Cryptocurrencies Provide New Processing Channels for Online Gambling Operators
Ever since online poker began in 1998 with industry pioneer Planet Poker, the ease with which sites can facilitate deposits and process payouts has been important to companies and ordinary players alike. Bitcoin and other digital cryptocurrencies now play a big and growing role in moving money to and from poker rooms and consumers. BTC offers several distinct advantages as compared to old-school payment processors.
Why Is Bitcoin Popular for Online Poker?
Online poker was an established field even before anyone had ever dreamed about Bitcoin. It may therefore seem strange that this type of decentralized currency has anything to offer the world of internet poker. Yet, BTC brings with it a host of benefits for every online gambler. Among them are:
1. Speed
Some forms of payment are virtually instant, like credit cards and PayPal, but there are many players for whom these solutions are not an option. Credit card purchases for online gambling are sometimes declined, and PayPal only allows poker transactions in a few countries. Bitcoin enables quick, almost-effortless payments from users around the world especially the United States. When it's time to withdraw money from a site, winning players appreciate the fact that they can get their funds in hours rather than the days or even weeks that checks and cash transfer services take. With the payment of the right miners fee (see below), Bitcoin transactions can be completed in an hour or even sooner.
2. Low Fees
The miners fees for using Bitcoin to transfer money are seldom more than a few dollars regardless of the amount being sent. This may not seem so great when it comes to depositing money to play poker because fees on deposits are usually covered by the sites. Where Bitcoin truly shines is when requesting cashouts of winnings. While most poker sites do allow a certain number of free withdrawals via old-school methods every so often, additional payments beyond this free allotment carry charges that can be $50 or more. The majority of poker sites that support Bitcoin permit fee-free withdrawals every single time.
3. Privacy
When using Bitcoin, people enjoy a high level of anonymity even though it is possible, with enough legwork, to trace bitcoins back to their previous owners. Meddlesome banks, governments, and other intermediaries can't interfere with online poker deposits via Bitcoin like they can with transactions involving credit cards, wire transfers, and other payment processes.
Downsides of Bitcoin
Nothing's perfect, and this is the case with Bitcoin as well. There are a few niggling issues that every Bitcoin poker player must come to terms with. None of them are deal-breakers, but they are things that those who intend to jump aboard the Bitcoin bandwagon ought to be aware of.
1. Risks of Price Fluctuation
It's not uncommon for Bitcoin prices to change by more than $100 in a single day. Fortunately, it's possible to avoid holding bitcoins for lengthy periods of time. Anyone can buy bitcoins, transfer them to their wallet, and then make a deposit to an internet poker room within a few hours. The deposit will (at most sites) be converted into USD or another government-backed fiat currency, eliminating the risk of price fluctuations while the money remains in the user's account. Then when the player wishes to make a withdrawal, the funds are converted back into Bitcoin at the then-prevailing exchange rate. All that remains to be done to liquidate the bitcoins is to move them to a wallet and then to an exchange where they can be sold.
2. Uncertain Transaction Timeframes
Bitcoin movements aren't handled by the network in the order in which they were received. Neither are they prioritized according to the amount of coins involved. The way it works is that Bitcoin miners can accept or avoid any transaction. To encourage them to include transactions in the next block, most individuals pay them a voluntary miners fee on top of the actual value of the bitcoins being transferred. Modern Bitcoin wallets can calculate the appropriate fee automatically, but this is more black magic than science. Even with the payment of the recommended fee, any given transaction could take days to be confirmed despite the fact that it usually doesn't take anywhere near this long.
3. Financial Regulations
Quite a few of the popular Bitcoin exchanges must comply with the legal rules that are in effect in the jurisdictions they operate in. This means that many of them view gambling transactions unfavorably and may ban anyone whose exchange account receives BTC from an address known to be associated with online poker. A commonsense precaution is to never send bitcoins directly to an exchange from a poker room or any other online gambling provider. Simply using a wallet as an intermediary solves this currency problem.
What Is Bitcoin?
Bitcoin is a digital cryptocurrency that operates using a global peer-to-peer network. It was created in 2009 by an unknown individual with the pseudonym Satoshi Nakomoto, and it has since found increasing mainstream acceptance. The price of one single bitcoin has skyrocketed from pennies at its inception to about $8,245 as of November 22, 2017.
To get bitcoins, people usually buy them from an exchange where they're traded for U.S. dollars or some other traditional currency. It is possible to acquire them in other ways too, like a private purchase from someone who's selling them or by winning them in a Bitcoin poker freeroll.
Once someone owns bitcoins, they can transfer them to anyone else by sending them to the recipient's Bitcoin address. People usually open up online wallets to store their bitcoins, send them to merchants to make purchases, and receive them from others. The high price of Bitcoin doesn't detract from its use as a currency because each bitcoin can be subdivided down to one hundred millionth of a coin: a unit of measurement referred to as a “satoshi” in honor of its inventor.
Bitcoin transactions are cleared by miners who turn their computers to the task of solving cryptographic puzzles that are related to previous Bitcoin movements as recorded in the blockchain, or public ledger. While the computations involved are too complex to go into in detail, suffice it to say that they ensure the security and accuracy of the whole setup. Once a new batch of transactions, or block, is successfully processed, it is added to the blockchain for all to see.
Other Cryptocurrencies and Online Poker
As the initial cryptocurrency to be widely deployed, Bitcoin has a huge first-mover advantage, and this can be seen in the sheer number of poker sites that are comfortable transacting in it. Other digital currencies are catching up though, and there are a few poker rooms that now accept Litecoin, DogeCoin, Ethereum, and other similar “altcoins.” Going forward, a few of these digital coins might become serious rivals to Bitcoin in the online poker space.
This article was originally published in late 2016. Since then digital currencies have been increasing steadily in use. Less than one year after the publication of this piece, a major online poker company, top 5 in the world in size, announced they would begin accepting 6 dozen cryptos for real money online poker. Professional Rakeback managed to get an interview with thier CEO and you can read that crypto interview here. After Bitcoin, the world's number two and number three cryptos are also the second and third most accepted in the gambling industry. Ethereum online gambling, with its smart contracts, low fees, and fast processing times is quickly becoming more widely accepted.
Crypto-Currency: Greasing the Wheels of Online Gaming
There are a significant number of internet poker rooms that accept Bitcoin and LiteCoin for both deposits and withdrawals. These Bitcoin poker sites denominate user balances in fiat currency and only use BTC when conducting actual cashier functions. Among the largest such sites, as determined by player traffic numbers from GameIntel.com, are:
- Pai Wang Luo Network - Ignition Casino, Bodog, Bodog 88
- Winning Poker Network (Americas Cardroom, BlackChip Poker, True Poker, Ya Poker, Poker Host)
- Chico Poker Network (BetOnline, Sportsbetting.ag, TigerGaming)
- Horizon Poker Network (Intertops, Juicy Stakes)
- Grand Poker Network (GrandPoker.eu, 5Dimes, SportBet, Island Casino)
Besides these sites that operate a dual BTC/fiat currency system, there are a few that run exclusively on bitcoin for deposits, payouts, and gameplay. Two of the most noteworthy of them are Nitrogen Poker and SwCPoker.
by: Michael Singh
Original pulication date: November 11, 2016