How Stablecoins Could Affect Cryptocurrency Gambling and Benefit Internet Gamblers

By Jim Beviglia in Industry Insight on December 3, 2018

11

Minute Read

For those who prefer to do their gambling on the internet by using cryptocurrency, there might be a way that your experience can be improved. You can do it by using stablecoins. Stablecoins can do all the same things that your cryptocurrency can do, but with a fraction of the volatility.

As anyone who has already tried it probably knows already, using cryptocurrency in online casinos and other gambling websites can be a real game-changer. All of the qualities that you’re looking for in the experience, such as speed, privacy, convenience, and frugality, are evident. On top of that, the websites that offer these casino experiences and sports betting opportunities attempt to lure cryptocurrency users into the fold with juicy incentives, since the digital coins are perfect for them as well.

The only problem, for gamblers and sites alike, is that even the most popular and enduring cryptocurrencies are saddled with a great deal of volatility. That means that the prices can rise or fall a significant amount in a rapid time span with little advance warning. For someone who is counting on gambling profits to be at a certain level, this can be extremely frustrating.

That’s where stablecoins come into play.

Stablecoins are structured in such a way that their value is not determined by the frequency with which they are bought or sold by cryptocurrency enthusiasts.

Rather their value is tied up in a more stable asset, such as the United States Dollar or the price of gold.

By utilizing these coins, cryptocurrency gamblers can deposit and withdraw them with a relative amount of certainty that their value will remain relatively stagnant. Thus, they can enjoy all of the benefits of cryptocurrency while enduring hardly any of the volatility. Many people feel that stablecoins could truly help to revolutionize the union between cryptocurrency and online gambling.

In the following article, we’ll explore how stablecoins have started to make an impact on the world of cryptocurrency and why users might prefer them. We’ll also talk about how the coins smooth the path for gamblers to deal with internet gambling sites. Finally, we’ll also look at what some drawbacks might be compared to other cryptocurrency coins that you might be able to use.

How Cryptocurrency Has Changed Online Gambling

Practically as soon as there was an internet, there was online gambling. It was just such a convenient way for the process to take place. Before long sites were springing up with regularity.

Many internet casinos came onto the scene. These sites mimicked all of the games that you could play at your local casino, and gave you the chance to win real money. When the Hold ‘Em Poker boom hit, these sites were uniquely set up to take advantage of players interest in the game, especially those players who might be too intimidated to try it in an actual casino setting.

In addition, online sites devoted to sports betting also began to pop up in every corner of the internet. No longer was there a need for someone to try to contact a local bookie, another intimidating prospect for many people. You could make all your choices from the comfort of your own home.

The only problem is that funding internet gambling usually means putting in credit card information. Considering that not all gambling sites are on the level, that can conceivably leave important financial and personal information in unsavory hands. On top of that, there is always the risk that the credit card company wouldn’t allow a transaction to go through.

Cryptocurrency, when it arrived with the creation of Bitcoin about a decade ago, helped to solve a lot of those problems. On the one hand, the coins weren’t tied to a bank or government of financial institution. They were solely the possession of the individual who owned them and could do with them what they pleased, including using them to gamble on the internet.

On top of the that, cryptocurrency coins also allowed for many other advantages for the online gambler. At the top of that list:

  • Minimal Transaction Fees: Unlike the interest rates attached to credit cards, cryptocurrency payments can be sent to online gambling sites for a relatively small amount. For gamblers dealing with tight profit margins, this is a great value. You essentially are getting the most out of your gambling capital by using the coins.
  • Speed of Settlement: No more waiting for a credit card or bank company to confirm a transaction. By using cryptocurrency on a gambling site, the funds that want to deposit appear in your account quickly. Even better is when you go to withdraw those same funds and they show up in your digital wallet in a heartbeat.
  • Privacy and Security. When using cryptocurrency on a gambling website, you can keep your personal information on the down low. And you only have to expose the financial information related to what you are putting into your account. The rest of your funds stay untouched and unseen by prying eyes or hackers.

Cryptocurrency Volatility

As the above advantages demonstrate, there is a lot to love about cryptocurrency’s usage on gambling sites. On top of all that, many gambling sites are so eager to be involved with cryptocurrency users that they will actively court you if you are using the coins. They do this through incentives and gambling bonuses that will add to your overall profitability.

But the top cryptocurrencies, such as Bitcoin, Ethereum and Dash, are subject to something known as volatility. Anyone who has ever played the stock market will understand how this works. But it’s important to break it down for those who might be newcomers to cryptocurrency, since they might not be used to worrying about the value of currencies.

In truth, all currencies change value. When you exchange coins when you go into a foreign country, you are essentially dealing in the Foreign Exchange market. That market is built on the fact that some currencies are stronger than others and those strengths, or weaknesses, are reflected in their values.

Cryptocurrency, which is meant to be used just as currencies like the Dollar or Euro might, also changes in value. The difference is that it does so with much more frequency and at a much greater range. Even Bitcoin, the standard by which all other cryptocurrency coins are measured, can often see its value rise or fall by several percentage points in a matter of hours.

Why is that the case? Well, it’s primarily because many people, enticed by how quickly the coins rose in value once people started to become aware of them, began buying into cryptocurrency solely as an investment vehicle. They never really intended to use them as they were meant to be used, which is as an alternative way of paying for things or receiving payment for them without having a third party get involved.

When people discovered Bitcoin, many bought into it without really having any idea what it was about.

As a result, the price skyrocketed to a point where a single Bitcoin was worth more than $20,000.

As if often the case in those situations, an inevitable backlash ensued, and the price of Bitcoin began to plummet. Even as it has settled around a level of $6,000 per coin in the last several months, which is still pretty high, sudden price swings are part and parcel of the coins. And that goes for all of the other cryptocurrencies that have followed in Bitcoin’s wake.

There might come a point when the volatility of Bitcoin and other coins starts to wane and prices stabilize. You might also see a point where cryptocurrency values begin to rise significantly again, as many experts feel like the coins, and the technology behind them, have only scratched the surface of what is possible. But, in the short term, volatility and traditional cryptocurrency coins will likely go hand in hand.

What Cryptocurrency Volatility Means When You’re Gambling with It

Whatever the reasons for cryptocurrency volatility, what’s important, for the same of this article, is what it means to somebody who wants to do some online gambling with the coins. Well, let’s say that you’re gambling with some random cryptocurrency that’s worth $200 per coin. You decide to withdraw some of your winnings.

Not long after you make the withdrawal and get the coins back into your digital wallet, a negative piece of news about these specific coins or about cryptocurrency in general sends the price down to just $100 per coin. You’ve taken a loss, through no fault of your own.

Let’s say you decide to put that cryptocurrency, at its decreased value, back into your account. And, unfortunately, Lady Luck doesn’t swing your way and you lose it. The following day, the price of the coins rises back to $200 per coin.

Now you’ve been hit by a double whammy. The coins dropped in price when they were in your possession and rose when you lost them. That kind of experience can be really damaging to your gambling funds and your finances in general.

Of course, you might have been lucky enough to see the price of the coins turn in your direction as well. They could have risen when you had them in your possession and dwindled after you made the deposit. But that kind of instability can certainly be worrisome when you’re depending on that money coming through for you.

Many investors who dabble in cryptocurrency favor a buy and hold method. In this way, they don’t need to worry about short-term price swings and can just worry about the long-term future of the various coins. It’s like sticking a blue-collar stock into your portfolio and forgetting that it’s there.

Unfortunately, online gamblers don’t have that kind of luxury, since they need to have the funding at the ready. That’s why price volatility is probably the top concern for those dealing with cryptocurrency in their online gambling exploits. And it’s also why the prospect of stablecoins being used for cryptocurrency gambling purposes solves a lot of the problems.

What Are Stablecoins?

When cryptocurrency was created by the folks who dreamed up Bitcoin, it wasn’t done so with the intent of creating a surging investment asset. It was done with the idea of putting personal finance back in the hands of the individual. They could use this currency on a global level without being beholden to any country or financial institution.

Stablecoins come closer in spirit to that original vision. The idea behind stablecoins is that their value wouldn’t be volatile. Those who create the coins do this by tying the value as closely as possible to some more stable financial instrument.

Most of the stablecoins which initially came into existence have used the United States Dollar as a benchmark.

Others have chosen a physical asset such as gold. And, more recently, coins have been created which use a bunch of other coins as the basis for their price, keeping values stable through a diversification effect.

In any case, you might be able to immediately see what that could mean when dealing with the coins. Instead of being worried about how price fluctuation might affect spending or receiving these coins, you can go out and use them with a relatively safe assumption that their value isn’t going anywhere. Stablecoins fulfill that original promise of cryptocurrency without having people get caught up in how much they are worth.

In every other way, their usage mimics what you would expect out of Bitcoin or Dash or any of the other popular cryptocurrencies which have a monetary focus. You can make transactions with them worldwide as long as the other party has a wallet which will accept and send them in return. And there is no third party in the picture that needs to sanction any of these transactions.

Many people feel that stablecoins are the future of cryptocurrency, in that they can be used freely without any concerns about them being an investment vehicle. Right now, they lack the popularity and branding of coins like Bitcoin that have been in the market for a while already. But many of the top stablecoins, such as Tether, True USD, or USDT, are making serious inroads.

All of these coins have slightly different ways of getting the same job done: the stabilization of values. And if the more traditional cryptocurrency elements can’t find some mode of stability, it’s entirely possible that one or more of these stablecoins will eventually muscle them out for supremacy.

Using Stablecoins for Online Gambling

If you did choose to use stablecoins in your online gambling exploits, you would be able to go through the process just as you would Bitcoin or Dash or whatever. You would:

  1. Find a Site: Most gambling sites advertise very clearly which, if any, cryptocurrency coins they will accept as payment. Again, you might be able to choose based on the kind of incentive they’ll give you for using the stablecoins that you have to fund your account.
  2. Buy a Wallet: By wallet, we mean a digital wallet, which can either be a piece of hardware that you purchase or a software program that you download. You might prefer a wallet that deals in multiple cryptocurrencies in case you want to keep your options open. Or you might buy one specific to the stablecoins that you have in mind for your gambling usage.
  3. Buy the Coins: The good news is that, with the increase in popularity of stablecoins, more and more coin exchanges offer them as part of your services. You can buy them with tradition currency or with other crypto coins. Just be wary of storing your stablecoins on a coin exchange, since that would take security measures out of your hands.
  4. Fund Your Account: From there it’s just a matter of synching up with the payments page of the site in question and inputting some passcode information. Some people might be scared away by this process, but it really is simple, even for a technological novice.

From there, you are all set to begin gambling with stablecoins as your bankroll. Remember that example above? It wouldn’t come into play if you have stablecoins in your account.

When you deposit them, you can be relatively assured that they will have a value similar to what it was when you put them into the account in the first place. By the same token, all coins that you withdraw should hold onto their value pretty solidly. For the most part, the only minor fluctuations would be a byproduct of small price moves from whatever instrument to which the price of the coins is tied.

In addition to that bonus, you get all of the other positive aspects of gambling with cryptocurrency online. Your deposits and withdrawals will be rapid, and the fees will be minimal. In addition, your identity and your funds will be safely protected.

As you can see from all of that evidence, the future of stablecoins as gambling fodder seems pretty rosy. But it is important to take a look with clear eyes at some of the factors that might come into play which could make the coins less than ideal. Knowing both sides of the story will help you make a better decision about whether stablecoins are for you when it comes to your online casino or sports book endeavors.

Drawbacks of Stablecoins as Online Gambling Funding

Lack of Accepting Sites

At this point, stablecoins are still a relatively new entity in the cryptocurrency world. As a matter of fact, many of the ones that are considered among the best in this realm have only just come into existence in the past year. As a result, the internet gambling community, particularly the sites which offer the services, are still catching up.

Many of the top gambling sites available to you won’t yet allow payment with the top stablecoins. Whereas it’s relatively easy to find sites that will allow you to pay in Bitcoin, Ethereum, or any of the other cryptocurrencies which are well-known but tend to exhibit high volatility, it’s still tough, at this stage of the game, to find well-respected sites that traffic in stablecoins.

You might think that one site is as good as another and that the advantages of using stablecoins far outweigh any issues you might have with a somewhat obscure website. But when you are putting your money on the line, you should ensure that it is going to a site that will treat it properly. The online gambling world is full of scammers who are trying to bilk people and would deprive them of any winnings the players might amass.

As a result, if you do want to use stablecoins and find a site or two that accepts them, make sure that you do proper diligence to make sure these sites are legit. That means that they have easily verifiable track records on customer satisfaction and service, offer exposure to a wide variety of games and sports, and distribute winnings in a timely fashion.

Don’t let your eagerness to take advantage of stablecoins lead you to a poor site. Otherwise, you could end up losing whatever advantages the coins might have offered.

Not Totally Stable

Just as the online gambling world is full of those who would try to scam people out of their money, the cryptocurrency realm, as new as it is, is also full of those who don’t have your best interests at heart. There are many cryptocurrency coins that are thrust into the market all of the time. Many might claim to be stablecoins, but in actuality they fall short.

The problem is that a stablecoin operation needs to have the kind of funding to back up their ability to keep their coins at a level price. Otherwise they could become as volatile as the average cryptocurrency coin. When that’s the case, you really aren’t getting much benefit out of gambling with them.

Long-Term Prospects

While the idea of gambling with stablecoins might appeal to you, the idea of improving your financial situation in any way possible is likely the utmost goal. And the fact remains that coins like Bitcoin, Ethereum, and all of the other big names might be a great pathway to do that.

Imagine if someday Bitcoin becomes the premiere way that people transact with businesses and with each other. Or what about if the Ethereum network, with its smart contracts, replaces the need for any kind of third-party business that might oversee a connection between two entities. There is practically no ceiling on what the value for those coins might be.

As a result, your best bet might be to invest in these more traditional, volatile coins, with the intent of holding on to them. But, in the meantime, if you also gain some exposure to stablecoins, you are not only hedging against that volatility, but you are giving yourself a way to use the coins in your daily activities. And if gambling happens to be one of those activities, so be it.

Conclusion

Stablecoins may or may not be the wave of the future for cryptocurrency. But as of right now, it’s hard to against them as a way for people to conduct their online gambling activities with the utmost convenience. Once the websites that offer gambling catch up to that fact, those who hare in possession of those coins will be well-poised to strike.

Jim Beviglia

Jim Beviglia joined Gamblingsites.org as a staff writer in August of 2018, parlaying his years of freelance writing into contributions on a number of different topics. He handles the sport of horse racing for Gamblingsites.org, and the intersection between the worlds of cryptocurrency and online gambling in a weekly blog. For his full-time job, Jim handles the television and track announcing duties at a harness racing establishment near his home. He spends as much time as possible with his wife Marie and daughter Daniele, both of whom are used to hearing his long-winded monologues about either the struggles of his Fantasy baseball team or which Beatles song is definitively the best.

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