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A decade ago cryptocurrency was almost unheard of, as a newly developed method of payment it was only really utilised by the most tech savvy internet users or sometimes by people making illegitimate purchases on the dark web.
However, in recent years cryptocurrency has taken the world by storm, quickly becoming noticed and utilised by businesses and consumers from around the globe. The opportunity to make secure, anonymous transactions quickly and with much lower fees has gained interest from many companies, particularly those in the online gambling industry.
But what is cryptocurrency and why are so many online gambling sites adopting it as a new payment method?
Cryptocurrency: The basics
Put simply, cryptocurrency is digital money that is transferred from person to person electronically. Cryptocurrency is decentralised and runs on a network of computers that verify each transaction, unlike other currencies that are secured by third parties such as banks. While regular currencies are managed and controlled by the government, cryptocurrency is run by computers using open source code.
The first and most well-known cryptocurrency is Bitcoin. First developed by Satoshi Nakamoto and released in 2009.
Nakamoto achieved what many inventors had failed at in the late 1990’s and early 2000’s by creating a digital cash system that actually worked. While previous attempts had focused on developing a centralised authority, Nakamoto’s design worked without servers and central systems and allowed anonymous transactions to be made around the globe.
Cryptocurrencies like Bitcoin operate on something called a blockchain. The blockchain is a list of transactions that record every time someone has sent or received that currency. Blockchain is a fundamental part of the process as it allows payments to be made securely and without the need of a third-party verifier. This type of currency is now legal to send, receive, buy and sell in many countries, including the UK, US, Australia and most parts of Europe.
With the potential to be one of the cheapest, easiest and fastest ways of transferring value between parties, more and more businesses are beginning to accept cryptocurrency as a payment method.
Many gambling sites are beginning to embrace it as a new payment offering
With a gross gambling yield of over £5.3 billion, the UK online gambling market is huge and highly competitive. In order to stand out from the crowd, retain customers and achieve growth, many gambling outlets are not only expanding their choice of live online casino games but also the number of payment methods that they will accept from customers.
While there are some casinos that deal solely in cryptocurrency, many popular online Ethereum casinos that have been operating for years are offering it as a payment choice alongside their usual payment methods.
What is so great about cryptocurrency?
One major advantage of accepting cryptocurrency for online casinos and gambling sites is security. Customers can feel reassured with the knowledge that their personal information is anonymous and secure and that their details are impenetrable through the blockchain and remain encrypted.
Usually one risk for online bitcoin casinos is becoming a victim of credit card fraud, however using currencies like bitcoin completely removes this risk. Many customers also feel comforted by the fact that they provide less personal information to the casino than they would if the transaction was to go through a central third party. This is particularly beneficial for customers who are new to a website and therefore have less trust in it.
Customers also fear that banks will look into their transactions when deciding whether or not they are eligible for loan products, and that numerous transactions from gambling sites could lead them to being less eligible. Whether or not this is a real risk, by using cryptocurrency users can eliminate this fear and keep transactions confidential.
Another benefit of using cryptocurrency other more traditional payment methods is that fees are usually much, much lower.
Operators sometimes pay as much as 5% of their revenue in fees to banks for transactions that go through them. However, with cryptocurrency the transaction is made directly between the operator and the customer and therefore fees are significantly lower.
Also, as a global currency it does not require currency conversion, something which many banks tend to implement additional hefty charges for.
Not only this but the transaction process is extremely streamlined in comparison to a bank’s, meaning that they can be processed within a much faster timeframe, whereas many traditional methods can take days to transfer from one party to the other.
Transactions using cryptocurrency are usually hassle free and will not take longer if they are international, whereas international payments through banks can sometimes involve lengthy processes.
But, of course, there are some risks to consider…
One risk for online casinos is that scams can still occur, with the most popular one being called the double spend. Double spending is when the user makes multiple transactions in quick succession, knowing that they do not have enough to pay for all of them.
In this instance, if two transactions were made and entered the transaction pool for validation around the same time, the transaction that cleared first would receive the funds, and if there is an insufficient amount in the currency wallet, the second transaction would be invalid, and no funds would be received.
Another risk to consider for users of cryptocurrency is the rate at which the value of the currency tends to fluctuate. The value of the currency may fall significantly after you have purchased it and therefore could leave you out of pocket. Obviously, on the flip-side of this, the value could also rise and give you great returns.
Many online gambling sites are beginning to realise the potential benefits of offering cryptocurrency as a payment method, and are using this technology as a way to stay
Many online gambling sites are beginning to realise the potential benefits of offering cryptocurrency as a payment method, and are using this technology as a way to stay competitive and stand out from other online casinos. Before purchasing cryptocurrency, users should always do research to ensure they understand the process and ensure that they only buy from legitimate websites.
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