Casino slot machines and crypto meme coins: Why long-term participation is bound to lose

An overseas player recently exposed his recent experience online:

He said that he lost everything in the LIBRA token transaction issued by the Argentine president. He has reaped rich rewards from the previous meme coins to the Trump coins a while ago, but all of this was cleared on LIBRA.

In order to turn the situation around, he plans to sell his offline physical assets and then go to the chain to get back everything he lost.

I have seen too many stories like this, and I have shared them with you many times in past articles. But this time when I saw such a story again, my thoughts have changed a little. It's not that the conclusion has changed, but that the way of thinking has changed a little. Now I have a more rational framework for looking at such problems.

During the Spring Festival, I saw a very interesting video, which used the law of large numbers and expected value regression to explain many interesting phenomena in casinos.

For example, why will gamblers lose if they continue playing for a long time?

Why are the most inconspicuous slot machines in many casinos the most profitable and stable money-making machines in the casino?

Although I am a science student and probability statistics is also a required course when I was studying, this is the first time I have seen a case where probability statistics uses such easy-to-understand words to explain these phenomena in the casino so thoroughly.

So today I will share with you the mystery.

Let's first look at an example of tossing a coin.

We all know that when tossing a coin, the expected value of the probability of tossing the front is 50%. But if we operate it in a different way, we will see results that are very different from our imagination.

If we toss a coin twice in a row, we will find that many people can throw heads twice in a row. In this case, many people will habitually think that the third toss will still throw heads.

If we toss this coin four times in a row, fewer people can throw heads four times in a row. In this case, fewer people think that the fifth toss will still throw heads.

If we toss this coin six, eight, ten, and one hundred times in a row, the number of people who can throw heads in a row will decrease sharply, and the number of people who habitually think that they can throw heads again next time will also decrease sharply.

As the number of coin tosses increases, we finally find that the probability of throwing heads is basically stable at 50%, instead of the probability that can sometimes reach 100% as seen when tossing 2 or 4 times.

This is the law of large numbers (the number of coin tosses increases) and expected value regression (the probability of heads returning to 50%) at work.

Applying this principle to casinos, we will find some interesting phenomena:

If a gambler only plays a game once and no longer participates in the future, even if the gambler has only a 10% chance of winning in this game, the dealer's final advantage is not very obvious, or in other words, the gambler's final disadvantage is not very obvious.

But if a gambler plays a game indefinitely, even if the gambler has a 49% chance of winning in this game, the dealer's final advantage will be very obvious, and the gambler will eventually lose.

Based on this principle, casinos will try to design some games when designing gameplay, even if it makes the gambler's expected winning value higher (as long as it is not higher than the casino), they will try to make the gambler play endlessly.

Slot machines are the best representative. The bets in each round are small, and you don't feel bad if you lose, and you can win from time to time, so gamblers often sit on the machine and can't get up. As long as you sit on it and can't get up, losing everything and leaving is basically a doomed outcome.

Change to meme coins in the crypto ecosystem.

The development of meme coins in this round of market has become less and less moving. There are basically only emotional games and behind-the-scenes operations.

In such a game, retail investors are obviously not dominant.

If you just take participating in such a project as a game, then it doesn’t matter how you play happily.

But if you take participating in such a game as a long-term profit-making method, indulge in it, and play it for a long time, even if you don’t lose everything in one go but can still win from time to time, the final outcome must be like playing a slot machine, in the boiling frog in warm water, the assets will eventually be cleared.