Do Cryptocurrencies Have a Future in the Online Casino Industry?
Online gamblers no doubt have seen ads for cryptocurrency casinos. With the wild fluctuations in the price of Bitcoin, those people might wonder if cryptocurrencies have a future in the online casino industry at all.
They’ve probably seen the sales jobs that online marketers post to make Bitcoin gambling seem like the best idea. Their favorite casino might offer deposits and withdrawals using Bitcoin, Litecoin, Ethereum, or Dash.
Evaluating the industry can be a mess of information, like so many other subjects on the Internet today. A recent article from CoinGape titled “Is there a future for Cryptocurrencies in the online casino industry?” appeared in my Google News alerts for gambling, so I thought it would be interesting to explore the topic.
Here’s a fair and unbiased recitation of the arguments from someone who covers the subject on occasion, but doesn’t have a direct stake for or against cryptocurrency gambling.
How Cryptocurrency Works
Bitcoin, Litecoin, and their rivals use blockchain technology for their value. About 17 million Bitcoin are in existence, both from the genesis block of original bitcoin and subsequent mining. Mining is a way to bring new bitcoin into existence though mining is more akin to minting new currency.
According to the Bitcoin Protocol, no more new Bitcoin will come into existence after 21 million have been mined. Most gamblers buy bitcoin with fiat currency (dollars, Euros, pounds). Purchases of the cryptocurrency — or scarcity compared against demand — causes fluctuations in the price.
At its height, Bitcoin was around $19,000 per unit. These days, the price is closer to $4,300 per unit…a massive drop over the past year. Forbes analysts predicted the value could go as low as $2,500.
Of course, other cryptocurrencies exist, such as Litecoin, Ethereum, and Dash. Each has its own cryptocurrency protocols, its own way to mine for virtual currency, and its own blockchain, security encryptions, and price.
The Case for Cryptocurrency Online Casinos
People who use blockchain payments have a lot of arguments on their side. Gamblers like that privacy it gives transactions. Many call it anonymity and that is true to an extent, though prosecutors have shown the ability to track bitcoin purchases (see: Silk Road).
What Bitcoin does is make it impossible for identity thieves to target them. Each time a transaction is made, it is added to the blockchain. This provides transparency — the people sending bitcoin can’t cheat you. The record exists for all the world.
At the same time, people aren’t identified except by numbers. Also, each new transaction creates an all-new verification code. If the old code is stolen, it’s useful. This makes cryptocurrency both transparent and private, strangely enough.
Because online casinos don’t have to spend time verifying your identity, they can send payments immediately. Blockchain withdrawals reach your Bitcoin wallet within 15 minutes, or at max around 2 hours.
In short, cryptocurrency payments are the fastest, safest, most private, and most transparent way to handle deposits and withdrawals. That sounds good, but there’s more to the story.
The Case Against Cryptocurrency Online Casinos
The wild fluctuations in the price of Bitcoin has been alarming. For gamblers, it is a game-within-a-game or a bet-within-a-bet. A year ago, Bitcoin gamblers were betting on a bull market. With a rapid rise in the value of Bitcoin, even a losing bettor might end up ahead.
2018 has been a bear market for Bitcoin. Even if you’ve won spectacularly at poker, blackjack, baccarat, sports betting, or slots — it might not matter. Let’s say you started out the year with a bankroll of $19,000 in Bitcoin and, over the course of the year, you doubled your winnings through good (or lucky) sports bets.
At the end of the year, you would have 38,000 units of Bitcoin. When it’s time to cash out the bitcoin, its value is 25% of what it was a year ago. You withdraw out for what amounts to $9,500 in cash.
The key is whether your cryptocurrency casino stored your bankroll in Bitcoin units or in fiat currency. If your 38,000 units was counted in US dollars, then things are fine. If your 38,000 units was counted in Bitcoin, then you have a big problem.
It’s one reason I recommend avoiding pure cryptocurrency casinos. Instead, if you use bitcoin, play at online casinos which use Bitcoin, Visa, and MasterCard, because your bankroll might be counted differently.
Which Cryptocurrency to Use
If you decide to use a cryptocurrency for gambling, you might consider using another virtual currency like Litecoin or Ethereum. Both were created after Bitcoin’s big success and their creators had Bitcoin’s pros and cons as a starting point.
Litecoin has four times as many units (84k to 21k) and is mined at four times the rate. Ethereum works better for small contracts, which increase the chances your rights and privileges will be maintained through the betting process. Transactions for both complete much faster than Bitcoin (example: 10 minutes for Bitcoin, 12 seconds for Ethereum).
Also, neither Litecoin nor Ethereum fluctuate as much as Bitcoin does, at least in 2018. Both have a lower value, so investing in them is more akin to investing in silver than gold. Even though Bitcoin fluctuations have an effect on the rest of the cryptocurrency markets, the price goes up and down less.
Cryptocurrency Deposits in 2019
If you go to US online gambling forums, you’ll see that sports bettors and poker players still prefer to use Bitcoin over Visa or MasterCard. The anonymity and transparency makes it a safer form of payment than credit cards or bank accounts. In the unregulated US gaming market, that is a really good thing.
In 2018, at least, you pay for the safety, speed, and anonymity. So do I recommend cryptocurrency deposits? It’s not my place to recommend one or other payment method. You’ve seen the advantages and disadvantages above. You’ve seen the alternatives. You know your situation better than I do, so use that information to pick the best online deposit option for you.