Pros and cons of using bitcoin for online gambling
It is probably safe to say that people have been gambling since the beginning of time. If nothing else, history records a variety of gambling practices in ancient cultures from thousands of years ago.
The fact that we gamble online today is only new in the sense that we are using advanced technology to do it. Gambling with bitcoin is just the next step in the evolution of a practice that has been going on for millennia.
Not every online casino accepts bitcoin as a deposit method. However, the number of casinos that do is steadily growing. Bitcoin is proving to be a popular option among online gamblers who, for whatever reason, want to avoid payment methods that involve fiat cash. This includes bank transfers, credit and debit cards, etc.
Note that there are a lot of positive aspects to gambling with bitcoin. But there are some drawbacks as well. The key to deciding whether bitcoin gambling is right for you or not is to take the time to educate yourself about bitcoin and cryptocurrencies in general.
Before we get into the pros and cons of gambling with bitcoin, let us talk about some of the basics of this digital currency. Bitcoin is not a hard currency. In other words, when you buy bitcoin you are not buying paper bills and minted coins. Bitcoin is a cryptocurrency represented by digital tokens. Those tokens are stored in a worldwide ledger known as a blockchain.
To do business with bitcoin, you first acquire what is known as a digital wallet. You then purchase bitcoin and transfer it to your wallet. Buying something with bitcoin is a matter of transferring the currency from your wallet to the receiver's wallet. You can also accept payments the same way; you become the receiver while the payer transfers currency from his or her wallet to yours.
Now let us get to the pros and cons of gambling with bitcoin.
Bitcoin gambling pros
There are lots of reasons people prefer to gamble with bitcoin instead of fiat cash. Their reasons are all encapsulated in the many pros of this method of gambling. Consider the following seven things:
One of the things that sets cryptocurrencies apart is the fact that they are not controlled by any central bank or government body. As such, the developers of bitcoin built privacy into their platform from day one. You can buy and sell with bitcoin and never have to reveal your identity or any personal information to those with whom you are interacting. Having said that this only applies to some services because if you are buying something with bitcoin and it has to be delivered to your home, you obviously must reveal personal information such as you home address.
There are not many areas of the industry where one can use bitcoin anonymously. Entertainment and services is one such area and this includes online gambling. However, it applies to anonymous and unlicensed bitcoin gambling operators only. Not everyone is willing to gamble this way. If you do, it's a good idea to keep your casino balance low. There have already been a few bitcoin-dedicated casinos that have run off with the money.
There are some licensed casinos that do accept bitcoin deposits directly or via third party, which is also the case with Mega Moolah casinos. If you would like to learn more about this, read our Can I play Mega Moolah with Bitcoin article.
To create a bitcoin wallet at Blockchain.com or BTC.com all you need is an e-mail address in order to procure a digital wallet. Note that Bitcoin Exchanges such as the popular Coinbase.com require customers to provide ID and proof of address (KYC) information when you open an account with them.
Whichever wallet type you choose, your digital wallet is identified in the blockchain (public ledger) by an ID token.
Bitcoin has been designed to be a secure cryptocurrency platform. It has several security features built in, including the very structure of its blockchain. The blockchain is a ledger stored on multiple computer nodes scattered around the world. Each node has an identical copy.
Whenever a transaction takes place, each of the nodes receives encrypted information about the transaction. The nodes must crack the code in order to verify that the transaction is legitimate. This is known as mining. Once a transaction is verified it is added to the blockchain on that node. The transaction becomes permanent and irrevocable as soon as all of the nodes have completed processing it.
This system makes bitcoin very difficult to hack. The system is also nearly impossible to defraud. That is not to say that bitcoin and the blockchain are 100% bulletproof. However the blockchain is constantly being reviewed by bitcoin users, which means hacks are unlikely.
3. Instant transactions
Bitcoin transactions are almost instantaneous. A transaction may take a few minutes to post during peak traffic times, but that's a lot less when compared to other forms of electronic payments. And when things are not busy, bitcoin transactions can clear in seconds. You do not have to wait hours, or even days, to make a deposit or withdrawal at a casino.
4. No third-party banks
When you gamble online using your credit card or your bank, you are involving a third party between yourself and the casino. Remember that every finger in the pie leads to a greater potential for something to go wrong and higher fees. Bitcoin is a straight transaction and there are no third-party banks involved.
An added benefit here is that bitcoin is not manipulated by central banks. Its value is determined solely by free market forces. If you are the kind of person who is not really enthusiastic about central banks and what they do, you can gamble with bitcoin and keep your bank completely out of the equation.
5. Limited fees
An extension of having no third-party bank involvement is that the fees associated with bitcoin are comparatively low. When you make a deposit using a credit card or electronic payment service, there is almost always a significant fee involved. The same is true for direct bank transfers. All of these fees are charged by financial institutions with an interest in your money.
When bitcoin fees are charged, they are extremely low. Note that you will pay an exchange rate and processing fee when you actually purchase bitcoin. It is no different than converting your native currency into a different currency.
6. Limited taxation
To date, no world government recognises bitcoin as a legitimate currency. Therefore, it is not taxed. All of your winnings from bitcoin gambling remain non-taxable as long as you continue to keep them as bitcoin. Convert them to fiat currency and things may be different, depending on your jurisdiction.
As an example, the United States considers bitcoin a security similar to stocks and bonds. If you start with $1,000 in bitcoin before growing it to $2,000 by gambling online, your $1,000 gain is not taxable as long as it remains bitcoin. Should you convert it to US dollars, the money is then subject to capital gains tax.
7. Limited jurisdictional issues
Finally, gambling with bitcoin makes it possible for some people who cannot gamble with fiat cash to still play their favourite casino games online. How can this be? Because there are some countries where gambling is illegal and there are no casino operators in those markets, or the banks and credit card companies will not honour transfers to gambling companies.
In essence, this means that bitcoin gambling may give some people the opportunity to gamble online even if the laws in their country attempt to prevent them from gambling. It is all thanks to bitcoin not being regulated by central banks or recognised as an official currency by world governments.
Bitcoin gambling cons
As fantastic as bitcoin is for gambling, everything about this cryptocurrency is not sunshine and roses. There are some distinct disadvantages to using it as a gambling currency. In fact, the same disadvantages apply to all bitcoin transactions. There are three of them:
1. Lack of withdrawal options
Just because a casino accepts deposits in bitcoin does not mean it also accommodates bitcoin withdrawals. Many bitcoin casinos do not. You can deposit with bitcoin as often as you like, but withdrawals may be limited to bank transfers, cheques, and the like.
There are a variety of reasons casinos do this. If this is important you may have to do some shopping around if you want to play a casino that supports bitcoin withdrawals. They are out there, but you have to look for them. One place to look is Coinbet.com.
2. Some tech knowledge required
Next, transacting business with bitcoin does require some basic tech knowledge and skill. Where everybody knows how to walk up to a retail counter and pay cash for something, using bitcoin is a bit more complicated. You have to be able to get online, sign up for a digital wallet, find an exchange or bitcoin ATM where you can buy your bitcoin, and then learn how to use your bitcoin to and from your wallet.
Learning is by no means difficult. However, you are probably not going to be ready to begin gambling using bitcoin within 10 or so minutes of getting started. There is some learning involved. A tech savvy person should be able to get up and running within a few minutes. If you are not so tech savvy, it might take you a little longer to get everything worked out.
3. Bitcoin volatility
Perhaps the biggest drawback of gambling with bitcoin is the volatility of the cryptocurrency. Because bitcoin is not controlled by a central bank, there are no safeguards in place to prevent huge price swings. A single bitcoin can be worth $7,000 today and $6,000 tomorrow.
Bitcoin's volatility is a direct result of supply and demand. It is a lot like stocks. The greater the demand for bitcoin, the higher the price goes. The price drops when more people are selling than buying. The lower the demand, the lower the price.
How does this affect you as an online gambler? The current price of bitcoin directly affects the value of your bankroll. You could be winning loads only to discover that the bottom drops out on bitcoin and the total value of your bankroll - in terms of your native currency - is less than when you started. That is the way bitcoin goes sometimes.
Now you know the pros and cons of gambling online with bitcoin. Does it sound intriguing to you? If so, you'll be glad to know that growing numbers of casinos are accepting bitcoin deposits. Take a look around and see what you find.
Byline: This article was published by Mega Moolah expert Henry. Media and other enquiries.