Now that the world is truly and utterly captivated by cryptocurrencies, we are experiencing a gold rush the likes of which we haven’t seen since the dotcom era. It’s clear to see that cryptocurrencies aren’t just a flash in the pan, however, their true value is the source of much speculation. How much are they really worth? Does cryptocurrency have intrinsic value or is its real-world value far less?
A Bitcoin primer
Bitcoin has been around since January of 2009, mere months after the theoretical paper, Bitcoin: A Peer-to-Peer Electronic Cash System, by Satoshi Nakamoto was released. While there was interest in Bitcoin from the very beginning, it wasn’t seen as a serious investment option by many market trend analysts until late 2016. After Bitcoin forked in August of 2017 the value of Bitcoin skyrocketed.
What’s amusing about this story is things like the following: that what I paid in Bitcoin for topping up my phone credit several times over would now be worth 10s of thousands of dollars; that the main transactions in Bitcoin for most of its history were drug exchanges on the dark web; that the elusive Satoshi Nakamoto has been rated one of the top 50 richest figures in the world, despite Satoshi’s Bitcoins never being touched and no trace of them for years.
While a lot of mystery and intrigue surrounds the story of Bitcoin itself, as well as speculation on the market, what’s not a surprise is the volatility of the coin, even from day to day. Half of the value of the coin has been wiped off in just over a month and a half, hitting from up to almost (US)$20,000 a coin to under (US)$10,000. For investors, this is a huge gamble. But a gamble that you may not have considered is the gamble taken by actual gambling houses who themselves accept and cash out Bitcoin.
Online Bitcoin gambling has been quietly gathering steam for years now. Online gambling has come a long way since it first emerged as a relevant form of gambling – and jumping on the Bitcoin bandwagon was a natural progression. When we talk about the history of online gambling we see that once upon a time there were no regulations in place when casinos could do what they please, and punters could place bets on anything, anywhere. Slowly, regulations started to creep in to keep a lid on these activities, bringing them into line with the regulations of the country of play. But then Bitcoin joined the party.
When punters were dealing with fiat currencies, the play was much more strict, you were limited to playing and cashing out in your own currency, often with wait times and issues like chargebacks. When Bitcoin came in, there was the ability to play in Bitcoin, cash out in Bitcoin (or cash out in your currency if you were playing in your own country), play anonymously, and more. The rise of Bitcoin in online gambling ushered in a less regulated era, yet again. And governments and overseeing bodies have struggled to keep up with technology ever since. If you’d like a guide to Bitcoin casinos then check out CasinoHash for the latest info.
But since the rise of Bitcoin as a fluctuating investment this has been a source of pain for online gambling houses. If you pay out in Bitcoin, then the implications can be disastrous.
Let’s take, for example, FortuneJack, a casino house with over 300 different games available on it. Punters deposit Bitcoin into their accounts to play – or Litecoin, Doge, Dash, or Reddcoin, just for a bit of a choice of options. They’re then able to play to their hearts content until it’s either a) time to cash out or b) they’ve run out of crypto.
But let’s say that a punter deposited 0.1BTC to play today, which is currently valued at $1000USD. They play a few games today and tomorrow then suddenly the cost of Bitcoin skyrockets. A jackpot game that they were playing today, let’s say the dice game, pays out at 11BTC. Suddenly, 11BTC is worth a whole lot more – and if FortuneJack hasn’t adjusted their jackpot in time for the game then they are caught paying out far more than they anticipated.
The other worry for Bitcoin gambling houses is punters who win big and accumulate funds in their online accounts. While on Monday, the house might have had to cash out (US)$10,000 to someone, if they leave their funds with the house for a week and the price rises, then the casino may be handing out what amounts to double that in fiat currency of the actual win.
So, as you can see, for Bitcoin gambling houses, the stakes are high. However, there are various provisos that they can put into place that can help to ease the pain in the case of unexpected price rises and falls. One of the ways in which they can do so is to convert all deposits into the casino to an equivalent value of fiat currency for play – even if they don’t actually “convert” it in real life, just have it as a placeholder. Another thing they can put into play is adjusting jackpot values in real time as a reflection of the current cost of Bitcoin’s value, so payouts don’t end up bankrupting the house. Thirdly, they can do a “conversion” to fiat currency on wins, so that even if players keep money in the house before cashing out, this won’t rise to ridiculous amounts.
Of course, all of these options may fall on the blurry side of legalities. What is known for a fact is that Bitcoin casinos and online gambling houses are more at risk now than they have been before due to the fluctuations in the price of cryptocurrencies.
However, there’s also a big opportunity to be made. If clever people behind these gambling houses can predict with some degree of accuracy what’s going to happen in the market on a very short-term basis, they can easily trade with punter’s deposit money, with the opportunity to make gains on the deposits on the open market – which can add up to a lot if you have plenty of customers.
While regulated online gambling markets such as Nevada and the UK strive towards making online gambling houses more honest and held more accountable, their struggles to be a mirroring in the rules, as regulators try to understand the technologies associated with online gambling and cryptocurrencies in particular.
Until more people, and especially those in positions of power and regulation, have a firmer grip on the technologies involved in online gambling, we will continue to see Bitcoin gambling online as a bit of a black sheep within the gambling world: little understood by those except the brains behind the operations and by those who know how to best work the system in their favor.
While there is something implicitly exciting and dangerous around gambling in this new world system, it’s not until these ways of doing business have settled down and the dust has cleared that they will truly be legitimate and more widely accepted. And it’s up to Bitcoin gambling houses to put in the hard yards and answer the difficult questions before this really starts to happen. So let’s make it happen – as Bitcoin gambling has a bright future.
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