Will Bitcoins revolutionize the Online Gambling Industry?


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Over the past few years, we've seen several national governments - most notably the United States - attempt to limit, restrict and even shut down online gambling. Behind the banner of protecting citizens from blowing their money on gaming, these governments are really trying to restrict any industry which they cannot control and earn tax revenue from. And this mission infringes upon the freedoms of people around the world.

This is where Bitcoin comes into the picture. Bitcoin is a virtual currency that isn't backed by a central government or bank and is worth what the market determines. These virtual tokens can be used to purchase online services and goods wherever they're accepted.

Due to the growing popularity of bitcoins, a large number of online poker rooms and gambling sites are accepting the currency. What's more is that federal governments are unable to regulate bitcoins because they are traded anonymously under the company founder's name, Satoshi Nakamoto. Going further, governments would have trouble tracking these currency units since they don't go through a bank or payment processor like PayPal or NETeller. But despite all of the positives, Bitcoin does have some potential problems, which we'll discuss below.

Real Concerns

The biggest problem with Bitcoin is a safety issue. It's a virtual currency that's based on "unhackable cryptography," and the key is that bitcoins remain unhackable. This isn't the United States' Fort Knox, where hundreds of armed guards protect gold on a daily basis. Instead, bitcoins are intangible cyber assets that are protected by computer geeks and programs. If somebody tries to hack bitcoins, they're not going to be shot at and attacked - just prosecuted....assuming they're even caught.

Another drawback to bitcoins is that they exist as a file on your computer, and if the file is deleted or lost, so too is your money. This is a far different circumstance from payment processors like NETeller and PayPal as well as banks because your money can't theoretically be lost. Plus many people are uncomfortable with buying into a currency that's not backed by any precious metal or physical commodity.

Do the Benefits outweigh the Negatives?

Despite the concerns associated with Bitcoin, it appears that much of the online gambling community is willing to invest in the currency. Sure hacking and lost money is a concern, but this comes with the territory in online gaming. In fact, Bitcoin might be even more safe for online poker and casino players when you look back at Full Tilt Poker.

Full Tilt dealt with banks and payment processors, which were easy for the US government to investigate prior to Black Friday. But with Bitcoin, casino and poker sites are less likely to run into trouble with governments because transactions can't be traced. Taking anonymity into account, bitcoins are only going to become more prevalent in the gaming world over the next few years.