After buying Bitcoin, I tried doing some short-term trading, but the results were not good. So recently I switched to small-scale gambling. On the one hand, it takes much less mental energy; on the other hand, the income is also more obvious. As of today, I have basically made back the losses from my failed investments in other coins (LTC, PPC, FRC, etc., which have all plunged recently), as well as the losses caused by short-term trading and other flipping about.
The things I take part in are, of course, things I approve of, so let me talk a bit about my view of gambling.
Of course, I do not approve of every form of gambling. For instance, the welfare lottery, I oppose; by contrast, I can accept the gambling industry in Macao or Las Vegas.
These two kinds of gambling are very different. The former is issued in the name of the state, but in essence it is a disguised form of oppressive taxation, and it mainly targets the poor. At the same time, it is the classic case of “the officials may set fires, but the people may not light lamps”: private gambling is prohibited, while the state itself may use it to rake in money. This is actually a rather nasty thing.
What? You say the welfare lottery is not a burdensome tax? That the money raised will be used for great welfare causes? On this question, I have said many times that: any public-interest or charitable organization only makes sense when it is an independent nongovernmental organization. Poverty alleviation, elder care, education, aid for the disabled, and so on are, by rights, the government’s own responsibilities; “public welfare” is, in the first place, the very essence of government. The taxes we normally pay are precisely for the government to carry out public welfare work. So what does it mean when, beyond the taxes we owe, we donate this and that sum for charity? If, on our side, we donate an extra ten million to Project Hope, while the government throws off its own duties that should be covered by the public finances—say, building the most basic schools in rural areas—to some so-called nongovernmental organization like Project Hope, and would rather spend hundreds of millions or even trillions on grandiose, vanity-filled celebrations than take out a few dozen billion more to focus on education, then is Project Hope good or bad?
Recently, I saw an article on Weibo signed by Han Han that also made this very clear. Many people think the problem with Chinese charitable organizations lies in corruption, but they still believe that donating is always a good thing: I donate 100 yuan, and even if 95 yuan are embezzled, at least 5 yuan will reach the people in need, right? However, if organizations like Project Hope were abolished altogether, if the government could no longer dump its responsibilities onto these nongovernmental organizations and had to shoulder these public welfare duties itself, then perhaps people in hardship would receive much more. For example, Project Hope has been running for more than twenty years, and the total money it has raised may not even amount to one percent of the Beijing Olympics. To put it bluntly: everyone who donates to all sorts of so-called charitable organizations in order to keep them alive has not only no merit, but is in fact committing wrongs.
The meaning of the existence of nongovernmental charitable or public-interest organizations must rest on their “disagreement” with the government. Either because one does not trust the government’s work, and so one carries out relief independently; or, even if one trusts the government, the government’s perspective is after all limited and balancing, and if I have particular wishes or ideals, I can seek out the corresponding nongovernmental organizations—for example, animal protection, gay rights, and so on, which for the time being cannot become basic undertakings universally recognized by society; or if I pay special attention to the deaf and mute, or especially to leukemia or AIDS, etc., then the government can only support various causes evenly, whereas I think certain causes should be given higher priority, so I can support organizations devoted to those causes. But in a harmonious society like China, where no one has any disagreement with the government, we only need to obediently pay taxes and trust the government’s use of them; there is absolutely no need to support any charitable organization that is in step with the authorities. So the welfare lottery, precisely because it is an official, welfare-related activity, is evil, much more evil than the gambling industry in Macao. The welfare lottery is an extra burdensome tax aimed at the poor, whereas places like the casinos of Macao mainly scam the rich, and are relatively speaking much better.
But apart from robbing the rich to aid the poor, what meaning does gambling have? The key is to look at the mentality and form of participation.
First of all, obviously, it has the meaning of entertainment. Gambling is all tense and exciting. If it is worthwhile for us to spend money playing games, then spending money on gambling is of course also worthwhile, and does not necessarily depend on whether one wins money or not.
Second, what we buy through gambling is possibility—spending 10 yuan more or less does not change my life, but if I win several million, my life will be very different. Although the chance of winning is very low, if I do not buy a lottery ticket at all, then there will be no chance of winning. Since that is so, spending a little money to buy a dream is also worthwhile.
Of course, you cannot really expect to make money by gambling. Only when my expenditure will not affect my life, while my possible gains would affect my life, is gambling worthwhile as buying a dream. If you become too addicted, and the money spent already suffices to affect your normal life, then this is certainly not worthwhile. If you really want to make money through gambling, it is not entirely impossible. For example, there was an earlier report about a group of mathematicians who organized themselves and used their mathematical ability to speculate, making a great deal of money. However, this kind of thing does not happen easily; in fact, that group of mathematicians had very large capital to begin with, and what they ultimately earned may have been only a few percent. For ordinary people, it is unrealistic to expect to make money through general gambling activities.
And yet I just made some money from Bitcoin gambling—how is that to be explained? Could it be that I wasn’t doing this in order to make money? The key is that Bitcoin gambling is no longer an ordinary gambling activity, but has its own unique advantages. First, Bitcoin gambling can provide an extremely high rate of return. The welfare lottery’s rate of return is generally below 50%—that is to say, after putting in 100 yuan, your expected return is only 49 yuan. But the most famous Bitcoin gambling site, SatoshiDice, can provide a 98% rate of return; that is, less than 2% of the funds invested by all participants goes into the organizer’s pocket, and after you put in 100 yuan, your expected return is more than 98 yuan. This is because Bitcoin gambling can greatly eliminate operating costs—it only needs to maintain a web page in total, and even that page is optional. Participants only need to send Bitcoin to the corresponding Bitcoin address, and the gambling system will quickly return the result according to the relevant mathematical rules (even if you lose, you will still get a tiny rebate). It is that simple: it requires almost no complicated operations or lottery-drawing activities, not to mention venue and material costs. This form of drawing also ensures that the process is fair and open, and every remittance and payout is public and traceable.
Of course, if the rate of return is 98%, we still cannot hope to make money from it. After all, making money cannot be entrusted to randomness. There are also certain forms of gambling that do not rely entirely on randomness, but require a certain amount of judgment and skill, such as btcoracle.com, which bets on whether the Bitcoin price three hours from now will be higher or lower than it is now; if you buy correctly, you win money. Likewise, the whole drawing process is completely open and transparent, and the time and amount of every remittance are plainly recorded and beyond dispute. Every past bet is also kept on file. And from the historical record, this gambling site’s rate of return so far has been as high as 105%—which is probably related to the fact that the payout ratio they set at the beginning was too high (1.9 times), and now the payout ratio is being adjusted continuously according to actual trends. In any case, if it were a random game, then a 1/2 chance of getting a 1.9x payout should yield an overall return rate of 95%; yet we note that even now, when the payout ratio has been adjusted to around 1.7 or 1.8, the return rate is still that high. This means that the outcome of this game is not entirely unrelated to luck, and does require a certain amount of discernment. If that is the case, then we can believe that people with sharper discernment may indeed have an expected return greater than 1 in this kind of gambling.
So recently I have mainly been playing some games on btcoracle, to see whether I am the sort with a good eye or the sort who just sends money to others. Overall, I have made a small profit. Especially in the last two days, when the exchange rate was hovering stubbornly between 122 and 123 dollars, I made money fairly steadily. At the same time, each time I place a bet, I usually also toss in two more bets to SatoshiDice at the same time (mainly the ones with a 91% win rate, the 50% win rate, and the extremely occasional one with a one-in-a-hundred-thousand win rate). On the one hand, this is for a bit of entertainment and excitement; on the other hand, it increases “possibility”; and on the third hand, it is also for tax-minimization considerations. Because small Bitcoin transfers generally require paying a certain tax—for example, transferring 0.02 coins requires paying a tax of 0.0005 (the tax ultimately goes to the miners)—then this is equivalent to a 2.5% loss, whereas SatoshiDice has a 98% return rate, with an average loss of less than 2%. And when I send out four remittances at once—0.02 + 0.01 + 0.01 + 0.01—the tax may still very likely be 0.0005. In other words, originally when I only remitted to btcoracle, the loss was 0.0005/0.02 = 2.5%, whereas now my loss is (0.0005 + 0.03×2%)/0.05 = 2.2%. Of course, I could also just send a bit more at once to btcoracle, but then I would lose two layers of fun. So now I place a few sets a day: SatoshiDice basically gives an immediate result, while btcoracle only needs me to check again after three hours, so it can be played entirely as an intermittent diversion and does not take up much energy.
A small reminder, by the way: btcoracle determines the exchange rate according to the first transaction after the corresponding time point. For example, if you place a bet at 12:34:56, then the first transaction after that time becomes the starting exchange rate, and the first transaction after 15:34:56, three hours later, becomes the ending exchange rate. What you are betting on is the rise or fall relationship between these two exchange rates. So if I want to bet on a rise, I can immediately make a small sale after placing the bet, and then immediately make a small purchase at the closing point. Because sometimes there can be a fairly large gap between the highest buyer’s bid and the lowest seller’s ask—being off by 1 dollar is by no means rare—this method in theory can make things more favorable to me. I currently keep 0.003 dollars in mtgox for precisely this kind of business~ Of course, since I have not done many experiments, although I feel it works, I do not know whether that is just an illusion.
Translated from the Chinese original with AI assistance. The original text is authoritative.
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