Casino slot machines and crypto meme coins: why long-term participation means inevitable loss?

There is no more touching story to tell about the meme coin, only the emotional game and the manipulation behind it.

Article by: Dao Shuo Blockchain

An overseas player recently exposed his recent experience online:

He described losing everything in the transaction of the LIBRA tokens issued by the President of Argentina. He has reaped rich rewards from previous meme coins to the recent Trump coin, but all of this was reset on LIBRA.

To turn the situation around, he is prepared to sell offline physical assets and regain everything lost on the chain.

I have seen too many stories like this, and I have shared them with everyone in previous articles. But this time, when I see this kind of story again, my thoughts have changed a bit. It’s not that the conclusion has changed, but the way of thinking has changed a bit. Now I have a more rational framework for looking at these types of issues.

During the Spring Festival, I saw a very interesting video that explained many interesting phenomena in the casino using the law of large numbers and expected value regression.

For example, why will a gambler always lose if they keep playing in the long run?

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, probability and statistics were also required courses when I was studying. However, this is the first time I have seen such a clear and thorough explanation of the phenomena in the casino using probability and statistics in such simple and easy-to-understand language.

So today I’m going to share with you the secrets behind it.

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

We all know that when tossing a coin, the expected probability of landing on heads is 50%. However, if we operate in a different way, we will see results that are very different from what we imagined.

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

If we toss this coin four times in a row, there will be fewer people who can toss four heads in a row. In this case, the number of people who still believe that the fifth toss will result in a head also decreases.

If we toss this coin 6 times in a row, 8 times, 10 times, 100 times, the number of people who can continuously toss the front side will decrease sharply, and those who habitually believe that they can toss the front side again next time will also decrease sharply.

As the number of coin tosses increases, we finally found that the probability of getting heads has basically stabilized at 50%, instead of sometimes reaching 100% as seen when tossing 2 times or 4 times.

This is the law of large numbers (the more times the coin is tossed) and the regression of expected value (the probability of heads appearing regresses to 50%) at work.

Applying this principle to the casino, we will discover some interesting phenomena:

If a gambler only plays once in a gamble and does not participate anymore, even if the gambler has only a 10% chance of winning in this gamble, the banker’s ultimate advantage is not very obvious, or in other words, the gambler’s ultimate disadvantage is not very obvious.

But if a gambler keeps playing indefinitely in a game, even if the gambler has a 49% chance of winning in this game, the house edge will eventually be very significant, and the gambler will eventually lose.

Based on this principle, the casino will try to design some games with higher win rate expectations for gamblers (as long as it doesn’t exceed the casino) when designing gameplay, in order to keep gamblers playing endlessly.

The slot machine is the best representative. The bet is small every round, so even if you lose, you won’t feel heartbroken. And you can win from time to time. So, gamblers often sit down at the machine and can’t get up. As long as you sit down and can’t get up, losing all and leaving is basically a predetermined ending.

Switch to meme coins in the crypto ecosystem.

This round of the meme coin has developed to the point where there are fewer and fewer moving stories to tell, basically only the emotional game and the manipulation behind it.

In such a game, retail investors are obviously at a disadvantage.

If just participating in such projects as a game, it doesn’t matter how happy you play.

However, if participating in such games as a long-term way to make a profit, getting addicted and playing for a long time, even if not losing all at once but occasionally winning, the ultimate outcome will definitely be like playing slot machines, where assets will eventually be cleared to zero in the frog-boiling process.