The fight for the right to gamble is on. Governments everywhere impose more and more regulations on casinos, poker clubs, slot machines, and all kinds of sport betting. When the free, open Internet emerged in the early 90s, we got online gambling immediately – the gambling industry (like the porn industry) has been a very early adopter of all new online technologies, from videoconferencing and virtual reality to mobile. Now the pendulum is swinging back – Big Capital and Big Government are in full control freak mode – and online gambling finds itself under heavy regulatory fire.
Enter Bitcoin, which seems made precisely for online gambling. If both users and providers use appropriate precautions, it’s very difficult for the state to block them. If you live in a place where online gambling is heavily regulated – or outright banned – you can easily gamble online in Bitcoin all over the planet.
The Pirate Bay and WikiLeaks have demonstrated that nation-wide IP blocks and domain name seizures don’t work. The decentralized nature of Bitcoin permits the creation of bets that live on the distributed blockchain, without potential single point failures related to a central domain or server (more on that later).
“The smart money is on a Bitcoin gambling revolution,” says BitcoinSportsbooks.com, a site specialized in online sports betting that also covers other aspects of gambling online with Bitcoin. “It’s time for gamblers to cash in their chips and start mining their Bitcoins because cryptocurrency is about to make conventional money a spent force in gambling.” The post has an infographic explaining Bitcoin for online casinos, created by NeoMam Studios.
After a simple introduction to Bitcoin, the infographic focuses on the financial advantages of Bitcoin for online gambling from the perspective of online casinos, affiliates, and gamers. The key concept is that Bitcoin transactions are cheap. Low transaction costs permit sustainable business models with low commissions, which is appealing to affiliates and end users, and translates into more profits for the operators. For example, BitCasino.io generated $5 million turnover in 3 months. Global reach is another unique selling point of Bitcoin gambling.
The infographic mention another important point: transparency. Since all transactions are visible in the blockchain for verification, Bitcoin offers greater financial transparency. This is true to a degree, but it doesn’t mean that Bitcoin gambling is always “provably fair” (as the infographic claims). For example, random number generators used by a Bitcoin casino might be skewed. This problem can be solved by using open random number sequences provided by trusted third parties.
Of course, the disturbing prospect is that the operator might just take the money and run, anytime. I started several discussions related to Bitcoin gambling and betting on bitcointalk, and this point was frequently mentioned. It appears that security-conscious, scam-wary, avid gamblers will only trust fully transparent systems that live on the blockchain itself, where all transactions are person-to-person (P2P) and the operator is never able to access the money.
This is difficult to implement, especially so because the operator must collect a fee. However, new “Bitcoin 2.0” transparent and trustable solutions are emerging, such as BetXCP.com and Xbet.io, both built on the Counterparty extension to Bitcoin. While such solutions seem ideal for betting (for example sports betting, which is also a booming market), they are not easily applicable to realtime casino games, but new developments are coming fast.
Infographics: BitcoinSportsbooks.com; Images from Shutterstock.
Last modified: September 26, 2014 18:59 UTC