Poker Pro Daniel Cates Explains How Poker Overlaps With Crypto

The prominence of cryptocurrencies in the poker industry has grown significantly over the past few years. What started as a method of exchange to fund offshore poker sites, turned into a legitimate interest from some of the world’s biggest poker names who now genuinely support the technology and the risk-reward that crypto provides.

From early ICO participation to day trading, many former poker players are now prominent crypto traders. Take Alex Wice, for example. The one-time poker pro is now one of the largest volume traders in crypto, reaching over $1 billion in volume traded on FTX in under a month. 

To learn more about this trend, we spoke to poker pro Daniel Cates. Regarded as one of the best online poker players in the world with nearly $20 million in career winnings, Cates has seen first-hand how crypto infiltrated poker circles over the past three years.

1. What attracts poker players to cryptocurrency markets?

Cates: There are some significant overlaps between the two industries. For one, both are subject to wild volatility which creates a situation where risk management, as well as bankroll management, become critical. I also think the speed of the crypto industry is what attracted many poker players. Outside of this year, the traditional equity markets have been much slower moving than crypto (for better or worse). 

While an 8-10% gain in any market is conventionally considered excellent, it is not exactly the type of return that poker players look for when grinding out 14 hours a day online or in a casino. Crypto is more aligned with the risk-reward that poker players train for and get excited about. If you go on Crypto Twitter or Poker Twitter, it is very common to see overlap between people talking about both industries. 

2. What are the main differences between the two industries?

Cates: With crypto you still have a “counterparty” (assuming a zero sum game) you are trading against but it is more market-based. Most large movements in the market are caused by macro-news such as regulations, hacks, or other market-moving events. In poker, you just need to worry about what is going on immediately at your table, with the exception of strategies focused around avoiding bubbles (where players are eliminated at the very cut-off of cashing in tournaments). 

In poker, we have had instances where macro factors, such as regulation, dramatically changed the industry, but this ends up being a long, drawn-out process. In crypto, a flash crash could wipe out 20-30% of your position in a matter of minutes. It is important to note, the same can happen in poker with one bad hand, but it is less of an external factor such as a market-wide announcement or event. 

3. Will poker ever be popular on the blockchain?

Cates: I think it is inevitable. In fact, I know a few closed door DAOs that are running poker games on a weekly basis using smart contracts. This helps legitimize the game as random card generators and technology can eliminate most threats. Blockchain is actually a great use for gaming as the immutable contracts can ensure the proper winner of a hand or contest is paid in full. 

We could also see a scenario in the next decade where all major in-person casino games are digitized with digital currencies. Imagine going into a casino poker room and scanning your phone or a wristband to access your capital versus having to visit a cage and walking around with a mountain of physical chips. As efficient as this would be, poker would lose some of its charm without the physical presence of chips.

Disclaimer: Please consult your financial advisor before investing in any cryptocurrencies or playing poker as they are volatile and pose risks for the average investor. This post is informational in nature and does not constitute financial advice.