Online casino operators are always looking to improve their services and offer more to their customers. One of the areas they’re constantly looking to improve is easier, faster, and more secure payment methods, which is why many casinos have begun looking at (or in some cases even offering) cryptocurrency payment options. But what is cryptocurrency? And what benefits does it offer to online casinos and their clientèle?
What are cryptocurrencies?
To understand what a cryptocurrency is, we first need to explore a technology that underpins it: the blockchain.
The blockchain is primarily used as a digital system of record-keeping, and is designed so that it’s very difficult to modify a piece of existing data. This is because, unlike traditional records that are stored in one place, blockchain records all changes, securing them using cryptographic techniques, and then duplicates and distributes the data across peer-to-peer networks. This means criminals can’t just change one entry if they want to manipulate the records: multiple copies of the records exist at any time, and data is compared between them to keep them accurate. This “distributed ledger” system makes blockchain an excellent way to accurately track transactions.
What do cryptocurrencies have to do with the blockchain?
Cryptocurrencies are digital or virtual currencies that use blockchain technology. Due to the cryptographic techniques used to secure the data in the blockchain, and the fact there are multiple records, blockchain allows for better control of additional currency, as well as identifying who a single unit of currency belongs to.
Cryptocurrency can be purchased from cryptocurrency exchanges, or “mined”. Cryptocurrency “mining” refers to the process of validating transactions on the blockchain, which “miners” receive cryptocurrency for doing. Basically, a miner helps maintain the blockchain network and the information on it, and gets cryptocurrency as payment for doing so.
There are many different cryptocurrencies which miners can receive. These include:
- Bitcoin (BTC)
- Ether (ETH)
- Ripple (XRP)
- Tether (USDT)
- Litecoin (LTC)
The benefits of cryptocurrencies for online casinos
We’ve already briefly touched on some of the benefits cryptocurrency offers; here’s a complete list of the reasons why many online casinos are interested in cryptocurrency:
- Increased security – If you’re a casino operator, cryptocurrency payments offer you much less risk because once payments are made, they cannot be undone. Credit cards, on the other hand, allow their owner to trigger a chargeback if they feel there was a problem or mistake with the transaction. As we mentioned earlier, blockchain also has fraud prevention built into it from the ground up, making cryptocurrencies a much safer option for payments.
- Faster payments – Where regular payment systems have a variety of checks and balances to ensure a payment is legitimate, and that the funds are correctly transferred between two parties, cryptocurrency payments are almost instantaneous owing to their use of peer-to-peer systems that automatically verify payments within their network.
- Easier international payments – Unlike regular currencies, which usually require a middleman to assist with international transfers, cryptocurrencies are truly global payment systems. If the company or business that you’re trading with accepts the currency, you can send cryptocurrency from one location to another without having to worry about international currency checks (except if your country has strict laws around cryptocurrency usage).
- No bank transaction fees – Financial institutions and organisations all have systems and employees which need money to maintain, which is why users and merchants are charged for making use of their services. Using cryptocurrencies takes banks and other middlemen out of the equation, eliminating the costs associated with these services.
- Greater anonymity – While a cryptocurrency wallet may be linked with specific transactions, it is generally not linked with a specific person. This means if you want to be discreet about your spending, you can be.
- No bank accounts required – As we’ve already touched on, all your cryptocurrency is stored in a virtual cryptocurrency wallet, not a bank account. This means you don’t have to worry about paying for a bank account.
- Some casinos do not require player accounts at all – Some casinos will accept cryptocurrency funds directly, eliminating the need for the player to create an account and verify their identity. Even more discreet!
The past relationship between cryptocurrencies and online casinos – it’s complicated
While you might think this new payment method would be quickly adopted by casinos around the world, that’s not been the case. The adoption of cryptocurrencies is affected by a number of factors, including support by online casino developers, local government regulations, and the volatility of the cryptocurrencies themselves.
In the early days of blockchain and cryptocurrency, governments were still playing catch-up but so were online casino platforms, which were unsure about the future of cryptocurrencies, and whether they should commit resources to adding cryptocurrency payment options.
Some individuals and organizations decided to take a chance and launched dedicated cryptocurrency casinos or casinos that would accept cryptocurrency payments, with the first gambling site accepting Bitcoin payments being an online poker site back in 2011.
Unfortunately for some players, these casinos sometimes operated in regions that didn’t have laws regarding cryptocurrency, or regarding cryptocurrency and gambling, meaning they operated in a grey area. Meanwhile, some regions have either put into effect strict cryptocurrency legislation or, like China, banned its use entirely, making operation of online casinos that accept cryptocurrency difficult if not outright illegal outside of certain countries. Thankfully for some operators, other countries – including the UK – took steps to offer licenses to cryptocurrency casinos, as long as they complied with gambling regulations.
The volatility of cryptocurrency is something online casinos have struggled to come to terms with as well. While all fiat (government-issued) currencies shift in value over time, they are still considered relatively stable compared to cryptocurrencies, which can see massive changes in value within short periods of time. This shifting value makes it difficult for casino operators to run, since a single unit of cryptocurrency might be worth $1 today, $10 two weeks later, and 50c two weeks after that.
The future of cryptocurrency and online gambling
Some may say cryptocurrency is the future of online gambling, while others believe it has no place in the future of online casinos. For most of us, this only makes the future of cryptocurrency and online gambling one thing: uncertain. Some governments have taken steps to completely ban the use of absolutely any cryptocurrency, some have begun to legalize it, while others have been slow to even acknowledge its existence.
At the end of the day, the only thing we know for sure is that cryptocurrency’s future in online gambling is a roll of the dice.
A variety of payment options when you play at BetMGM
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