About six years ago, using the pseudonym Satoshi Nakamoto, an anonymous computer programmer, or group of programmers, built the Bitcoin software system and released it onto the internet. It uses a public ledger to record transactions which are cryptographically signed for security. This was something that was designed to run across a large network of machines — called bitcoin miners — and anyone in the world could become a miner.
Bitcoins are just long digital addresses and balances, stored in an online ledger called the “blockchain.” But the system was also designed so that the currency would slowly expand, and so that people would be encouraged to become Bitcoin miners and keep the system itself growing.
When the system creates new Bitcoins it gives them to the miners. Miners keep track of all the bitcoin transactions and add them to the blockchain ledger, and in exchange, they get the privilege of awarding themselves a few extra bitcoins.
Yes, it’s a fact. If anyone of us wishes to transfer a Bitcoin payment to another person, anywhere in the world, the recipient receives their coins in a few seconds. At the moment, many transactions are typically processed in a way where no fee is expected at all, but for transactions which draw coins from many bitcoin addresses and therefore have a large data size, a small transaction fee is usually expected. So, the value in which they finally receive may have a couple of digits shaved off but the difference is minute in comparison to the amount of value that has been transferred.
The only time a fee may occur is when you go through a third party exchange to covert Bitcoin from a fiat currency or vice versa.
Well, all large companies are currently investigating accepting Bitcoin following the example of Overstock.com who on the 9th January 2014 became the first major retailer in the world to start accepting Bitcoin as payments for its goods. US$126,000 worth of goods were purchased in Bitcoin on the first day which represented a 4.33% increase in sales from their normal income of $3 million per day. However, the initial excitement may have begun to wan because as of 13 March 2014, Overstock Bitcoin income had shrunk to under 1% of their normal daily cash intake.
A couple of weeks later in January, two downtown Las Vegas casinos began accepting Bitcoin, but only in their gift shops. The press release and accompanying publicity went viral and the names of the casinos became known globally. Unfortunately, Bitcoin is a very long way from being a working and accepted commodity in the US casinos but only due to the complex gaming regulations and lack of understanding on the part of casino executives and regulators at this moment.
However, we do foresee the major gaming companies introducing their own cryptocurrencies in the future as it would make more sense to have your own customers and employees as miners as well as receivers and users.
We also at AACASINO already have a full working process theory for any landbased casino and betting operation but we have not yet received as much interest as we hoped for at this time.
There is a lot of ignorance regarding Bitcoin but unfortunately this doesn’t seem to deter having an opinion either. Thus, there is a lot of bad press and theories and this will take time for the casino industry to learn and realise for themselves the distinct advantages over cash, credit cards and ewallets and the regulators to foresee the increase in social responsibility and AML.
Bitcoin wallets can be lost but by the negligence of the Bitcoin owner. Like any item of value, there are methods to protect yourself to ensure your wallets are neither hacked nor lost.
At this moment, Bitcoins are still not widely accepted but in terms of casino gaming and betting this is positive news for any operator to take advantage of the present 12 million coins that are currently in circulation.
The crytocoin is still in its infancy and any press story with a distant association to Bitcoin tends to send the price down. However, this volatility should have no serious actual impact on the gaming industry. Players always have a set amount they wish or can afford to wager regardless. So whether they play at their $100 worth at 1 Bitcoin or 0.00001 it doesn’t really matter. The operator too has to have a set amount of cryptocurrency to show they are able to pay out winners but their own funds are topped up by the unfortunate losers so they should, in theory, not having to buy Bitcoin at inflated prices. We strongly advise any operators to operate only in Bitcoin and Cryptocurrency though and not to mix with their cash operations as the fluctuations will over complicate the day to day running of the business in this case.
There is currently no buyer protection, which was an unintentional part of the overall philosophy behind the instigation of Bitcoin but this is easily remedied by using an exchange service as an escrow.
There is built in deflation since the total number of Bitcoin is capped at 21 million. Each bitcoin will be worth more and more as the total number of Bitcoins maxes out. It’s a reward for the early adopters but may add to the volatility of value as spending surges occur when the price greatly increases thus sending the value down again. Furthermore, the volatility is deterring new buyers as they either fear their purchase will decrease short term or find it hard to accept why they should buy Bitcoin at such an inflated price than say a year or 2 ago.
As we can see, the decentralised nature of bitcoin is both a curse and blessing.
Bitcoin and other cryptocurrencies are certainly here to stay. The banks and governments have the most to fear of its existence which will cause a delay in the acceptance and understanding amongst the general public. Bitcoin will hugely succeed globally once it is understood and accepted or hugely fail due to a technical issue that was not foreseen.
However, in relation to its acceptance into the gaming industry we all clearly remember the time when slots and internet gaming were being dismissed by gaming establishments. Any casino executive still having that train of thought is clearly not working in the right business in this day and age. It’s a slow learning curve for us all.
Bitcoin, although not a currency, is a commodity and is legal everywhere depending on what you are doing with it. However, some countries may restrict you as a miner or as an exchange or even as a user. Governments are still struggling to understand what it is, so we can expect regulations to take much longer. There have been restrictions placed in certain countries due to panic though but then lifted at a later date once understood better. At this moment we don’t foresee how any user may be ever stopped from using Bitcoin if they so wish.
So far, Bitcoin has mostly been utilised by operators of a non-gaming background. Many are keen to use the anonymity of the cryptocurrency to exploit their online gaming into jurisdictions and countries where licenced operators are unable. However, the darker side of this is that they are further tarnishing the image of the Bitcoin and in addition severely shooting themselves in the foot in terms of customer retention and fraud prevention. It feels like online gaming is taking a step backwards and regulators haven’t still learnt their lesson of the slow uptake to regulate online gaming in the early years.
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