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Introduction to Bitcoin for online casinos
Real money can now be easily converted to Bitcoin or any other cryptocurrency for the benefit of many players and online casinos
The advent of cryptocurrencies has been a huge benefit to online casinos and players alike. The most well known of cryptocurrencies, Bitcoin, has taken the world by storm offering so many advantages over other forms of transactional processing of monies.
Arguably the beginnings of Bitcoin was to remove the middleman, remove the control and monopoly that the middleman has over the flow of monies, and to return this control to the end user.
All too often banks have been charging excessive fees, performing a poor quality of service, whilst not being held accountable for the poor risk management that they have, case in point the Global Financial Crisis (GFC) in 2007 to 2009. For that matter, Bitcoin began in mysterious circumstances but has proven to work with its blockchain technology. The blockchain technology uses a double ledger system that is made public in order to maintain an audit trail.
As the Bitcoin is transferred from one owner to another a block is attached to the end of the chain and the chain becomes longer and longer, thus the naming convention “blockchain”.
With this technology, the middle men “banks” are no longer needed. Verification and authenticity is found within the blockchain producing incredible efficiencies. Third party intervention cannot occur whereby extra bitcoins are unfairly created to flood the market and transfer wealth to the market manipulators.
At first the creation of bitcoin was seen as a gimmick. The value did not grow and was relatively flat. However, as it became more prevalent and people began to realise the benefits the value of bitcoin skyrocketed.
The value of Bitcoin has seen a roller coaster ride which is normal for all phases of new inventions. The easiest comparison to make is the dot com boom in 2000, in which companies were excessively valued against their profit to earnings (PE) ratio. Whilst the dot com boom did bust, there are companies that survived! You might have heard of them: Facebook, Google, and Amazon. Bitcoin has stabilized and although there are many naysayers, I believe Bitcoin is here to stay whilst other smaller cryptocurrencies will gradually become obsolete and die away. This usually happens after a new form of technology has been created and survival of the fittest takes place.
Bitcoin and Online Casinos
When bitcoin was first created there was a slow uptake of its use. It then became more widely used when the advantages of bitcoin became understood. Now many online casinos offer to accept and paying out in bitcoin. This is not only an advantage to them, as they can avoid a lot of administration overlays but an advantage to you too.
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Advantages of Bitcoin
The benefits of using Bitcoin is not only found with the player but with the online casino. First up Bitcoin offers anonymity and safety whilst other forms of currency do not. If a player is concerned about their country’s or locality’s nebulous laws and governance, Bitcoin offers that comfort of being protected against big brother. This is possible to do because personal information is not required for linking Bitcoin to a user’s personal information. That is, integrity of the transaction, does not require a person’s name, address, date of birth etc. This is an amazing feat in the use of blockchain technology, which no fiat currency can copy. As such, Bitcoin is not regulated and cannot be manipulated by any government or organization. Hence using Bitcoin to play online casinos protects the identity of the player and the intrusion of governments.
Secondly, there are no absurd transactions fees or charges because there is no middleman! Intermediaries which purport to be offering a level of service commiserate to the fee they charge angers the public. Too often in the media, intermediaries themselves have been disclosed as overcharging banking customers and generating large profits. Transacting with Bitcoin is for free. Everyone and anyone is allowed to use it without charge. Compare this to a credit card transaction which has a range of between 5% to 10% in transaction fees. For 1,000USD, you end up with $900USD deposit using a credit card whilst with Bitcoin you have an extra 100USD worth of Bitcoin play money as there are no fees!
I must point out though there is one downside and that is the fee charged on converting fiat currency to bitcoin. Just like a foreign currency exchange, to convert hard currency to bitcoin you will need to go to an exchange facility which wil charge a fee. This fee may range between 0.25% to 6.0%.
Lastly, it is by far a much more efficient transacting process. The comparison of processing a Bitcoin transaction with a credit card transaction is like day and night. A Bitcoin transaction for withdrawing a player’s money can be as fast as 15 minutes. When compared to credit card withdrawals which could be weeks or even months! That’s right, this is a huge difference between the two forms of transacting, and it’s not because the online casino wants to delay processing for credit cards. It is because there is more red tape, more forms to be completed, more boxes to be checked and completed for credit card transactions. Bitcoin doesn’t have the same administrative burden that other forms of fiat currency have.
Six easy steps for using Bitcoin for online casino
“But it is all too hard!” I hear you say. In fact, it’s not. It’s quite easy and it doesn’t take too long to get started. The added benefit you get in using bitcoin for online casinos far outweighs the negatives. So what are you waiting for, give it a try!
Step 1: Convert to Bitcoin
The first step is to exchange your hard currency into bitcoin. Go to Coinbase or any other Bitcoin exchange and open an account.
Take note that there may be fees involved for the exchange (currently at 4%). A Bitcoin exchange is the same as a foreign currency exchange company in that it is matching buyers with sellers. The exchange operator may charge a commission or an administrator fee.
The exchange will ask for personal information, however this information will not be disclosed when transacting with the online casino. More on that later as to why. Please do not be concerned with providing personal information to the Bitcoin exchange as this is perfectly legitimate and is often required by the exchange operator as part of their risk and compliance measures.
The exchange will advise you of an exchange rate and will match you with a seller of bitcoin.
Once you are happy with the exchange rate, your hard currency will be exchanged with bitcoin. It take approximately 2 to 3 days before the bitcoin will be available in your Coinbase eWallet. Congratulations! You now have bitcoin, which Coinbase (or the exchange that you have used) has deposited onto your Coinbase eWallet. (We talk more about eWallets later)
Step 2: Obtain an eWallet
Now you could start transacting in bitcoin direct from Coinbase eWallet, but if you did that your personal details would be disclosed. So you need an eWallet (your own non Coinbase one)to overcome this.
Also Coinbase and other Bitcoin exchanges do NOT allow transactions with online casino’s directly. Your account and your Coinbase eWallet will be suspended if you sent bitcoin direct from your coinbase ewallet to an online casino. Therefore an eWallet of your own is necessary, as you will need to move the bitcoin out of the Coinbase eWallet and into your own eWallet.
There are many places to obtain an eWallet, and there are many types. I recommend an eWallet which is for free via Electrum. It’s safe and secure and quick and easy to open.
So what is an eWallet? As the name suggests its a digital storage to hold your bitcoin. Same as a physical wallet or purse to hold hard currency. A digital wallet is needed for bitcoin. And the same as hard currency in your physical wallet there is no personal ID attached.
Step 3: Transfer the Bitcoin from the Bitcoin Exchange (Coinbase eWallet) to the eWallet (Electrum)
The Electrum eWallet has a Receiving Address. The Receiving Address is to be used on the Coinbase eWallet.
On the Coinbase eWallet you will find a Senders Address section. Enter in this section the Receiving Address that was found on the Electrum eWallet.
Make sure that the Sending Address is the same as the Receiving Address in the Coinbase eWallet and Electrum eWallet. If the wrong address is used, the Bitcoin could be sent to the wrong account! Once you are sure, click send. Congratulations! You have more completed a transfer.
Step 4: Deposit – Transaction from the eWallet to the online casino
Now you are ready to send from your Electrum eWallet Bitcoin to the online casino.
Using the Receiving Address that the online casino provides, enter this on the Senders Address on the Electrum eWallet.
This transaction is not from the Coinbase account (or Bitcoin exchange account) and therefore no personal information is exchanged in this transaction with the online casino. You are using the Electrum eWallet to send to the eWallet of the online casino.
When complete, you are now ready to play online!
Step 5: Withdraw – Transact from online casino to eWallet
This step is for when you have completed playing online and you want to cash out.
Using the Receiving Address that is found on your Electrum eWallet, enter this on the Senders Address on the online casino eWallet.
And click send.
The bitcoin is now deposited into your Electrum eWallet.
Step 6: Convert Bitcoin to hard currency
If you want to convert the bitcoin to hard currency, the bitcoin will need to be sent back to the Coinbase eWallet and then converted.
To do this simply use the Receiver Address being entered on the Senders Address process that has been used in all of the previous steps.
Then exchange the bitcoin on Coinbase to hard currency.
Again a small administration fee may be charged, and 2 to 3 days may be required before the hard currency is deposited into your bank account.
Summary
The use of Bitcoin, or any cryptocurrency for that matter, has many advantages and it is quite simple to follow. The advantages, although mentioned are only three, but it is the significance of each individual advantage which is paramount and valuable. The process to follow is a simple and with the use of Bitcoin becoming more commonly used, you will find that you probably won’t need to convert Bitcoin to fiat currency in the future. Feel free to use other forms of cryptocurrencies. They will also offer the same advantages as bitcoin but I feel that it is not as liquid.
Frequently Asked Questions
Question: Why do I need to use bitcoin if the rules and regulations in my country are clear and there is a strong governance and framework in place?
Answer: You don’t have to use bitcoin, however if there is any doubt as to the legality and you want to play on an online casino then it would be prudent to use bitcoin. Bitcoin provides that extra layer of privacy protection that no other form of payment method can offer at this point in time.
Using bitcoin is also faster than transacting via other methods.
Question: Is using bitcoin truly anonymous?
Answer: Yes it is. As long as you are sending bitcoin from an eWallet that is NOT held on a digital exchange then your personal details will not be revealed. Keep your digital exchange ewallet for exchanging bitcoin for hard currency and vice versa not for sending to and from online casinos.
Question: What is Coinbase? And besides Coinbase can I use something else?
Answer: Coinbase is similar to a foreign currency exchange except instead of foreign currency it deals with digital currency and with hard currency. It therefore matches buyers and sellers of cryptocurrencies such as bitcoin with each other. In return for matching buyers and sellers they charge an administration fee of 4%. This fee is relatively high when compared to other exchanges however coinbase is one of the most trustworthy and secure digital exchanges.
In addition to matching buyers and sellers, Coinbase has the ability to store the money for you on a Coinbase eWallet. By using a Coinbase eWallet you can easily transact with others with cryptocurrency. The disadvantage of using a Coinbase eWallet is that your personal details are recorded and attached to the eWallet so you will not be anonymous on the transaction.
Coinbase is one of the largest exchanges, having facilitated over $60 billion worth of transactions and over 11 million customers.
Yes, you can use other exchanges to acquire or sell bitcoin, however we strongly recommend Coinbase due to it being tried and tested with many users who have provided good reviews. Their platform is user friendly, they exchange in many digital currencies, they have a high liquid base. They are also one of the most secure and trustworthy exchanges. Having said that, it is always wise to move your digital currencies to your own eWallet. Never leave it on theirs as an exchange is what hackers will most likely target. (A bit like robbing from a bank). So use coinbase to exchange but not to transact.
Question: Why not use Ethereum or any other cryptocurrency?
Answer: By all means you can use other cryptocurrencies. However it may be more difficult to find an online casino to accept that particular cryptocurrency, and the exchanges may not be as liquid as bitcoin. The higher the liquidity the easier it is to find buyers and sellers and a more stable value. Less liquidity can produce higher volatility and may incur a higher administration fee on exchange.
Question: How safe is bitcoin? Can it be forged?
Answer: Unlike hard currency, bitcoin cannot be forged. It is impossible to create fake bitcoins and inject it into the pool of existing bitcoin. The pool of existing bitcoin can grow through the process of “mining”. This process involves using complex algorithms to solve puzzles, if you will, to create a new “block” on the blockchain. The addition of a new block creates a new bitcoin. The amount of time and energy is not insignificant and this was deliberately structured in this way legitimately to not thin rapidly the value of existing bitcoin. Bitcoin is therefore impossible to forge or to create fakes. And it is also extremely safe if you use a secure eWallet. If you have bought bitcoin, I strongly recommend not leaving it on an eWallet that is operated by an exchange as there is a possibility that it could be hacked.
Question: Can my bitcoin be stolen?
Answer: Highly unlikely. However if someone were to gain access to your eWallet it could be stolen. As with a normal hard currency wallet, should anyone obtain the keys to unlocking your wallet they could steal it. Having said that, if your eWallet is an external drive (or even on a piece of paper with a bar code!) the perpetrator will need to somehow get their hands on your eWallet, which would be extremely difficult! If your eWallet is connected to the internet then the chance is slightly higher as anything on the internet could be hacked, but again the odds are extremely low especially if the eWallet is not operated by a digital cryptocurrency exchange.
Question: Is gambling with bitcoin the same experience as gambling with fiat currency?
Answer: Yes. The experience is very much the same. You will have minimum bitcoin bets as with any other currency and you can adjust the amount you wish to place a bet with. There is no difference in the experience of playing online casinos with bitcoins or USD or Euros etc.
Question: Is bitcoin better than other cryptocurrencies?
Answer: in my personal opinion, bitcoin has more advantages than other cryptocurrencies. The question could be posed as “is US dollars better than Euros?” Each has its own mechanism in place to value the currency, each has a certain amount of liquidity and supply and demand. My preference is bitcoin because it is currently the most liquid, it is the most likely cryptocurrency to become the one and only cryptocurrency to use, it is arguably the most stable when compared to other cryptocurrencies. You may find that you prefer using other cryptocurrencies. I’m not sure why, unless you were speculating that they would rise in value quicker than bitcoin.
Question: Am I exposed to fluctuations if I use Bitcoin?
Answer: yes you are. But with any currency you will be exposed to fluctuations. The USD can go up and it can go down. The EURO like wise, etc, etc. The more important question to ask is, will bitcoin become common in daily use and therefore remove the need to convert to the local fiat currency. If this were to take place then conversion of bitcoin would not be required.
Question: How volatile is Bitcoin?
Answer: The value of Bitcoin reached its peak of 20,000 USD in January 2018, and since then has traded between 6,000 USD to 8,000 USD. The boom has past, and the value has stabilized. There were predictions that the value would again increase to 20,000 USD however I believe this would take some time as the are less speculators now than back in January 2018. Having less speculators is a good thing as it brings stability to those are using it to real transactional purposes such as online casinos.