Bitcoins for dollars - sound risky? First of all, what is it? 'Bitcoins' is a term for a kind of digital dollar introduced as open source software by elusive developer and engineer Satoshi Nakamoto (or at least that's who we think it is but of which he denies).
Dealing in bitcoins, is it even more of a gamble than actual gambling itself? Most estimates state that more than half of global Bitcoin transactions are wagers on gambling sites – offshore, unregulated gambling sites. A scandal of a billion dollars being lost however in recent months to various people and companies however was a loss that came out of thin air and there was no spin or gamble button even pushed.
Put Bitcoins and online gambling together and does the whole world do a flippity-flop? Maybe yet lately even in the wake of all the recent high profile scandals being reported concerning Bitcoins, there are still others who remain hopeful of things continuing in the future for a few different reasons. It is said that mature and established business practices (audits, accountability, transparency, etc.) will be put into play by the next generation of Bitcoin exchanges which may mean Bitcoin may regain the credibility it's lost in recent days. Bitcoin has been plugging away since 2009 with relative ease, but now the developer of Bitcoin has declared bankruptcy after a billion dollars was lost because of hackers.
The US is considered 'bitcoin' friendly compared to other governments like China, many people are all for a digital currency but Bitcoin isn't going to be it now but it certainly had its run. The European Banking Authority, on the other hand, has warned that Bitcoin lacks consumer protection and can be stolen with charge backs impossible. Gambling services like Satoshidice.com (the most popular Bitcoin gambling site) and Just-Dice.com has handled more than $2 billion in wagers since it was founded in June 2013. This system has seen growth as fees are lower than the 2-3% typically imposed by credit card processors so what is it really then that sounds sketchy, all the parts put together, 'unregulated' 'trading dollars for bitcoins' 'online gambling' 'hackers' 'discrepancies in US laws'? Are the reasons for trading in Bitcoins as compelling for not doing so? Certainly after breaking headline news came out just recently about the now fall of Bitcoin, what can be said for things turning around, if ever?
The red flags from the start were with gambling and currency conversions, most of which happened largely on unregulated, websites set up on offshore servers, in places where officials are unaware it even exists. Regulators are having a difficult time keeping up with the growing Bitcoin to dollar switch, even Senator Tom Carper of Delaware who chaired last November's Homeland Security Committee admitted to the PBS News Hour that he'd only learned about Bitcoin six months before. Bitcoin gambling continues to grow and become more popular, meanwhile efforts to regulate have barely begun. Bitcoin makes gambling easy.
Companies however, like Satoshi Dice, in May of 2013 (whose servers are overseas) announced that they would begin blocking IP addresses from the United States as a “proactive measure” to minimize risk from U.S. Courts who are unclear about the definition of Internet gambling and Satoshi Dice isn't the only one. Many operators are spooked by the precariousness of the situation, but how precarious is it really and how will things change in the future. It's hard to say which way things will play out. Meanwhile, many ride the wave and many choose to get off but who's to say gambling is a societal ill when most gamblers, either online or in land-based casinos are not problematic gamblers but are responsible adult who just enjoy an occasional play or bet on either a game of chance or a game of skill? Is it a problem that needs to be regulated, is this phenomena something both players and non-players should be concerned about? Should people who care spend their time on thinking about these issues focus on more worthy concerns, all valid questions.
The biggest concern is once transactions are made, receiving back money for whatever reason is impossible. The transactions are irreversible. This is good news for gambling operators it eliminates the risk of charge-back fraud but for the players it means trusting operators who are unregulated and often anonymous. On the positive side for betters it means receiving winnings right away. It means no bank wires or deposits to wait on as Bitcoin itself is a payment processor. This phenomena is unheard of even for any billion dollar casinos in Vegas where this revolutionary exchange is not possible. In Las Vegas Casinos the house edge is 1.9 percent at Just-Dice, for example, whereas online it is only 1 percent.
The internet breaks down international boundaries and takes away the hassles of currency exchanges. So, is it such a bad thing then? Maybe it's just the idea of virtual money that scares people, the idea of trusting a company with no face and no forwarding address? Regulation is only a matter of time, or is it? Bitcoins have made gambling online internationally possible, increasing profit for operators and payouts for winners. Transactions are anonymous and transparent and merely go into a public ledger making betting fair and cheating impossible Bitcoins minimize risk. The Bitcoin mathematical algorithm makes it impossible for the house to cheat and the house edge is lower. Operators are also more easily able to skirt gambling laws that crack down on payment processing – laws that are ambiguous and unclear.
So what can be said about the bitcoin for the dollar, gambling online? Really it's just another issue, never black and white and always complicated, pros and cons to every side, but the way it looks with Bitcoins, there are more pros than cons except for in recent days. True, gambling is a risk, but it's only one in a million we take whether it's with Bitcoins, banks or the Stock Market. The question remains, to trade or not to trade? To bet on bitcoins or to trade them out?