The proliferation of online betting sites across the internet has been quite interesting to watch. It is surprising then that so few of these accept bitcoin as a banking solution.
Why would anyone expect an online gambling site to adopt bitcoin? Because it is both a cryptocurrency and a revolutionary idea. Let's face it, online gambling is considered a fringe business enterprise. There are as many people against it as there are for it. Cryptocurrencies are strikingly similar. They are on the fringe of the financial services world. In essence, both online gambling and bitcoin are aimed at similar audiences.
With all that said, there are growing numbers of casinos looking at bitcoin as a banking solution. The online gambling industry is slowly but surely warming up to the idea. That is a good thing for both players and online casino owners. In this post, we want to look at how online betting/gambling sites benefit from using bitcoin. We have identified five of them.
1. Instantaneous transactions
Processing a bank transfer takes time. Depending on location, a bank transfer could take days. In the meantime, the player is sitting around waiting to get started. Bitcoin changes that. Bitcoin transfers are nearly instantaneous in most cases. Transactions take a few minutes during heavy internet traffic times; they take just seconds during those times when traffic is light.
How does this benefit gambling site operators? It benefits them by getting players into the game more quickly. The reality is that gambling is a business that relies on impulse. If a credit card is not available, nothing kills a gambler's impulse faster than having to wait for a bank transfer to clear. If he or she can deposit bitcoin and start playing within seconds, then he/she will get to the slot machines or game tables faster.
Instantaneous transactions bring up another benefit that online casinos are just beginning to discover. That benefit is one of being able to offer pay-as-you-go deposits. Allow us to explain.
Standard operating procedures now require online gamblers to make a deposit through one form or another. Deposits are typically in fiat currency that is converted into credits that can be used to play. It works well enough, but it all takes time. It also requires gamblers to fund their accounts in advance of actually playing.
Bitcoin's near instantaneous transactions can, at least in theory, eliminate the need to pre-fund a gambler's account. By using something as simple as a QR code that can be scanned by the gambler's smartphone, an online casino could allow a player to begin playing without having to register or fund an account. Bets could be funded in real time using bitcoin.
This would make online gambling even more attractive to some players. It would be the online equivalent of walking up to a blackjack table at a land-based casino, placing a few bills on the table, and beginning play. It is instantaneous and anonymous.
2. Secure transactions
Online betting sites the world over have to be vigilant about security. In most jurisdictions, vigilant security is mandated by law. But even in jurisdictions where there are no security regulations in place, it just makes good business sense to make an online gambling site as secure as possible. This is another area where bitcoin can help.
One of the strongest assets bitcoin brings to the table is security. Just look at bitcoin's blockchain. Bitcoin transactions are added to the blockchain without any personal information attached. Buyers and sellers are represented by digital tokens assigned to their individual wallets. That makes the blockchain very secure. It also maintains buyer and seller anonymity.
Also consider the fact that once a transaction has been verified and added to the blockchain, it is irrevocable. This aspect of bitcoin makes fraud very difficult. But it gets even better. Transactions are not finalized until every node on the bitcoin network verifies them. That means every node has to agree that a transaction is legitimate before it can be finalized and added to the blockchain. This increases security even more.
From the betting site's perspective, accepting bitcoin means allowing players to play without having to collect critical banking information. Sites do not need bank account numbers, ID numbers, credit card information, etc. They don't even have to withdraw bitcoin funds from a player's wallet. Why? Because bitcoin operates on 'push' transactions rather than 'pull' transactions.
When a player makes a deposit with bitcoin, he/she is 'pushing' bitcoin from his/her wallet to the casino's wallet. Because the casino is not 'pulling' money from the player's account, the casino doesn't need any personal information from the player.
The long and short of all of this is that online betting sites collect less personal information from bitcoin players. That means less information they have to keep secure and less information that could potentially be hacked. Everyone is more safe and secure as a result.
3. Wider audience
Next, consider the impact of bitcoin on a site's audience. There are a number of countries around the world that restrict online gambling to one degree or another. In the least restrictive among them, sites are able to operate without a license as long as they accept only cryptocurrency banking solutions. Players can play without restriction as well.
In the most restrictive countries, both licensing and playing can be a challenge. But online betting sites can be hosted in other countries while players can still play using bitcoin and a virtual private network (VPN). The VPN allows players to log on to a site by rerouting traffic away from the restrictive country. Using bitcoin removes the banking restrictions. This creates a seamless transaction between player and casino owner without any government interference.
Some online casino owners might consider this a workaround and something they do not want to be a part of. That's fine. But they can still benefit from a wider audience in other ways. For example, consider online gamblers who don't have traditional bank accounts. Bitcoin is a fast and easy way to deposit for them.
Online gamblers may prefer bitcoin so as to not get involved with traditional payment methods. They do not want to use their bank accounts or credit cards; they do not want to sign up with an electronic payment system; they have no interest in an e-wallet system that requires purchasing vouchers through an ATM or retail outlet.
All these players want to gamble online, yet they don't want to use traditional funding methods. Bitcoin gives them access without requiring them to use a banking solution they are not comfortable with. This opens the door to more players from around the world.
4. No bank interference
Because online casinos are considered fringe business opportunities in many parts of the world, banks are often reluctant to work with site owners to find creative financial solutions. Cryptocurrencies like bitcoin completely remove banks from the equation. That means no bank interference for either deposits or withdrawals. It means no bank charges or fees, no bank rules to follow, and most importantly, the bank does not know what you are doing. It's none of their business how you use our own money, right?
5. Higher profit potential
This final benefit of using bitcoin only applies to site owners who understand the volatility of cryptocurrencies. As you might already know, the price of bitcoin can vary widely over the course of several days. Even hourly changes can be significant. The volatility of bitcoin is such that holders can lose a lot in a very short amount of time.
So how does this benefit online gambling site owners? It benefits them by offering them a higher profit potential. For this benefit to be valid though, site owners have to look at bitcoin as more than just a cryptocurrency. They also have to look at it as a security, similar to stocks and bonds.
The operator of an online betting site can sell bitcoin just as quickly as one of his/her customers. So let's say he/she accepts bitcoin transactions from a large number of players. All the bitcoin his/her site accepts goes directly into his/her digital wallet the same way fiat currency is transferred into his/her bank account. If this person is smart, he or she pays attention to the price of bitcoin on a daily basis.
In the event of a significant price increase, the smart casino owner can cash in some or all their bitcoin by selling it on the open market. Just like buying and selling stocks, he or she can generate a profit simply by selling when the price goes up. The price will inevitably go down later, so the person can buy back in at a lower price and start the process all over again.
Experts do not recommend doing this as a principal way of making money with an online betting site. Betting should still be the primary revenue generator. But if an online casino can make a little bit extra by using bitcoin as a security, there is nothing wrong with that.
It is likely that more online casinos will be getting on board with bitcoin in the near future. Bitcoin offers a lot of benefits that are hard to ignore. The only question is how long it will take before bitcoin becomes the most favored preferred solution for online gambling?