What Should You Do With Your Bitcoin Winnings?

bitcoin-Chart-Up2When you win bitcoin gambling at your favorite online casino, what do you usually do with it? Do you leave it in your account? Do you withdraw it right away?

Some gamblers put a lot of thought into this, while others may play it by ear. But when it comes to bitcoin winnings, you really cannot afford to make spontaneous decisions—at least if you do not want any surprises.

Holding bitcoin is not like holding a “fiat” currency like US dollars. Let’s talk about why.

The Value of Bitcoin is Subject to Extreme Fluctuations

Every currency experiences changes in its value over time relative to others. The US Dollar fluctuates against the Euro, the Pound, the Yen, and so forth.

Indeed, if you know anything about investing in foreign exchange, you are aware that Forex is considered to be a “high risk” activity.

Currency trading can pay handsomely if you become a trading expert, but the vast majority of retail investors fail because it is so challenging to predict price movements accurately and make the volatility work to one’s advantage.

So when I tell you that investing in Forex is “low risk” compared to investing in cryptocurrencies, you should understand my full meaning.

Take a look at some of the fluctuations in bitcoin value (expressed in US Dollars) over 2017 alone according to the data on CoinMarketCap. These are all for 1 BTC:

  • January 2017: $720-$920
  • March 2017: $1,290+
  • May-June 2017: $2,000-$3,200+
  • August 2017: $4,400
  • September 2017: $5,000
  • October 2017: $6,180+
  • November 2017: $7,300+
  • Early December 2017: $10,000+
  • December 17, 2017: $19,000+
  • December 22, 2017: $13,800
  • February 5, 2018: $6,200
  • March 13, 2018: $9,000+
  • April 20, 2018: $8,367
  • May 14, 2018: $8,792

Seriously, those are some wild price fluctuations within a ridiculously short span of time. Look at the massive gains in early December—bitcoin nearly doubled in value.

But then look at what happened between December 17th and December 22nd. Actually, it only took 24 hours for bitcoin to drop a third of its value. It then lost half its value again during the latter part of January leading into February.

Bitcoin Is a Gamble … Which Is Fine, So Long As You Know It

What will happen to the price of bitcoin next? Will it make a rebound, soaring back up to its previous heights or even surpassing them? Will it continue on its downward plunge? Will it consolidate?

We can speculate all day about this, but in the end, we will be doing just that, speculating.

Lately cryptocurrencies have been taking a lot of flak because they are such a high-risk vehicle. In fact, critics have been slamming companies and individuals who promote them as an “investment” rather than a “gamble.”

In some respects, this ire is deserved. A lot of folks who want to drive crypto values up have been pretty misleading to consumers about the risks involved.

That being said, there is nothing wrong with a gamble, so long as you know you are taking one.

And that brings me around to the point I am making, which is that so long as you have cryptocurrency holdings of any kind, you are always engaged in a gamble.

So when your bitcoin winnings are just sitting in your online casino account, they are actually “in play” in a manner of speaking.

But in this case, the house is not the casino—it is the market.

That is why you need to make a conscious decision about what you will do with your winnings when you do get lucky playing slots, poker, or other games online with cryptocurrencies.

You essentially have three options. Let’s go over them.

Option 1. Leave your money in your casino account.

bitcoin-casinos-online-gamblingYour first option is to simply keep your funds in your casino account. There are few advantages to doing this:

  • It is convenient. The next time you decide to play, you will not need to take the time to transfer funds. They will already be there waiting for you.
  • The casino will appreciate it. There is a tendency for online casinos and sportsbooks to favor customers who leave at least some funds in their accounts on a continuing basis. Doing so signals to the casino that you intend to come back and play again soon.
  • You may be trying to build up your account. For example, perhaps you play poker and you always stake the same percentage of your account. As your account grows, so can your stake sizes, leading to progressively larger wins. If you are withdrawing on a regular basis, it becomes hard to grow your account in this exponential fashion.

Those are all valid reasons to consider leaving at least some of your funds in your online casino account when you are not playing.

But here are the drawbacks when those funds are in bitcoin or another cryptocurrency.

If the casino keeps your funds in bitcoin …

  • If you forget about the funds in your account and the value of bitcoin rapidly drops, you could log back on to realize you have lost money. Yes, you still have the same amount of bitcoin, but it is not worth what it would have been had you cashed it out before.
  • If you notice the value of bitcoin dropping rapidly and decide you want to convert your money before it does, you have extra steps to deal with before you can do so. While withdrawals are instant in a lot of cases, there are scenarios where you might need to wait 24 hours or more for a transaction to process. As you now know, a lot can happen with the price of bitcoin in 24 hours.

If the casino converts your funds to US Dollars while your money is in your account …

  • If your funds are in USD while they are in your account and bitcoin takes a jump, you will not benefit from the increase in value.

You can see that there are potential drawbacks to offset the advantages.

So what should you do? It is completely up to you to weigh the pros against the cons and make a decision.

My default recommendation would be that you keep some of your money in your bitcoin casino account so that you do have the convenience of funds waiting for you, but that you withdraw at least a percentage of your winnings on a regular basis.

Option 2. Cash out to a bitcoin wallet.

That brings me to the next thing you can do with your bitcoin funds, and that is withdraw them to a wallet.

That means that you are keeping your funds as bitcoin, but you are not leaving them sitting in your casino account.

The benefits of doing this are:

  • You are in control of the money you move to your wallet and can do whatever you need with it fast. If you want to quickly convert it into US Dollars, you can, or you can store it indefinitely or re-deposit it into your casino account later.
  • You do not need to worry about what will happen to your bitcoin if the casino site tanks. Of course, this is only a concern if you are playing at new sites that do not have solid reputations. If you are playing at well-established sites that are well-known and have strong financials, this is not something you need to worry about.

Are there any drawbacks? Not really, unless you forget about the money in your wallet and bitcoin takes a nosedive. Then you have the same loss in value that you would have had if you had left the funds in your casino account.

It is important to make sure that the wallet you choose to use is secure. You can check out the wallets which we recommend here.

Option 3. Convert your bitcoin back to your native currency (i.e. US Dollars) and withdraw it.

The third thing you can do with your winnings is cash them out entirely, meaning you withdraw them from your casino account, and then you either convert them using a wallet or an exchange into a fiat currency of your choice.

The benefits of exchanging your bitcoin for US Dollars include:

  • Your money is “totally safe and secure”. If something should happen to the casino site where you gamble or your wallet, you can rest assured that your funds are not going anywhere. They are simply in your regular bank account, and are available to use for everyday purchases. The money which you withdraw and convert will no longer be subject to the massive volatility of bitcoin. The only fluctuations in value it will experience are the regularly expected fluctuations in the value of the dollar. So you do not need to worry anymore that the value of your winnings will plummet overnight.
  • You can do something else to increase the value of your winnings. For example, you could take them and invest them in a vehicle which is more stable and reliable than cryptocurrencies, for example, a mutual fund.

The drawbacks include:

  • Any money which you to withdraw and convert will no longer be conveniently ready and available to gamble with on your favorite crypto sites. If you want to put the funds back into your account, you will need to jump through the relevant hoops and pay the applicable fees for the conversions and transfers. You will also have to deal with the time delays and the hassles involved.
  • You could withdraw your money and convert it into your native currency only to discover upon doing so that bitcoin has just taken a tremendous leap in value, and you missed out. It can be very painful to realize that if you had just waited another day to withdraw, that your winnings could have totaled quite a bit more in your native currency.

Deciding When to Convert Your Bitcoin or Crypto into Fiat Funds

So you can see it is all about timing, especially if you are thinking about making a conversion from crypto to fiat funds. If you pick an advantageous time to do so, it might protect you from a loss of value. But if you pick a disadvantageous time on a mistake, it might result in an unintended loss.

Choosing an advantageous time can be quite difficult. In fact, right now you are probably wondering how you can go about timing your conversions in order to try to profit from bitcoin’s volatility, instead of losing money.

This whole process may be somewhat familiar to you if you have ever traveled to a foreign country or lived in one. I used to live overseas, and every morning when I woke up, I could turn on the TV and see the current exchange rates.

The idea was that you could look at the rates and decide whether this was a good day to convert your money in either direction or not. If you had a little flexibility, you might, for example, decide to wait a day or two to see if the rates improved. If they moved in your favor, then you could make your conversion. Then your money would go further.

You can do that with bitcoin as well, but it is even more of a shot in the dark because trying to guess what is going to happen over the next few days is far more difficult. The swings up and down are way more pronounced.

Imagine for example that bitcoin’s value compared to the dollar has moved up and down a few times over the past week, and you know that you want to withdraw and convert your bitcoin sometime within the next few days.

Today, you notice that the value has improved a bit over yesterday, and the same was true the day before. Should you take advantage of this, or should you wait another day to see if this trend continues?

There is no easy answer to this question. On one hand, if you convert today and value soars tomorrow, you will have missed an opportunity. On the other hand, if you fail to convert today, and the trend reverses tomorrow, you will lose value.

This raises the question, “Does this really need to be total guesswork?” The answer to that is, “No, not exactly.”

There are ways to predict movements of price in the currency market. These include fundamental and technical analysis as well as price action. These are the methods which currency traders use to make their money.

Of course, the average person making a currency conversion for a one-time purpose is not going to use these methods, because they take a great deal of time and effort to learn how to use effectively to make predictions.

Now, consider what I said before about how much more volatile cryptocurrencies are then their fiat counterparts. It is already very difficult to make reliable predictions about fiat currencies; doing the same with cryptocurrencies is much harder.

For this reason, even experienced traders who are dealing with bitcoin may have little to no luck figuring out what the price of bitcoin is going to do relative to other currencies.

So it is unlikely that you will be able to precisely time your own conversions when you are withdrawing your bitcoin gambling winnings. Hopefully, sometimes it will work out to your advantage, but many times, it probably will not.

General Tips and Advice for Managing Your Bitcoin Gambling Funds

Bitcoin and Gambling Questions and Answers

Now that you are aware of some of the challenges associated with trying to figure out how much of your bitcoin gambling winnings to withdraw and convert, and when to do it, let us briefly go over a few best practices and reminders.

Things to Remember:

  • At any point, there are three things you can do with your bitcoin gambling funds. You can leave them in your account, you can transfer them to a wallet, or you can convert them into your native currency.
  • Bitcoin can gain or lose value relative to other currencies rapidly and unpredictably. For that reason, holding it at all is a gamble.
  • Trying to predict what will happen to the price of any cryptocurrency is also a gamble. Even experienced currency traders have a difficult time surmising what price is doing for virtual currencies. So while you can try to time your conversions in your favor, you face severe limitations in doing so.

Best Practices:

  • You probably do not want to leave all of your gambling winnings sitting in your bitcoin casino account. Doing so exposes you to the maximum risk associated with crypto volatility. It also puts all of your eggs in one basket, which could be a problem if for whatever reason the site goes under. For that reason, I recommend transferring at least some of your funds out of your account on a regular basis and converting them to your native currency.
  • Try and follow along with the fluctuating exchange rates, and where possible, time your conversions to take advantage of them. But know that there is only so much you can do to give yourself an edge here.
  • Never lose sight of the risk involved with crypto holdings. While bitcoin is promoted as an investment, it really is as much of a gamble as many of the games that you play at your crypto casino.

Conclusion: Never Take the Value Of Your Crypto Gambling Funds for Granted

When the only funds in your online casino account are in your native currency, you can rest comfortably assured that they retain their value while they are not in play. The same cannot necessarily be said for bitcoin or other crypto funds. Even when they are not in play, their value could be rising or falling precipitously against the dollar.

For that reason you must take extra care when managing crypto gambling funds. Even though the amount of bitcoin you see in your account each day will remain unchanged when you are not playing, the dollar value it is equivalent to is changing continuously. Keep that in mind and you could make smart decisions about the money in your bitcoin casino account.

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