6 Ways Bitcoin Has Changed the Gambling World
By now, almost everybody has heard about the Bitcoin boom, whether from their barber, brother-in-law, or old college buddy.
These pitches usually began with tales of “getting in on the ground floor” or purchasing Bitcoin back when it cost next to nothing. And invariably, the tale ends with visions of grandeur — one of those rare get rich quick schemes that actually seemed to work.
To wit, the value of a single Bitcoin back in late September of 2015 stood at $230 or so. Fast forward one year later, and Bitcoin circa September 2016 was worth a hair over $600. Jump another year forward to September, and the original cryptocurrency was valued at $4,400 — good for a cool 19x profit in just two years.
And by the time December of 2017 rolled around — with folks like those mentioned above telling everybody they knew to hop aboard the Bitcoin train — a single unit of BTC could be sold for more than $19,600.
This marked the peak for Bitcoin’s dollar value, however, and within a month’s time, BTC plummeted by 50% to just over $10,000. The price fluctuated from there, but the downward trend continued before leveling off at today’s value of $6,400.
It was a whirlwind ride for Bitcoin, and more so for the folks who invested in the cryptocurrency craze. If you were one of those initial investors who bought at a three-figure amount, selling at five or even four figures represented a healthy return on your outlay. Indeed, many tech-minded individuals out there parlayed their early interest in Bitcoin into a legitimate fortune by cashing out at the peak.
On the other hand, thousands more bought into the Bitcoin investment fad when the value approached $20,000, as “analysts” and “experts” advised them that $100,000 prices were inevitably on the way. These people sunk their hard-earned money into Bitcoin looking to cash in, only to find their initial stake cut in half — or worse.
As I briefly recount the story of Bitcoin, I can’t help but notice the similarities between BTC investors and casino gamblers. Both parties began with a starting bankroll, which was then deployed as investment funds in a highly volatile market.
Bitcoin traders must navigate the maze of legislation addressing cryptocurrency, “whales” selling or buying massive amounts that move the market, and the inherently random nature of short-term exchange rates.
As for casino gamblers, the job entails many of the same factors, albeit in different forms.
New legislation on gambling issues — including online play and sports betting regulation in recent years — is seemingly rolled out by the week on the local, state, and federal levels. Casinos can adjust the rules and payouts on their table games and machines to tilt the house one way or the other. And during any short-term gambling session, even the most skilled players are beholden to Lady Luck.
This connection between Bitcoin and gambling makes perfect sense too, as the advent of cryptocurrency has had a significant impact on how people place wagers and play games.
According to a report published in February of 2018 by the cryptocurrency media outlet Bitcoinist, approximately half of all Bitcoin transactions made between 2014 and then were gambling related. This activity creates a Bitcoin-based gambling market valued at over $30 billion using the current exchange rate.
The reasons for this heavy Bitcoin gambling volume are quite clear when you understand the underlying blockchain technology. I’ll spare you a tutorial on Bitcoin — you can learn about the basics here straight from the horse’s mouth — but at its core, cryptocurrency seems to be perfectly built for online gamblers and industry operators.
To find out why, read on to learn about the six major ways that Bitcoin has changed the gambling world.
1 – Online Gambling Payment Processing Became Painless and Free
The entire purpose of Bitcoin — and any cryptocurrency worth its salt — was never to become a vehicle for speculative investment. Instead, the concept envisioned by inventor Satoshi Nakamoto (a pseudonym used by an as yet unidentified innovator) was altogether different.
Nakamoto created Bitcoin to serve as an alternative to the fiat currency system. He or she was especially interested in replacing the standard system of electronically exchanging funds, which is facilitated by middlemen like credit card companies, banks, and payment processors.
Bitcoin’s purpose is to make those middlemen obsolete, as the currency’s cryptographic code foundation combines with the blockchain — loosely described as a continuous, anonymous ledger of Bitcoin transactions — to create true two-party exchanges.
Think about it… when you buy something on Amazon, eBay, or your favorite online casino, you can’t exactly use cash. Thus, you rely on “trusted third parties” — like the bank backing your debit card or a payment processor like PayPal or Neteller — to move your money into the seller’s account.
This can be quite convenient when you’re purchasing the latest bestseller or an antique, because these middlemen don’t worry about those transactions.
But as any online gambler knows quite well, banks and credit card companies love to get in your business the minute you try to make an online gambling deposit. Because of the murky federal laws regarding online gambling operators, your transactions can be regularly blocked by the bank, rejected by the card issuer, or otherwise held up.
This dilemma has caused major headaches for millions of players all over America. When transactions are blocked, players can’t reload their bankroll to enjoy their favorite hobby.
And even when the transactions do go through, the online betting sites tend to charge fees of 5%-10% to cover their own payment processing expenses.
All things considered, debit/credit cards and Neteller are extremely inefficient and unreliable ways for an online gambler to move their money.
That’s where Bitcoin comes in. When you use a private key (an impenetrable password linked to your cryptocurrency wallet) to initiate a Bitcoin transaction through your favorite online casino or sportsbook, no banks or middlemen need to be involved. The site simply uses their own private key, the Bitcoin transaction is approved and entered into the blockchain, and your funds are moved safely, securely, and anonymously.
You can get a great idea of how Bitcoin improves online casino payment processing by taking a look at Bovada’s entry explaining how Bitcoin transactions work:
“Bitcoin is a peer-to-peer digital currency, electronic cash that you can use to send money to friends or merchants.
Created and held electronically, Bitcoin is entirely decentralized, which means it’s not controlled by any singular institution, like a bank. It can be transferred securely, anonymously and very quickly by anyone from one end of the world to another.
For nearly a decade, Bitcoin has built an undisputed reputation on its security and privacy. Using Bitcoin does not require you to enter any of your personal or private information to make a transaction.”
Card-based deposits charge fees of nearly 6%, and you have a limit on how many you can make per month. Conversely, a Bitcoin deposit comes completely free of charge and carries no limits.
Just ask yourself one question… which method would you use ahead of your next online gambling session?
2 – Major Gaming Regulators Moved to Recognize Bitcoin as Legal Tender
Bovada isn’t alone in accepting Bitcoin transactions either, as many of the largest online gaming networks out there. The Paddy Powers, Betfairs, and 888s of the world have also made the move.
This has been made possible by the approval of major iGaming regulators like the Malta Gaming Authority (MGA), which passed three laws normalizing Bitcoin within the gaming industry back in July.
Between the Virtual Financial Assets Act (VFA), the Malta Digital Innovation Authority Act (MDIAA), and the Innovative Technology Arrangements and Services Act (ITASA), the Mediterranean island nation moved swiftly to become the first Bitcoin hub.
The MGA also began licensing Bitcoin-based online casinos (more on this in the next entry), where players can wager actual Bitcoin instead of dollars, pounds, or Euros.
Silvio Schembri, who serves as Junior Minister for Financial Services, Digital Economy, and Innovation for the Maltese government, offered the following take on the island’s decision to embrace Bitcoin:
“These bills address the challenges currently being faced by the industry, among them legal uncertainty and lack of clarity, providing a sound legal framework for these operators to operate without stifling innovation and giving the industry space to flourish.
These bills are the first step in a long and important process to begin legitimizing cryptocurrencies as legal tender throughout Europe and beyond.
This industry is disruptive by definition. It’s still in the initial stages, but it has huge potential.”
3 – Bitcoin-Based Online Gaming Sites Carved out a Niche
One big part of that potential that Schembri alluded to is the rise of Bitcoin-based online gaming sites.
Between casinos, poker rooms, and sportsbooks, gamblers today don’t have to exchange their Bitcoin for US dollars or some other fiat currency in order to play. Instead, a Bitcoin betting site allows players to wager their own cryptocurrency — providing yet another extension of the “take out the middleman” philosophy envisioned by Nakamoto.
Take a look below for a list of the most popular Bitcoin betting sites out there today:
- 7Bit Casino
- Crypto Games
- Mars Casino
The first Bitcoin-based casino to launch was BitCasino.io, which made its debut back in 2014.
Tauri Tiitsaar, who serves as Head of Casino Operations for BitCasino.io, spoke about the inception of Bitcoin-based gaming:
“We recognized the significant pitfalls in the current payment processing channels, specifically in regards to cost and speed of processing deposits and withdrawals.
Once we discovered bitcoins and the blockchain, we knew that it was the perfect digital gaming token for online gambling, which made all payment processing instant and free.
This means we could process our player’s winnings instantly and seamlessly, which is something any player likes!”
Now, BitCasino.io is home to more than 700 table games, slots, video poker variants, and other ways to wager Bitcoin.
The site has also pioneered the development of many Bitcoin-based casino staples, including Bitcoin Blackjack, which Tiitsaar described as follows in a press release:
“We have experienced extraordinary growth, both in terms of new player registrations and overall turnover, and the feedback on our games has been excellent.
That’s why we’re reinvesting as much as we can into new games like Bitcoin Blackjack — we are now bringing a mainstream experience to this new and exciting cryptocurrency market.
The rapid adoption of Bitcoin worldwide and the simplicity of processing deposits and withdrawals, has seen a huge influx of players from countries we would have never imagined.”
By allowing players worldwide to wager their own reserves of Bitcoin, thereby ditching the fiat currency model for good, sites like BitCasino.io are fitting tributes to the idea borne by Nakamoto.
4 – Poker Pros Dove Headlong into the Bitcoin Investment Craze
One interesting phenomenon to occur during the Bitcoin boom saw poker pros line up in droves to convert chunks of bankroll from fiat currency to crypto.
Anybody with a connection to the poker industry couldn’t help but notice the trend between 2015 and 2017. Instead of tweeting about their chip stacks or recent scores, big-name pros like Doug Polk, Fedor Holz, Scott Seiver, Mike “Timex” McDonald, and Dutch Boyd were busy sending out up-to-the-minute Bitcoin value updates.
Players openly discussed how the latest Bitcoin dip handcuffed their ability to buy in for major tournaments, and when the price was skyrocketing, pros were happily posting retirement plans.
Of course, the market wound up crashing between December of 2017 and the next few months, leading to articles like this covering the poker world’s panic.
Poker pros weren’t just investing in Bitcoin itself, though, but the entire cryptocurrency industry.
Doug Polk — a three-time WSOP gold bracelet winner and one of the best online cash game players on the planet — parlayed his budding poker instruction video series on YouTube into another channel devoted to the crypto space. And soon enough, Polk was all-in, launching a startup called CoinCentral to facilitate exchanges and provide investors with up-to-date news:
“As of today, I am excited to announce my next project. Today is the official launch of my cryptocurrency news site CoinCentral.com.
I’ve been involved in the space since BTC was $100, so this has been a passion for me for years now. I believe Cryptocurrency is the future. I look forward to this new challenge and will do my best to ensure anyone looking for accurate information will find it.
“At Coin Central, our goal is to help anyone interested in the world of Crypto to get trustworthy and reliable information to make decisions.”
A Bitcoin-based poker room known as Virtue Poker has also sprung up, and here’s how co-founder Ryan Gittleson described the concept when speaking to PokerNews:
“Instead of trusting a random number generator from an operator stored in some offshore server, every single player has an RNG built into the machine that they utilize and they shuffle the deck for each hand played on the platform.”
It didn’t take long for Virtue Poker to attract high-profile pros to back the site, with none other than 10-time WSOP winner Phil Ivey signing on as a sponsor:
“I’m looking forward to serving as a strategic adviser to the Virtue Poker team.
I believe their new peer-to-peer solution built using blockchain technology can add significant value to the online poker experience.”
Between poker-playing Bitcoin investors, pros turned crypto advisers, and online poker rooms where Bitcoin replaces chips, these two industries have become a perfect pair.
5 – Canada Declared Bitcoin Trading to Be Gambling
National governments worldwide are still struggling to catch up with Bitcoin’s integration — especially when it comes to gambling — but in a particularly ironic twist, Canada’s central bank has fused the two issues entirely.
In January of 2018, Stephen Poloz — who heads the Bank of Canada — warned Bitcoin buyers that their investments were nothing more than virtual gambling:
“They are crypto but they are not currencies. I’m not really sure what they are.
They are not assets really … I suppose they are securities technically … There is no intrinsic value for something like bitcoin so it’s not really an asset one can analyze.
It’s just essentially speculative or gambling.”
I tend to agree with that sentiment, as you’ll learn in the final entry, but it’s still quite striking to see a progressive country like Canada come down against cryptocurrency. This is especially true when you consider Canada’s relatively lax attitude towards the gambling industry.
Of course, whether you believe Bitcoin investment is nothing more than a blind risk is a matter of personal perception. But whenever a governmental agency voices its displeasure with new ideas, one is forced to wonder if it simply hopes to preserve existing institutions like fiat currency.
6 – Bitcoin Investment Created a New Generation of Gamblers
Remember all of those people who sunk a chunk of their savings into Bitcoin during the boom days?
Whether or not they consider themselves avid gamblers, these bold and ambitious investors are surely kindred spirits. They were willing to take a financial risk in hopes of securing an eventual reward, and what’s more, they had to ride the roller coaster known as variance to get there.
Buying any amount of Bitcoin as a speculative investment is, in a certain sense, the ultimate gamble. Once you’re all-in, you can’t control the outcome, much like a hand of poker or a pull on the slot machine.
And given the clear connections between cryptocurrency devotees and the gambling industry, it stands to reason that investors in the space may cross over to dabble in further wagering.
After all, if you’re already in the Bitcoin game for the long haul, a bit of blackjack or baccarat seems like the perfect way to pass the time.
Bitcoin has changed the gambling world in many ways, and it’ll probably continue to do so for many years. Some of the changes are good, and some might not be good, but only time will tell the overall influence cryptocurrency has on the gambling world.