Crypto Betting Basics: Demystifying Odds, Probability, and Expected Value

With the rapid growth of the cryptocurrency world, we’ve seen the emergence of crypto betting platforms, blending the potential for financial gains with the thrill of traditional sports and event betting. If you’re new to this scene, it’s crucial to understand the basics of probability, odds, and expected value to make smart decisions and boost potential returns.

In this article, we’ll break down these key concepts in a friendly and approachable manner, providing a solid foundation for anyone venturing into the world of crypto betting.

Probability

Probability is the backbone of any betting form, including crypto betting. Simply put, it’s the chance of an event happening, usually expressed as a percentage or fraction. Probabilities help bettors gauge the possible outcomes of an event and make informed decisions about the risks involved.

To calculate the probability of an event occurring, just divide the number of desired outcomes by the total number of possible outcomes. For instance, if you’re betting on a coin flip, there are two possible outcomes (heads or tails), and the probability of the desired outcome (say, heads) is 1 in 2 or 50%.

Odds

Odds are like probability’s close cousin but expressed differently. They show the ratio of how much you’ll win compared to your stake if your bet is successful. There are two main types of odds: fractional odds and decimal odds.

• Fractional odds: These look like fractions, such as 3/1 (pronounced “three-to-one”). Here, for every $1 bet, you’d win $3 if your prediction is correct. The total return would be $4, including your initial $1 stake.
• Decimal odds: These appear as decimal numbers, like 2.0. To find your potential winnings, multiply your stake by the decimal odds. For example, a $10 bet at 2.0 odds would return $20 (including the initial $10 stake).

Getting the hang of odds is essential in crypto betting, as it helps you quickly evaluate potential returns on investment for any bet.

Expected Value (EV)

Expected value stands as a pivotal concept in determining the long-term profitability potential of a wager. It takes into account the odds and probabilities associated with the wager, offering a single value that represents the average return you could anticipate over time.

To compute a wager’s expected value, follow these steps:

• Transform the odds into their implied probability.
• Multiply the implied probability by the potential earnings (inclusive of the stake).
• Deduct the result of the stake multiplied by the complement of the implied probability (i.e., the probability of a loss).

For instance, let’s say you place a $10 wager on a team with 3/1 fractional odds to secure a victory in a match. The implied probability is 25%, and the potential earnings amount to $30. The EV calculation would be:

EV = (0.25 * $30) – (0.75 * $10) = $7.50 – $7.50 = $0

In this scenario, the expected value of the wager is $0, indicating that, on average, you wouldn’t win or lose money in the long run.

Conclusion

Grasping the concepts of probability, odds, and expected value is vital for anyone diving into the world of crypto betting. These principles help bettors make informed decisions, manage risks, and potentially maximize returns.

By mastering these concepts, you’ll be better prepared to navigate the thrilling and potentially rewarding world of crypto betting.