Should I use Bitcoin at Online Casinos? - Pros and Cons
Bitcoin, the world’s first viable digital currency, has a lot of people excited. For the first time in human history, value can travel the globe in a matter of minutes with no central intermediary needing to authorise it.
Since no one can stop a Bitcoin transaction and the system does not rely on identification as traditional payments networks do, one of the early uses the cryptocurrency is well-suited to is online gambling.
In the following article we’ll explain exactly why you might want to use Bitcoin at an online casino. You’ll learn:
- What Bitcoin is.
- What makes Bitcoin useful for iGaming.
- The advantages and disadvantages of using Bitcoin to gamble online.
Over the course of the next few hundred words, you should learn if Bitcoin is going to be a suitable payment method for you to fund your online punts. Let’s begin!
What is Bitcoin?
Bitcoin is the world’s first decentralised, digital currency system to solve the problem of double spending without relying on a central intermediary. It is also the most secure monetary system ever created.
It was created in 2009 by an anonymous developer or group of developers known as Satoshi Nakamoto. No one knows who is behind Bitcoin but it doesn’t matter since all the code is entirely open source and anyone with a knowledge of programming can audit every aspect of it.
In the current (fiat) monetary system, we put a huge amount of trust into banking institutions. We trust that banks won’t take unnecessary risks with our money, we trust that they will give us our deposits when we ask for them, and we trust that the central bank won’t print so much currency that everything in our account becomes worthless. Banks routinely break this trust.
Bitcoin provides a stark contrast to the current financial system. Rather than rely on central intermediaries for issuance and validation of transactions, it uses a network of independent computer units. These units, which comprise the most powerful computing network on the planet, are responsible for checking that transactions follow the rules (not spending the same coins twice, etc.) and also record them forever on an immutable database known as a blockchain.
This article isn’t long enough to discuss all the nuances of Bitcoin’s security model and incentive structure but take it from us, it’s highly secure. In its 11 years of operation, no entity has ever managed to comprise its security model. Given that the network is worth over $180 billion today, it’s not like there isn’t an incentive to attack it either.
This security model not only makes sure transactions follow the rules, it also enforces the 21 million limit hard cap on the total Bitcoin supply. Miners unlock new Bitcoin with each block and will do so until this total is reached (next century). The number of these new Bitcoin also decreases over time, slowly increasing the relative scarcity of the BTC in circulation.
Since the total supply and issuance is fixed, changes in Bitcoin demand create massive price swings. Bitcoin went from just cents to almost $20,000 based on this demand. Although the price is lower than this today, the network has been through many of these boom-and-bust cycles, each time setting a higher bottom for the price. Many people believe this trend is set to continue and expect much higher Bitcoin prices in the future.
Why Did Online Casinos Adopt Bitcoin So Quickly?
Some of Bitcoin’s properties make Bitcoin ideal for use at online casinos. We’ve listed them below:
- Censorship resistance – no one can stop a transaction in the way that a bank might.
- Speed – Bitcoin transactions settle with absolute finality in a matter of minutes. Bank transactions take between a few days and a week.
- Anonymity – Whilst it would be wrong to say that Bitcoin is a totally anonymous digital currency, it can be used with a much greater degree of privacy than a bank account can.
Thanks to the above properties, the online casino industry was one of the first to embrace Bitcoin as a payments technology. For many casino operators, it was a no brainer. Much of the headache of setting up an online casino comes when trying to set up banking relationships and with Bitcoin, none of this is necessary.
Bitcoin seriously lowered the barrier to entry for would-be casino operators. Along with many honest market participants, the unregulated world of early Bitcoin casinos also attracts a few scammers too.
Many Bitcoin casinos still lack the kind of regulatory oversight of their more established, fiat currency counterparts. This gives players essentially zero recourse in the event of some shady goings on at the casino. Lack of licensing is still easily the largest problem with using Bitcoin at online casinos today.
Who Would Benefit from Using Bitcoin at an Online Casino?
For many people who have access to modern banking facilities or live in jurisdictions with regulated gambling, there might be no need to use Bitcoin at an online casino. Gamblers in markets such as the UK might feel that the additional steps needed to use Bitcoin (actually buying some, for example) are too much of an inconvenience for the benefits they personally receive.
Whilst Bitcoin isn’t going to improve everyone’s gambling experience, there are plenty of circumstances in which it might.
Those Who Want to Keep Their Gambling a Secret
Bitcoin is a pseudonymous system. Although anyone can view the blockchain (ledger of transactions), there are no identities associated with addresses, obscuring who is sending and receiving which payments.
Through careful study of the blockchain, it is actually possible to determine Bitcoin users’ identities. There exist large companies that specialise in what’s become known as blockchain forensics. However, their services are not cheap and are reserved for high level criminal activity – not a few hundred dollars in gambling payments here and there!
Those Who Don’t Have Bank Accounts
Bitcoin is an entirely permissionless system. No one can stop anyone from creating a wallet and buying Bitcoin or sending it once they have some.
Almost every other payment system at an online casino requires a bank account. There are billions of people around the world today that do not have a bank account. A large percentage of these do have access to a smartphone and the internet. These are the only two entry requirements to participate in the Bitcoin network. Meaning, for the first time ever, online casino operators can appeal to those who lack access to traditional banking facilities.
Gamblers Who Like to Move Their Money Around
Withdrawing from a casino using a traditional payment method will usually take between a day and a week. This has come down a lot in recent years, but it’s still far from ideal for those players who might not want to leave a large bankroll at an online casino.
Maybe they don’t really trust the software and would rather have their money in their own account. Or, maybe they are a particularly high-volume player, or professional, who wants to be able to move money quickly between accounts.
Either way, Bitcoin transactions can be settled in as little as 10 minutes, but sometimes take around an hour. This is a vast improvement and allows high volume players to move their entire bankroll directly between casinos (you can transfer from one casino wallet to another) in the same evening.
Withdrawals to wallets in the player’s control take the same amount of time. When you’ve finished your session, you don’t need to leave your cash at the casino. You can withdraw and redeposit in a few hours or the following day.
Although most casinos offer bonuses, those found at Bitcoin casinos are often much larger than traditional iGaming venues. Being a relatively new concept, the Bitcoin casino has a lot to prove. They want new customers to come, have a great and fair time, and tell their friends. It’s only through this word of mouth that Bitcoin use at online casinos will grow.
To entice players, many Bitcoin casinos will run massive promotions. It’s not uncommon to see 0.5 BTC matched deposit bonuses (~$5,000). Bitcoin casinos can afford to offer such competitive bonuses because their overheads are usually much lower. They don’t pay card processing fees and many do not have a license.
Disadvantages of Using Bitcoin at Online Casinos
Of course, Bitcoin isn’t the perfect money for transactions today. There are a few flaws with the system that some people might find inconvenient:
- Deposits are not instant – Unlike instant card payments, Bitcoin deposits can take around an hour.
- Volatility – Bitcoin price often swings up and down by large percentages. This is great if the value of your bankroll increases 20% overnight. Not so good if it plunges by 20%!
- Less convenient than other options – Unless you get paid in Bitcoin, you’ll need to actually buy some Bitcoin. This step puts many people off.
- Bitcoin casinos are often unlicensed. This means players need to use great discretion when using them. Luckily we test and monitor the best casinos so you can play with certainty.
Should I Use Bitcoin at an Online Casino?
Whether or not you should consider using Bitcoin at an online casino will depend on your own circumstances and the state of both online casino regulation and banking infrastructure where you live.
It’s not going to improve the experience of a British player with a bank and Neteller account who only wants to use a single casino, for example. However, someone living in an underbanked nation of Africa with a smartphone and places where they can connect to the internet might very well appreciate the technology.