What is Bitcoin?
Bitcoin (or BTC) is a decentralized virtual currency which is traded in much the same way as stocks, bonds or money but a eWallet that accepts Bitcoins are necessary to store them in. According to Bitcoin.org, no one single person, company or government owns Bitcoin. It requires the public to use Bitcoin to keep the currency moving, the more in demand it is, the higher the value it has. One of the main attractions Bitcoin has had is its supposed anonymity enabling the user to buy, sell and purchase items without it going through any banks or other financial institution.
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Bitcoin was little known when it first started in 2008 but soon began to be adopted in an ever widening circle. In 2011, it began to be reported on more and more in the mainstream press. Since then some of the major global and international companies to use Bitcoin are, Dell, Overstock and Microsoft.
The adoption and use of Bitcoin by some companies around the world has however, caused governments to take note of this form of currency. In August 2013, Germany’s Ministry of Finance declared Bitcoin as a ’Unit of Account’ which can be used for private transactions. This has enabled Germany to tax users of the new currency. In December, 2013 China banned all banks and other financial institutes from dealing with any Bitcoin currency, later citing transparency, security, solvency and false claims over trading volumes as a reason for the ban. This made it impossible for residents to transfer their virtual money into real money and caused the value of Bitcoin to drop rapidly. The UK and the EU have also recognised Bitcoin as a form of currency. Other countries have either followed suit or are mulling over how to regulate Bitcoin. In the US however, it is not recognized as a currency but as a taxable commodity, with an IRS guidance on how to report any Bitcoin usage on tax income forms. For more information on the business world search forbes website.
Buying Bitcoins for the first time instead of using traditional currencies can seem daunting but it is easy to do. There are many methods but the simplest and most straightforward way is to purchase your Bitcoins at an online exchange or broker. At an exchange a buyer and a seller are matched together whilst a broker has a supply that they sell direct to the purchaser for a fixed price. The Bitcoins are then transferred through Bitcoin addresses (which work similarly to an email but with a series of numbers for the address), which can take anywhere from 10mins to a few hours. Once received you will need to move the Bitcoin to your eWallet ready for use.
So, quite simply put Bitcoin is:
•A virtual currency that is stored within a eWallet.
•Bitcoins have a decentralized value that fluctuates according to use and demand.
•Transactions in Bitcoins are broadcast within seconds and generally verified within an hour.
•Transactions cannot be reversed once made.
•Bitcoin transactions in the majority of cases carry no charges or fees.
For more in-depth information read Wikipedia’s site on Bitcoin.
Online poker sites have become more and more popular and with the advent of Bitcoin making it possible for those in countries that prohibit online gambling to play. The ways to play online poker with Bitcoin can be separated into three main choices, Bitcoin only poker sites, online casinos that accept Bitcoin and sites that accept Bitcoin through Neteller. But what are the differences between traditional online casino’s that accept Bitcoin and the newer casino’s that will only accept Bitcoin as a form of currency?
Bitcoin Poker Sites
Due to the fact that Bitcoin is anonymous, unregulated and transfers are more or less instant, online casinos have recognised its great potential and the number of offshore, Bitcoin only poker sites are increasing.
The costs incurred for a Bitcoin only poker room besides the software are minimal and this is represented in better rakes per hand and other incentives such as bonuses or rewards that are passed onto the players. The costs of transferring funds and withdrawing funds are also free for players compared to non-Bitcoin only casinos where these transactions may incur a fee,
The other advantage that these casinos have is the anonymity, often requiring no proof of id or email address from its users, meaning that those from countries where gambling is prohibited can play. It also means that withdrawals are actioned much faster than in other casinos where documentation may be requested. The disadvantage of this anonymity is that Bitcoin poker sites could be vulnerable to collusion and other player security issues.
The games available at Bitcoin Casinos are more or less the same as those offered at traditional casinos such as poker, roulette, slots and dice.
Some of the bigger Bitcoin only sites are: PokerStars, SWC Poker, Betcoin Casino and Bitcasino.
Pros of Bitcoin in Online Poker
•Transferring money to and from your online casino accounts
The requirements are much the same as with other traditional forms of payments and you will still need an eWallet to use Bitcoin but withdrawing money tends to be much simpler and faster with Bitcoin.
Unlike other casinos which requires a certain amount of personal player information and may restrict or not accept players from certain countries due to laws, the majority of Bitcoin casinos allow players to register with just a username and password. This could be classed as an advantage, depending on where you live or as a disadvantage and a potential pitfall.
•US players are able to use them.
Due to the fact that Bitcoin isn’t recognized as an official currency so long as the state where a player lives doesn’t have its own laws making it illegal to participate in an online poker site these players can play without fear
•The Opportunity for a bigger return on their investment
Not only can players win on the tables but they also stand a chance to make a profit when cashing in their Bitcoins to real currency depending on the current trading price.
•Better Rakeback for players
Due to the lower costs incurred with a Bitcoin only casino, players often receive a higher rakeback than at more conventional casinos.
Disadvantages of Bitcoin in Online Poker
Where there are advantages there are always disadvantages to be considered. Here are some of the top disadvantages to take into consideration when playing with Bitcoin.
•Bitcoin only casinos are unregulated offshore sites.
With no regulatory body overseeing these sites, their promise that funds are kept segregated cannot be validated, meaning that a players Bitcoins could potentially be at risk. The sites will strive to convince and prove conclusively that its games are randomized and fair but again without a separate regulatory board this cannot neither be proven or disproven.
There is also, though not an as yet high risk that the government might try to take action against an online casino accepting players, playing in a state where gambling online is banned. Though, this would be a more difficult task for the US government it has interfered with online gaming transactions before.
•The fluctuating value of the Bitcoin
The value of the Bitcoin can as easily drop as rise. Unlike convention currency such as the Euro, Dollar, or Pound the Bitcoin has a commodity value much like oil, gold or wheat and can have large increases and decreases in its value from hour to hour depending on global events.
•The use of Bitcoins is not Anonymous
Although it may be possible to register anonymously at a Bitcoin poker site the use of Bitcoins can be traced back in a block chain to the financial exchange to a person’s account.
•Bitcoin is not a legalised form of currency and does not have the backing of banks.
This means that should the Bitcoin industry stop working there would be no safety net for its users in the way that other financial institutions receive governmental help if they run into financial difficulty. On the plus side of course due to the fact that it is not backed by governments its rate is also not manipulated by these institutions.
•Bitcoin is an online Virtual Currency and therefore susceptible to cyberattacks.
Although the programming behind Bitcoins is sophisticated so are cyber-thief’s. In 2013 the UKs Crime Agency reported that currency user’s emails were being hacked and that they were receiving spam messages demanding a ransom of two Bitcoins to fix the virus. There has also been a case of a European Bitcoin payment processor losing $1 million after a cyber-attack.
•All transactions are final
With traditional banking methods it is possible to dispute a charge if it appears fraudulent, with Bitcoin all transactions are irreversible, even if made fraudulently.
Differences between a regular poker site and a bitcoin poker site
There are few differences between a regular poker site and a Bitcoin Poker site but here are a few of the more noticeable differences:
•Some of the smaller Bitcoin casinos may not offer the same range of choice in the variety of games available.
•Many Bitcoin casinos have not used the better known providers such as Playtech or Betsoff for their games opting instead to create their own games or acquire them from lesser known sources.
•Bitcoin casinos only offer Bitcoins as a form of currency compared to regular casinos which have a range of payment options.
Playing poker is a game of chance and for many the use of Bitcoins is the same. Hard gamblers may consider the chances of making higher profits at a Bitcoin Casino to inviting to miss and then the second chance of making a profit when selling their Bitcoins to be too much of a lure.
For others the game of chance with Bitcoin may be too much, preferring to stick to the more traditional regulated casinos.
Either way the use of Bitcoin has increased phenomenally over the past few years, with gambling being one of the most common uses for Bitcoin expenditure.