Nothing is guaranteed, but most people will agree that investing is, in the long run, a profitable venture. Most casino games are slightly favorable to the house, in a percentage that is usually called “house edge” and in statistical terms may be understood as the amount of money the casino gets from each player.
We decided to experiment with some of the Bitcoin casinos that accept user investments. To begin our experiment we chose Bitvest.io and deposited 0.01 BTC (the minimum amount) at 1X risk. We left the money for a whole week and took daily note of its performance. The investing process is easy, you just send any amount of BTC (should more than its minimum 0.01 BTC) to the provided deposit address, head to the Investments tab and, fill in the necessary details in the New Investment form.
How did our investment behave?
We had good and bad performance days. On the second day our investment rose around 0.5%, while on day 4 and 5 we took a loss of nearly 0.3%. Overall, we got a little profit, finishing with a net profit close to 0.5% at the end of 7 days’ experiment. Below is a chart of the daily fluctuation of our investment’s cumulative profits during the 7 days’ period.
The figure above could serve for the purpose of arguing that investments should be carried out for long periods (months, at least). In the short-term the investments are quite volatile, which suggests that there is not much difference between investment and gambling.
The total received investment by Bitvest was around 100 BTC at the time of this experiment. That represented a small percentage of shares in the total bankroll, which presented both benefits and detriments, depending on how we see it: It reduced the risk of losing our principal, but decreased our chance of earning a good fortune.
Why and why not Bitvest?
On the positive side, the site is actively promoted, contests and giveaways are running frequently, they randomly tip people for chatting and they are always listening to what their users are saying and implementing new features. Based on that, the site is trustworthy and reliable, and investing in its bankroll is a kind of safe investment to grab some profit in some extent. The site gives the option of setting two-factor authentication (2FA), allowing us to add an extra layer of security to our investments (and funds, in general). The site, although some minor errors, is completely responsive, so that we can monitor our money from both computers (desktops, laptops) and mobile devices. Finally, it has a Shapeshift widget integrated, which lets us invest using a wide range of altcoins.
On the negative side, at the moment of divesting you have to pay a commission to the site. The amount of commission does not depend on your profit, but on the time period your investment stays active, which starts from at the moment you click invest, to the moment you click divest. The site also passes the withdrawal fee to the users, while no bankroll is wasted in covering such fees, that is a point that may discourage some (small) gamblers and a point you should consider before investing (for reasons explained below).
Tips for investing on Bitvest
While we technically got a profit of slightly less than 5000 satoshis (~0.5%), in practice we faced a lose, if we take into account the withdrawal fee we had to pay (fixed at 20 000 satoshis) and the deducted commission (~1000 satoshis). Considering the amount we invested, the return should be at least 2% to make us get a break-even, which is barely realistic if we take into consideration that the “average” house edge of the site lies around 1.7% (Source: KLYE, High moderator at Bitvest). Personally, I would suggest investing at least 0.1 BTC on the site, so that you would be getting a decent amount of profits about 50,000 satoshi after one week if everything goes as expected. Monthly return will reach to 2% and should be reasonable at crypto world.
As I had already mentioned, try to leave the investment active for as much as you can. You may divest part of your investment if you want, but remember the power of compound interest and avoid doing so. Of course I am not suggesting you to keep the investment forever, but remember as well that the house edge need time to do its work. Based on that, investors should only invest the Bitcoin that they do not need in the short term, and even forget about it (well, not literally, keep checking how the site is going). Keep in mind that only invest the amount what you can afford to lose.
During the experiment, we took some time to keep an eye on the live fluctuation of the investment; even though we did not save the data, we could notice that it goes up and down quite fast. We give the above information to warn our readers of such situation and advice them not to divest for the fear of losing their principal. It is true that nothing is risk-free, but at least 9 out of 10 times the house edge does its work and gets us a profit, just be patient and resist the temptation of running away.
Our final stats.
Proofs of liabilities and reserves
Bitvest enables any user who has an active investment or balance on his account to verify that its money is included in the sum of liabilities, option found under the investments tab. With the above mentioned information, the user can contrast such details against the proof of reserves (cold wallets, whose data is related on Bitvest’s main BitcoinTalk thread), to verify that all balances are honored.
Bitvest’s cold wallet is 15iksRMotdLu9ubZAEVJtNyDcmYYPkorth, to prove their ownership over it, Lightlord’s and Zodiac’s xpubkeys were publicly posted. You can get more details and verify the data by yourself by visiting their official thread.