Cryptocurrency is almost 15 years old, but as a concept, it still feels fresh, innovative, and exciting. That innovative vibe, plus the air of mystery that still surrounds the idea of an encrypted virtual currency, helps explain why 145 million Americans currently own crypto or have in the past.
Unfortunately, as public interest in crypto increases, so does the possibility for unhealthy behaviors — up to and including crypto addictions. One Scottish rehab center recently opened to specifically address crypto addictions, and addiction programs across the U.S. are starting to offer more crypto-specific resources.
Like gambling addiction, crypto addiction can hide in plain sight — which is why it’s important to know the key warning signs of addiction and intervene as soon as you notice them in yourself or others.
What is cryptocurrency?
At its most basic, cryptocurrency simply refers to an encrypted form of virtual-only money. Unlike paper money, cryptocurrency isn’t issued by a centralized regulator like a bank or federal government.
Instead, the inventors of cryptocurrency aimed to replace centralized banking with a decentralized financial system that could take place digitally and entirely through encrypted online transactions.
Just as there are multiple forms of paper money — the American dollar, the Japanese yen, and the European euro, for example — there are multiple cryptocurrencies. Bitcoin was the first cryptocurrency (at least, the first decentralized, encrypted form of cryptocurrency), and it remains the most popular and well-known cryptocurrency today.
As of 2022, though, there are at least 19,000 different cryptocurrencies that crypto enthusiasts can trade with today.
What does it mean to invest in cryptocurrency?
If you’re wondering how to buy cryptocurrency, the most straightforward way is to sign up for a cryptocurrency exchange. Once you create your account and verify your info, you use real money (meaning money issued and backed by a central authority like a bank) to buy your cryptocurrency of choice.
Your newly acquired crypto is then stored in a digital wallet, and you can use the virtual cash you’ve purchased to make further investments.
Why is investing in cryptocurrency so risky?
In some ways, investing in crypto through an exchange is similar to investing in the stock market via the New York Stock Exchange. But trading cryptocurrency is inherently riskier than trading on the stock market, which is one reason investing in crypto can become an addiction.
First of all, when you buy stock, you’re investing directly in a company. Hopefully, a company that’s doing well and has earnings and cash flow backing it that helps provide a positive return on investment over the long run.
But crypto isn’t backed by anything. After all, its original purpose was to serve as a decentralized, unregulated alternative to strictly regulated banks. If you invest in a cryptocurrency that later loses all its value, you quite simply lose all your money.
Cryptocurrency is prone to scams
Because it’s not regulated, cryptocurrency is more prone to scams than an institution like the stock market or federally backed banks.
Of course, crypto’s inherent riskiness is part of the thrill of investing in it. Whenever an investment pays off, you experience the rush of winning. As with gambling, that high may push you to make even riskier investments — and the more you lose, the more you’re determined to reclaim the high of winning.
Now that we’ve established what crypto investing is and why it has such a high addiction potential, here are some of the clearest warning signs you or your loved one has a crypto addiction.
You spend most of your time trading crypto
Any hobby requires a certain investment of time. While spending any amount of time trading crypto isn’t necessarily a warning sign, you should be concerned if your crypto habit keeps you from working, sleeping, eating, or socializing as much as you used to.
You can’t be away from your phone or computer
If you enjoy trading crypto but aren’t necessarily addicted to it, you shouldn’t struggle to log off your computer or put down your phone when you need to switch to another task. (At most, you might experience a feeling of annoyance that disappears once you’ve moved on to a different activity.)
A loved one with an addiction, however, will find the idea of stepping away from the crypto space — even to sleep or take care of other basic needs — closer to unbearable.
You’ve tried to stop, but you can’t
Many people with addictions recognize they have a problem and try to change their behavior, but they can’t seem to stop. Sure, they might be able to stop smoking or gambling for a few hours, days, or even weeks.
But these changes never seem to stick — they can’t stop thinking about the activity they’ve quit and eventually feel compelled to return.
If you’ve tried to stop trading crypto at least once and have never succeeded, that’s a warning sign you or your loved one could be addicted.
You’ve spent too much money trading crypto
If you like trading crypto on the side but aren’t addicted to it, you should be able to set a trading budget and stick to it. If you’re addicted, though, you frequently exceed your budget.
You might even have lost a large amount of money and tried to stop trading, but the thought that you can recoup your losses if you just invest more money keeps you from quitting.
If you spend so much money on crypto that you can’t afford necessities, have had to trim spending in other areas, or are taking drastic measures like drawing from your retirement fund even though you were hoping to retire early — you probably have a crypto addiction.
You can’t seem to think about anything but crypto
People with addictions often find themselves obsessively thinking about their addiction. You might try to think about something else — an upcoming vacation, a work task, or a relationship with a loved one — but get pulled back into thinking only about your investments, usually with a strong sense of anxiety.
You meet addiction-related risk factors
We now know that there’s no such thing as an “addictive personality.” However, there are still several risk factors that mean some people are more likely to get addicted than others:
- A history of trauma, especially childhood trauma
- Environmental factors, especially growing up around others with addictions
- A history of mental illness
Genetics may play a crucial role in determining who develops an addiction. If your parents or other family members have experienced addiction in the past, it’s worth asking yourself if you see any overlap with their behavior.
If you’ve identified these signs of a crypto addiction in yourself or others, it’s important to move on to the next steps as soon as possible. If you think you’ve developed an addiction, start by reaching out to close friends and family members to ask for help. Schedule an appointment with a therapist who can recommend the next steps.
If your loved one is the person with an addiction, gently ask about their life and what you can do to help. It’s important not to attack someone with an addiction — resist the urge to get angry or frustrated. Instead, listen with compassion.
Work with your family members to identify and mitigate environmental factors and mental health concerns that could be fueling their addiction.
With love, support, and external aid, you can work on managing a crypto addiction and get back to the life you love.
FinanceBuzz is not an investment advisor. This content is for informational purposes only, you should not construe any such information as legal, tax, investment, financial, or other advice.