The Bitcoin price surge during 2017 demonstrates the power it has as a medium of exchange. From an average trading price of $700 at the start of January 2017, Bitcoin closed the year trading at an approximate value of $12,000. Undoubtedly, this is a massive increase in value. With this in mind, and also considering that Bitcoin is a digital currency with features such as anonymity that are revered by online bettors, one would think that the demand for Bitcoin as a preferred payment method at gambling sites should massively increase. Unfortunately, this hasn’t been the case, as online players still prefer transacting with traditional payment methods. In light of this, we look at the reasons why Bitcoin has failed to gain the traction it deserves in online gambling.
Security and Technicality
When making reference to security issues, it’s not that Bitcoin is not secure; in fact, it’s considered by some to be too secure. On the surface, this reasoning may seem absurd, but as the saying “too much of something good is bad” goes, this is one of the reasons why Bitcoin is shunned by some in the gambling world. From mining or trading or however you choose to make Bitcoin, the processes of attaining some BTC is considered to be way too technical for some online gamblers. The amount of research involved is extensive and may be seen as a huge turn-off.
In addition to the above, you’ll need to memorize a ridiculously long Bitcoin wallet password. This is generally a long sequence of numbers that you need to keep safe on a piece of paper or on a hard drive. Perhaps this is the reason why some people still prefer a four-number pin for credit/debit cards and a more memorable password for electronic wallets.
Potential Hacks and Losses
At one stage, Bitcoin seemed as if it was impenetrable. It was simply unimaginable that someone would manage to get through to another’s Bitcoin wallet – especially considering the secure nature of the coin. However, this is no longer the case, as there are frequent reports of extortionists who have found loopholes to access the Bitcoin addresses of several users.
The challenge does not lie in the fact that these hackers are able to access your Bitcoin address, but in the fact that there is hardly any way to trace these criminals, mainly because governments do not recognize Bitcoin as an official currency. As you cannot do much to recover stolen Bitcoin, online gamblers may find it difficult to transact in a currency that they might potentially lose at any time.
Bitcoin’s Illiquid Nature
Online gamblers are not just looking for the thrill of winning, but also potential profit. By using Bitcoin, though, there’s a challenge that comes after winning.
Withdrawing Bitcoin from an online casino is pretty much easy and instant, as your cash reflects in your wallet in a few seconds. However, if you want to use it elsewhere, only a few online sites allow payments in Bitcoin, which means you have to convert it into a conventional currency before you proceed to purchase any product or service.
With that said, Bitcoin users are in a constant loophole of having to trade BTC for cash, and there are many sites where you can do so, but it’s not always as easy as you might think. You may go for days or weeks before you manage to get a sale, and those looking for a quick fix may become annoyed by holding onto the coin for longer than anticipated. Therefore, it can be said that online gamblers prefer liquid assets which are associated with conventional currencies.
Possibilities of Extreme Volatility
One of the biggest downsides of Bitcoin is its volatility. This has led many to steer clear of using the cryptocurrency, not only in the gambling world but in other sectors as well. There are many professional gamblers who play as a way of living, and they need to be reassured that the value of their “savings” is profitable not only in the short term but also in the long run. This means that when withdrawing, they need a guarantee that their BTC will have attracted some value after a year or two. However, it’s not always as smooth as this. You might deposit one Bitcoin with a value of $700 at the start of the year, only to cash out at the end of the year with a value of $100, which is a clear loss. This is not to say that Bitcoin is constantly decreasing, but there is indeed a possibility of sharp declines. For this reason, the uncertainty of the market makes online gamblers rather skeptical.
Going by the Word of the Experts
Studies on human psychology often mention that people may be influenced by others when it comes to decision making. This is especially true when it comes to Bitcoin and online gamblers. Many online gamblers have refused to warm up to the idea of using Bitcoin because experts in areas such as finance and investment have castigated the cryptocurrency as a scam. Based on this, many online gamblers may follow suit, as they perceive these opinions as nearer to the truth as opposed to the views of Bitcoin investors.
There are several industry experts who view Bitcoin with complete skepticism, citing it as a bubble about to burst. It is these experts who play a big part in dissuading online gamblers from adopting Bitcoin as their preferred payment method at online casinos.
Confinements of the Law
Believe it or not, there are people who love living within in a bubble (a legal bubble, that is). They find it difficult to use Bitcoin as a medium of exchange because it is seen as an unregulated currency. Although some countries do not have laws to define whether transacting in Bitcoin is illegal or not, some online gamblers see this as a grey area that they ought to avoid. As such, they aim to operate safely by using conventional currencies that are regulated and recognized by the government. The legal bridge is one obstacle that Bitcoin really needs to overcome if it is to successfully hook an increased number of online gamblers.
While there are those who stay away from Bitcoin because it is yet to be recognized and regulated by the government, there are also some who turn a blind eye based on the exact opposite. The question of if and when governments will regulate Bitcoin is a longstanding one that has been in existence for quite some time now. While it looked as if governments were about to embrace the currency, China put a damper on this, leaving the world wondering whether it would take a few months or a year before other countries would follow suit. As a result, Bitcoin transactions were banned altogether even in areas that were once regulated. Sadly, this has reversed some of the positive momentum Bitcoin had achieved in the past.
However, it’s all starting to look like Bitcoin is about to warm the hearts of governments once again, as Canada recently started with regulation by going as far as implementing Bitcoin ATMs in certain states. Other countries also embarked on a similar drive, including Mexico and the likes of South Africa, the US, and Swaziland, where they’ve established commissions to check the feasibility of Bitcoin regulation.
Instead of appeasing some online gamblers, this has actually pushed them even further away, as with government regulation comes taxation. Once Bitcoin is regulated by the government, it will lose one of its appealing features, i.e., its non-taxable nature. Many are shying away from Bitcoin for fear of being taxed, and it’s a question of staying with the devil they know (conventional currencies) or switching to a devil they don’t (Bitcoin).
So What Does the Future Hold?
The future of Bitcoin in online gambling lies upon one major factor, and that is a potential Bitcoin bubble. The start of 2018 also shows the volatile nature of the cryptocurrency as values began dropping. This led many pessimistic investors to proclaim that Bitcoin is indeed on the path to a bubble. However, even though values have declined, it’s not significant enough to chase the optimists away.
As long as Bitcoin manages to rise in a short space of time, it will no doubt receive the momentum it deserves. Apart from this, Bitcoin needs to attract as many as users as possible in the near future to help the coin become more liquid, and in turn, it will have a ripple effect whereby demand increases.
We can deduce a few things. If Bitcoin is to invest in its marketing efforts, in theory, demand should increase, and that is despite the negative opinions of skeptics as well as government regulation. As such, we could expect a small increase in the uptake of Bitcoin at gambling sites. However, on the flip side of the coin (no pun intended), we could also see a dip in the use of the currency as a result of price decreases and the increased amount of hacks and money laundering, all of which indirectly affects how Bitcoin’s strength and positioning are determined.