Chance are you’ve heard of Bitcoin – the revolutionary new currency for making payments. Like most money, it gets its value from people agreeing to give it value. Ultimately it’s still just a bunch of numbers in an account. When you think of money in your bank account, you might forget it’s essentially just a bunch of numbers too.
Before we answer the question in the title of this article, we’ll explain some background information.
What Makes Bitcoin Different to Normal Money
Currency like the US Dollar is issued by a combination of the Federal Reserve and federal government. The Federal reserve is a central bank which “loans” money to governments, creating a massive debt for the country. So the vast majority of money in circulation are actually IOU notes, representing debt to the Federal Reserve.
Is the Federal Reserve the federal government? NO. It’s a private banking institution that has no relation to the government, although that’s another story. But the problem with government currencies is they are controlled by central and private corporations such as the Federal Reserve. This means private companies can manipulate things like interest rates and control entire economies.
Bitcoin is different because it has no central authority. It is “decentralized”. Nobody specific owns or controls it. Any changes to how Bitcoin works needs to be approved by thousands of different people, known as the “miners”. The miners are people who control the computers which process Bitcoin transactions. And anyone, including you, can become a miner. With so many different people in-charge, votes need to be passed before changes can be made. So it’s a kind of democratic system, where nobody has complete control over what happens.
How Governments Treat Bitcoin
Any alternate currency is a threat to existing monetary systems. But despite relatively widespread adoption, Bitcoin is generally considered by governments as an asset, rather than a currency. In most cases, you don’t pay tax on income via Bitcoin until you convert it to government-issued money such as the US dollar. This is for a few reasons beyond the scope of this article.
Because governments don’t usually treat Bitcoin as real money, this allows gamblers to wager it at online casinos which don’t require a gaming license in their state of residence. What’s more is some countries forbid its citizens from gambling online. But because Bitcoin is not recognized as real money, players from restrictive countries can often still wager with Bitcoin online.
The Blockchain and Alternatives to Bitcoin
Bitcoin is the first and largest “cryptocurrency”, but there are many others such as Ethereum and Monero. There are thousands of others, although their value with respect to government currencies can drop to zero virtually overnight.
The technology that drives cryptocurrencies is the “blockchain”. It sounds complicated, but it’s simply a group of computers throughout the world that all share the same information, such as account balances and transaction details. When you send funds to another person, you broadcast transaction details to a few computers in the network. And those computers pass it to others. Each computer then checks your transaction is really from you, and that you have enough funds in your account. When enough computers confirm everything, the payment recipient’s account is credited with the amount you sent. While there are different technologies, this explanation is a crash course on how it works.
How the Blockchain Is Being Used By New Casinos
New casinos will soon be opening which use the blockchain directly to pay winnings. This means that whenever you win at these new online casinos, your winnings will be immediately deposited into your cryptocurrency account. But it wouldn’t be using Bitcoin because the transactions are far too slow. Generally a Bitcoin transaction takes about 2 hours to complete.
Casinos that use the blockchain to directly pay winnings are likely to be the next big thing in the online gaming industry. This is because there are so many unlicensed and rogue online casinos that routinely refuse payouts to players. Generally if the online casino is licensed in a regulated jurisdiction, like for example William Hill live roulette, then you are more assured of being paid winnings. But if the casino was new, or without any license, you wouldn’t know if you could trust them. That is unless they used a blockchain that paid winnings directly into your account.
Even larger and licensed online casinos often have bad reviews involving problems with payments. Most of the time payout refusals occur because the player accepted a deposit bonus, and attempted to cash out without making the minimum required wagers. This isn’t the casino’s fault. It’s the player’s fault because they didn’t read and understand the conditions of the bonus. In the case of bonuses, it isn’t so easy for the casino to pay players directly via the blockchain. This is because payment would not be due until the player meets certain wagering requirements.
Bitcoin vs Direct Blockchain Payments
A casino that allows you to bet and be paid in Bitcoin is not paying winnings directly to you. They are first allowing you to buy gambling credits that you play with. Then any winnings in casino credits are converted to Bitcoin. But this conversion is done manually by the casino staff. And for any reason they consider appropriate, the casino staff may refuse to send you payment. This is not a “trustless” system in the sense you still need to trust the casino to pay you winnings.
Direct blockchain payments are a very different thing because they are payments directly to your cryptocurrency account, without any intervention of the casino staff. However, you would still need to trust that the casino’s games and software are fair.
We are seeing the emergence of blockchain technology. It is already being used for a lot more than just digital payments. Because a blockchain network involves thousands of computers that nobody has full control over, it has many possible applications. But ultimately a blockchain is just a way to store unchangeable and un-hackable data across a network of many computers. So although blockchains will play a large role with online gambling, you still need to be sure the online casino uses fair gaming practices. A large part of this is playing only at casinos which operate with a license, and from a properly regulated jurisdiction.
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