Gambling = Speculating = Investing = Saving

A debate has come up here in the forums from time to time surrounding the definitions of gambling, speculating, investing and saving.

In my view, they all exist on the same continuum, and there's often no good reason to use these terms individually: every decision about where to place your money is a "gamble", is "speculation", is an "investment", and is "saving" all at the same time.

Say you just want to "save your money". You have a "savings account". But what does that actually mean? You put US dollars into an account and those dollars sit there, potentially collecting a small amount of interest.

But the value of the US Dollar can go down, and depreciate even faster than your interest payments. Hence you are not "saving your money", but rather you are investing in USD when you do that. And your bet might pay off: all of the other investments you would have chosen instead of USD could have faired much worse.

And are you "investing" when you make this decision? What is the difference between investing and speculating? These terms are often used synonymously, but "speculating" is usually meant to mean a more risky investment.

And what is speculating, anyhow? It's your prediction of future gains--just like gambling is. Gambling is usually meant to mean a form investment where you have little or no realistic way of predicting the outcome. In other words, the proverbial "roll of the dice". But many forms of gambling often are informed. Sports betting may come from your own assessment of a team's prospects. Top poker players make millions--playing by the same rules the amateurs play by. Is what they are doing, "gambling", or is it "investing"?

My thesis here is that all four of these things are the same thing, only differing in two factors: knowledge and risk.

On one end of the spectrum you have what many would call "saving", which is putting your money in something that is very well known, has a long reputation for stability (or relative stability), and is relatively low risk. Many choose USD (for instance) for this task, but many also choose things like real estate, or bonds, or diversified investment funds, and so on.

On the other end of the spectrum you have pure gambling, e.g. a roulette wheel, dice, or some other format where you cannot possibly know anything about the outcome outside of mathematical percentages. In this case the risk is high and the knowledge is low.

In between those things you have... the real world. Most decisions about placing your money involve some amount of knowledge and some amount of risk. Everybody has different levels of knowledge of their investment, and thus one personal (say an amateur poker player) may be "gambling" because they have zero knowledge of the outcome, whereas a professional player is taking a carefully calculated risk, often referred to as "investing".

Hence all investing exist in a continuum that depends on the investor's context.

It's not correct to deride some investments as "gambling" without that context, nor is or correct to overestimate other investments by calling them "saving". And it's also not correct, unless you are God, to pass judgement, in somebody else's investment decision, e.g. "that's pure gambling!" or "you should invest your money in something completely absolutely endlessly safe like USD" without knowing... what they know.

Buying Bitcoin is gambling, speculating, investing or saving, depending on your own context. If you know the market very well, pay attention to it every day, and know the risks, then you could call it "investing". Some are convinced that Bitcoin is so safe that they call it "saving". Many don't know anything at all about Bitcoin except for the name, "Bitcoin" and the fact that it has gone up in recent years--in this case you would probably call their buying of Bitcoin, "speculating".

Buying USD should be treated the same way: it is a relatively safe, low risk, negative yield investment, but how many people understand macroeconomics well enough to understand what they are doing? Even for US dollars, there is a tinge of speculation for most people.

Is buying memecoins speculation? Gambling? Investment? Saving? It depends on your knowledge, and on the risk. Clearly this realm of investment contains a higher degree of risk than others, but the actual risk will depend greatly on the knowledge of the buyer.

The list of examples is endless: all investments--every potential place you can store your money--can be gambling, or a speculation, or an investment, or savings. The difference is only in degrees.