Bitcoin has been gaining mainstream acceptance as a mode of payment for various institutions and now its latest success is in the realm of high-stakes casinos, both online and Vegas-based.
Bitcoin is currently one of the most hotly-discussed topics in the technology industry. A cryptographic tool that started out as a means of fund exchange for the tech literati, Bitcoin has started gaining mainstream acceptance, with governments attempting to work out its legitimacy as a means of exchange and investment.
As a sign that Bitcoin is going mainstream, several institutions, organizations and individuals are now accepting the virtual currency as a mode of payment. These include schools, business establishments, employees, and even government agencies, to some extent. There are still grey areas in terms of how Bitcoin is to be considered as legal tender, however. Some governments have even categorically defined Bitcoin as not being a “legal tender” as it lacks certain characteristics of central-bank controlled currency.
The latest institutions in a string of entities that have started accepting bitcoin involve the gambling industry. Bitcoin is already popular among online risk-takers, and it is only understandable, due to its volatile nature. Even buying into the crpyto-currency itself does entail both potential benefits and risks. When the dollar-to-Bitcoin exchange rate can skyrocket and crash in a week or even a single day, then it becomes a gamble for those who are into speculation. This is why seasoned investors recommend investing into Bitcoin-related products and services, and not in the currency itself.
With regard to gaming, the transparency and pseudonymity in Bitcoin transactions itself has catapulted the likes of Bitcoin casinos Just Dice and Satoshi Dice into popularity, with the latter even minting a few actual millionaire winners (in dollar terms), in their supposedly “provably fair” algorithms. Meanwhile, the traditional casino industry is already catching on. The question is whether patrons will also warm to using Bitcoin for betting.
Recently, VR Zone reported that two brick-and-mortar casinos in Las Vegas are already accepting Bitcoin payments through BitPay terminals. However, given the tight regulatory framework that these establishments are under, Bitcoin is only being accepted at the hotel. Patrons may book rooms, buy drinks and pay for amenities using Bitcoin, but cannot make deposits nor cash out using the crypto-currency.
This might soon change, at least starting from online establishments. In the recent week, Vera&John announced being the “first licensed and regulated online casino to accept Bitcoin deposits.” The Malta-registered company now lets users make deposits in Bitcoin, which are then automaticaly converted into Euro through payment processor Coinapult. Users who deposit Bitcoin can only cash out through the virtual currency, as well, thereby mitigating any potential problem arising from using the system as a de-facto exchange between Bitcoin and other established currencies. The company does not hold any Bitcoins, which also reduces its exposure to market risk and currency fluctuations.
The main difference between Vera&John and other online Bitcoin casinos is that sites like Satoshi Dice use Bitcoin transactions themselves as the basis for the bets. Vera&John, meanwhile, has already-established games run by its own proprietary software, and Bitcoin is only used as a means of depositing funds. In fact, Bitcoin in this case is treated as a means of facilitating online payments, rather than a means of holding currency or value, which illustrates the dual nature of the crypto-currency.
Americans can’t use Bitcoin at casinos
Given the stringent anti online gambling legislation in the US, however, the firm will be unable to service residents in the country, and has chosen to establish its business in Panama, which they consider to be a jurisdiction and banking system with “clear, market-friendly regulatory frameworks.”
Bitcoin usage is catching on among gaming companies and other online gambling establishments, as well. Given the ease of transactions and pseudonymity, there is a question whether Bitcoin will eventually make online payments frictionless for these kinds of transactions. Case in point, Bitcoin was considered the currency of choice for deep-web services such as Silk Road, which had been used for illicit transactions like drug and weapons deals. When transactions cross borders, will gamers and gamblers from the US eventually be able to use Bitcoin for transactions otherwise unavailable?
Black market deals, mobile payments and online gambling are only just the beginning for Bitcoin. Venture capitalist and Netscape founder Marc Andreessen has already lauded Bitcoin as the most promising technology of the decade, comparing it with the rise of personal computers in the 1970s and the Internet in the 1990s. Beyond gaming, what could Bitcoin have in store for us?