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Bitcoin and Gambling: The Perfect Union?

You’ve probably heard about Bitcoin. It’s been all over the news recently because the price of a single unit of the world’s most-recognized digital currency has been as volatile as ever in both directions. First it went up and everyone lost their minds. Then, it went down to similar effect. Bitcoin proponents have a long list of reasons why cryptocurrency will change the world. Amongst others, Bitcoin has been heralded as an escape from global banking elites, as a cheap and permission-less peer-to-peer means of exchange, and as a way to attract new punters to the world of online gambling. Today, we’re mostly looking at the latter but we’ll touch on some of the other factors that cause those who tout Bitcoin as the future of finance to get all excited.

What is Bitcoin?

Bitcoin, at its heart, is a database. It’s been globally distributed and exists on many computer systems simultaneously. Within this network of computers, some are financially incentivized to check that all adjustments to the database are within the parameters set by the participants of the network. In the case of Bitcoin, the parameters are simple. The only changes that can be made to the database is the transfer of what are colloquially termed Bitcoin from one address to another. This means that when checking transactions, the miners (as the machines that do the checking are referred to) are looking to see if the address has the requested number of Bitcoin at it. A system of currency is, of course, worthless if users can simply create units of it from nothing.

blockchain - cryptocurrency bitcoin

Copyright: pogorelovaolga / 123RF Stock Photo

What Makes Bitcoin Special?

There are several features of Bitcoin that make it special. These include its limited supply, its “unconfiscatability”, its lack of central authority, and its borderless operation.

The primary aspect of Bitcoin that appeals to many investors is its limited supply. You don’t need to be an financial guru to realise that if something is useful and in short supply its price will go up. Whilst it’s unclear if it is perceived usefulness or genuine usefulness that is causing many people across the globe to buy and hoard Bitcoin, both drive the price in the same direction – upwards. The code that all the network participants use works on the basis that there will only be 21 million units of the digital currency. Miners, users, hackers, or governments cannot increase the supply. This makes Bitcoin the planet’s first digital and scarce thing.

It’s not just scarcity that makes something useful, however. Another of Bitcoin’s special features could be providing the necessary utility required to warrant such interest in the technology. Bitcoin is the first commodity, asset, or currency (call it what you will) that is truly impossible to confiscate if it’s stored correctly. Any other scarce “thing” exists in space and time. This means if someone were to exert enough force on the owner of said commodity, they would be able to seize it. A government could have you killed for your property, gold, or bank account assets. They can use explosives and blowtorches to get into any vault imaginable. However with Bitcoin, the data can live in a person’s mind. Without a certain string of characters, no one can do anything with another’s Bitcoin. This is a truly revolutionary property of the digital currency. Its decentralised structure means there is no one person to attack either. The malicious actor couldn’t force enough of the network’s miners to change the rules to seize someone’s Bitcoin. Ultimately, if a private key is lost, so too are the Bitcoin associated with it.

Advantages of using Bitcoin to Gamble

Bitcoin and online gambling are not new acquaintances. Being a permission-less source of funding for all those with internet access, naturally casino operators are interested in Bitcoin. There exist great numbers of people across the globe who lack access to banking facilities yet they have smart phones and often get online either through data packages or local Wi-Fi hotspots. Casino operators would love to tap into this market and, using Bitcoin casinos, are currently attempting to do just that.

Another perk for them is that the users themselves assume all transaction fees. Traditionally, the casinos bore the brunt of VISA and MasterCard fees and thus required a minimum deposit amount from a punter. This is not usually the case with Bitcoin casinos. This means that there is even more money to be made by offering games of chance using Bitcoin rather than more traditional funding methods.

What About the Punters?

The best thing about the Bitcoin gambling experience from the punters’ perspective is the fluidity with which they can transact. Thanks to Bitcoin’s unique properties, it’s no longer necessary to keep large bankrolls on sites. Previously, if you were a serious online gambler, or a professional poker player, the most convenient way for you to play would be to keep your bankroll on the site that you played on itself. This requires a lot of trust. It’s fine if you live in a territory with good legislation to protect players. However, many do not. What if the casino website just disappeared overnight? You’d lose your funds, that’s what.

Bitcoin is different in this respect. VISA and MasterCard deposits traditionally take seconds to make, whereas the withdrawals can take days. If you were a player who wants to gamble every day, you’d be forced to leave a large roll at the site. With Bitcoin and other cryptocurrency casinos, you can withdraw on your own terms. This means all you have to trust as a player is the casinos software itself, and the code of the Bitcoin network. No central authority needs to authorize the payment. I don’t know about you but I find it much easier to trust math than I do people or companies.

Transparency is another factor which makes Bitcoin appealing as a funding method for gambling websites. With other deposit options, again, trust is required. You must trust that once you’ve initiated a withdrawal, the companies and banks involved will deliver the funds to your account. Once it’s in the system, there is no way of checking which stage of the convoluted legacy bank transfer process it’s up to. With Bitcoin, you can simply check how many confirmations every transaction has received from the network. You can also often see the funds immediately in your account, even if they appear as “unconfirmed” and require some time for you to spend them. Again, many people in parts of the world that endorse online gambling won’t see much benefit in this quality. However, if you live somewhere where draconian legislation prevents online gambling, using your bank simply might not be an option. Many refuse to communicate with gambling websites at all in places that are not friendly to betting on the internet.

This last point fits neatly in with another of Bitcoin’s qualities that make it suitable for use on casino websites. Depending how you bought BTC, and how you access Bitcoin casinos, it’s possible to use it with a remarkable degree of anonymity. This won’t matter to you if you live somewhere that the government supports and taxes online casinos. However, there exist many nations across the globe that do not. In these countries, outing yourself as an online gambler could be dangerous. By using virtual private networks and/or TOR browsers, punters can access gambling websites without alerting the authorities. If they were to buy Bitcoin locally, with cash, and use the same levels of protection when transacting with them, they’d be completely out of the gaze of the law. Sure, it’s possible to see the transactions but there is no way of linking them directly with a single person. This makes Bitcoin ideal for use on casino websites from within nations that do not support online betting.

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