The processing of deposits and payouts has traditionally been a troublesome aspect of online gambling, but Bitcoin (BTC) may have changed this for good. This cryptocurrency allows people to send money – in sums large and small – inexpensively and easily around the world, easing the frustrations of many players and casino operators alike. A growing number of sites now allow customers to fund their accounts with Bitcoin and use it to cash out their winnings.
Problems With Traditional Payment Methods
Before getting into what makes Bitcoin so versatile and useful, it’s perhaps worthwhile to go over existing solutions and point out their inadequacies.
Sending pieces of paper flying around the globe is a ridiculous proposition that would seem farfetched if explained to an alien visitor from an advanced civilization. Besides the amount of time and physical effort it takes to fill out a check and dispatch it through the postal system, there’s also the possibility for checks to bounce.
Credit and Debit Cards
Making a payment by card is quick on the player’s end, but some card issuers frown upon gambling transactions and may block them. Casino managers must exercise caution because of credit card fraud and bogus chargebacks by losing players, both of which can sap the profits of an online casino.
Western Union and MoneyGram
Money transfer services typically involve going to a specific retail location to conduct transfers, which may be inconvenient. There are substantial fees involved in this means of payment, which sometimes amount to 10 percent or more of the total transaction value.
E-Wallets Like PayPal, Neteller, Skrill
E-wallets are one of the most convenient solutions for gambling payment processing. However, the largest e-wallet companies don’t allow American customers to use their services for gambling purposes.
A wire transfer is a little bit like a check, but it’s safer and speedier. Sending such a wire often costs quite a bit though because corresponding banks will take their percentages in addition to the normal fees levied by the issuer’s and recipient’s banks.
Bitcoin Is a Convenient Solution
Bitcoin doesn’t suffer from many of the issues that plague other means of payment, and it offers a number of benefits besides. The reasons many people are turning to Bitcoin include:
Speed – In most cases, Bitcoin transactions take less than an hour. Although some online gambling firms have a manual review process, this procedure is in place for their other payment choices as well. Thus, Bitcoin often remains the quickest method.
Low fees – The fees for sending BTC to any destination amount to less than 1 percent of the transaction amount. It’s even possible to avoid these nugatory fees if the sender is willing to put up with a slower transaction speed.
Available around the world – Though Bolivia, Iceland and a few other countries have banned the use of Bitcoin, it remains legal in the overwhelming majority of the world especially the United States.
All transactions final – Casino, poker room and sportsbook operators don’t have to worry about chargebacks with Bitcoin. Once processed, all payments are final and cannot be rescinded.
Anonymity – While there are sophisticated data mining techniques that may allow someone to trace the movement of bitcoins, for all intents and purposes, transactions are pretty much anonymous.
Security – All spending of bitcoins requires the authentication of a private user key. This key is usually very strong, from an encryption standpoint, so those who use Bitcoin benefit from enhanced protection from unauthorized use.
Counterbalancing all these advantages is one glaring weakness: The price of BTC moves up and down almost constantly. Serious gamblers get around this fact by only holding bitcoins for short periods of time before selling them or depositing them to a gambling site.
How Does Bitcoin Work?
Bitcoins are stored in wallets with both a public key and private key. Any transfer of bitcoins is signed with both keys. It is then broadcast to the Bitcoin network. Once the transaction is confirmed, it is written to the blockchain: the publicly accessible log of all Bitcoin transactions that have ever been made.
Mining refers to the process of validating transactions by running the applicable software. Due to the nature of the mathematical calculations embedded in the Bitcoin protocol, it’s easy for people to confirm that a transaction is legitimate while all but impossible to generate spurious ones. Miners ensure that everything is OK by updating the blockchain with the latest Bitcoin movements, and they’re rewarded for their efforts by the occasional creation of new bitcoins, which are distributed to them. Bitcoin operates on a consensus system wherein the majority of the users have to agree on any updates to the blockchain. This prevents rogue or mistaken individuals from making errors that could upset the network.
Rather than engaging in mining, most people obtain bitcoins by purchasing them at an exchange. These Bitcoin exchanges serve as platforms for exchanging the digital currency with traditional currencies, like dollars, euros and pounds sterling.
Where to Use Bitcoin
Eager players can gamble to their hearts’ content using Bitcoin at many online venues. Some of them conduct all the game-play in BTC while others convert bitcoins into the currency in which the games are denominated. A few of these Bitcoin-friendly operators are:
- Bovada: Offers sports-betting and casino games to a heavily American player base
- 5Dimes: An integrated sportsbook, casino, bingo, lottery and poker firm
- FortuneJack: Spreads poker tables and casino games and only accepts deposits in Bitcoin and other cryptocurrencies
- Satoshi Dice: One of the most popular Bitcoin dice sites although it no longer accepts U.S. players
- Betcoin.ag: Poker, sports bets, casino action and dice make up the product lineup here
With Bitcoin becoming more mainstream every day, a growing number of gambling websites have chosen it as a means of avoiding payment processing woes. Popular with players, affiliates and the owners of internet-based casinos, it may soon become the standard currency for gambling transactions.