We recently ran a series of articles outlining the various payment methods that the most reputable online casinos use for both withdrawals and deposits, which we hope you found helpful.
Naturally due to the sheer volume of payment methods (for instance at the time of writing, one casino, Vera&John played host to at least 15 different ways of paying) we couldn’t cover them all.
Whilst this short piece isn’t really an effort to redress that balance either, as it’s beyond the scope of our site to do so, we’re going to shed a bit more light on the situation surrounding Bitcoin. Since Bitcoin has seemed never to be far from the news, players are naturally going to ask us what the state of play is on this payment method, not least with recent developments surrounding the Mt. Gox exchange.
Anybody Still Not Heard of Bitcoin?
On the offchance that any readers have been castaway on a desert island the last year or 2, here’s a brief description of what bitcoins actually are, in layman’s terms.
First things first, Bitcoin with a large ‘B’ refers to the software and technologies used in producing bitcoins (with a small ‘b’) which means the actual currency itself. We will refer to the latter in this item.
In short, bitcoins are totally different from other methods of payment, even though they are transacted online just as credit and debit card payments, Neteller and the others.
Where they differ really is how the value is sourced. Whilst the other payment methods are in a ‘real’ national currency like Euros or Dollars, bitcoins are THEMSELVES a currency.
The currency is generated using some very complex and sophisticated open source technology maintained by ‘geeks’ all over the world, who ‘mine’ the bitcoins using their own hardware and are rewarded with payment, often in bitcoins themselves.
The bitcoins can be held in wallets, amongst other methods, which can often include physical paper wallets, and are completed when a private ‘key’ is matched with the corresponding public ‘key’.
Is it a Real Currency?
A crypto-currency would be a more accurate description. Since the bitcoin is neither backed by anything of intrinsic value nor subject to banking regulations of any specific country, it is not ‘real’ in that sense, however its widely-varying degrees of acceptance in different parts of the world mean that it acts just like a currency.
For instance there are tens of thousands of online businesses now taking bitcoins for payment, and even bricks and mortar businesses, such as at least one café in the Netherlands which accept bitcoins too.
But We’re Only Interested in Bitcoins for Gaming?
Fair point — let’s get to the nuts and bolts of bitcoins and their relationship to the gaming sector.
Well, as with the sector in general, the status of bitcoin payments to online casinos is in a state of flux.
For instance, the US, whilst perhaps more receptive to bitcoin in general, the relationship is disrupted by hostility to gaming online, whereas the situation is somewhat the reverse in much of Europe.
Are There Any Clouds on the Horizon?
Certainly. As noted, bitcoin is still settling down and may yet prove to be a white elephant.
One major issue is its volatility. Whereas bitcoin peaked at just US $32 in 2011, 2013 saw it reach a historical high of around US$900, whereas at the time of writing its value is a little over US $500 (please note that you can find different bitcoin prices depending on which market in bitcoins you are referring to).
The Mt. Gox exchange based in Tokyo, Japan was often used as a benchmark (see below).
In any event that’s a fair few ups and downs and it is this volatility, together with security concerns and use of bitcoins in illegal trade (we assume whatever the Dutch café was selling was legal in that jurisdiction!) which have caused online casinos to tread carefully just as much as other businesses in relation to bitcoins.
So Bitcoin Is Here to Stay?
Again we have to exercise caution. The prognosis looks quite fair — indeed gaming activities at one major online gambling provider in June 2013 accounted for between 25 and 50 per cent of TOTAL bitcoin transactions.
Most significant of all recent developments is that the formerly trusted Mt. Gox exchange in Tokyo, previously the largest-volume bitcoin exchange, requested bankruptcy protection under Japanese law (CEO Mark Karpeles had resigned, a few days before) following the revelations it had ‘lost’ around 750,000 customer bitcoins and about 100,000 of its own (together around 7% of the total number of bitcoins in the world) over the last few years.
This has clearly shaken up the market and of course had an influence on prices (by some estimates bitcoin fell to a little over the US $500 mark, though it’s rallied since then) and it’s too early to say how far-reaching the damage is.
But where there’s a will there’s a way, and bitcoin lends itself to flexible and global online gaming in a way that other payment methods do not necessarily provide. Certainly as much as a 50 per cent share in the bitcoin transaction levels for a particular month can hardly be ignored.
On the other hand the warning signals are also clear and present. Naturally if you bought your bitcoins at a low level in 2011 and are using them now to game you’ve seen a great deal of appreciation since then, thought it could be equally said that bitcoin speculation is itself something of a gamble!
In many ways the situation calls to mind that which faced the whole online gaming sector when it was in its infancy in the nineties and noughties — and as we know even now there are question marks concerning the legality of gaming online.
Actually it’s quite appropriate we mentioned Vera and John in our introduction, as they are one reputable online casino who are accepting bitcoin for payment. It will be interesting to see how quickly they are joined by their peers in the coming months.