world of stock investing.
Volatility is simply a measure of how far the price of a security goes up or down from the average or mean. If a stock is volatile, it can have massive swings up or down. Options traders love volatility because they can use leverage to play a stock to go up via a call option or play a stock to go down via a put option.
Sports bettors have a form of volatility measured by spread lines. If Dallas is a -6 favorite against San Francisco, the mean is -6 on Dallas. How far the spread goes up or down is the volatility measure of the Dallas versus San Francisco spread line.
Why Bitcoins volatility is different from other forms of financial volatility
Although created in 2008, the Bitcoin blockchain remains a relatively young asset. Bitcoin is more than an asset. It’s also a store of value, and it’s a currency that people utilize to buy goods and service, or in our case, to bet on sports and casino games.
Because of the Bitcoin blockchain’s unique qualities, it’s volatility is a sign of strength, not of weakness. All forms of investment or currency utilization go through periods of volatility.
Eventually, the currency, asset market, or security (Bitcoin qualifies as all three) stabilizes. Think of the housing market crash of 2009 followed by the housing boom and then a period of stabilization.
Before diving deep into the issue of bitcoins and volatility, it's important for us to define exactly what we mean by volatility. The term volatility comes from the world of stock investing.
Volatility is simply a measure of how far the price of a security goes up or down from the average or mean. If a stock is volatile, it can have massive swings up or down. Options traders love volatility because they can use leverage to play a stock to go up via a call option or play a stock to go down via a put option.
Sports bettors have a form of volatility measured by spread lines. If Dallas is a -6 favorite against San Francisco, the mean is -6 on Dallas. How far the spread goes up or down is the volatility measure of the Dallas versus San Francisco spread line.
Why Bitcoins volatility is different from other forms of financial volatility
Although created in 2008, the Bitcoin blockchain remains a relatively young asset. Bitcoin is more than an asset. It’s also a store of value, and it’s a currency that people utilize to buy goods and service, or in our case, to bet on sports and casino games.
Because of the Bitcoin blockchain’s unique qualities, it’s volatility is a sign of strength, not of weakness. All forms of investment or currency utilization go through periods of volatility.
Eventually, the currency, asset market, or security (Bitcoin qualifies as all three) stabilizes. Think of the housing market crash of 2009 followed by the housing boom and then a period of stabilization.