How to gamble with Bitcoin?
In the early days of Bitcoin, about 50% of its transactions were wagering by gamblers and win payments by online casinos. To the majority of those who bet over the internet, the cryptocurrency was the best thing ever to happen to online gambling.
That is since InterCasino and GamingClub, the two forerunners in online betting, opened in the middle of the 1990s. Indeed, there are many reasons why Bitcoin and online gambling is the perfect match. And all of them point to the fact that the former was built for the internet and fiat currency was not.
It is true that fiat money for many years served the brick and mortar casinos well. When the blackjack, craps or roulette on the internet came along, it continued to provide the same service, but this time round it was through credit cards and other online payment methods such as PayPal and Skrill.
Limitations of fiat currency
However, a few things had to change and the following shortcomings arose as a result:
- Use of the new methods of payment required the players to share critical personal information with both the credit card company and the online casino. This left them vulnerable to authorities, rogue elements in the casinos and even third party scammers.
- On their side, the casinos had to deal with the infamous chargeback feature. Players using their cards to wage and then turning round to disown the transactions has remained as one of the most common forms of cheating in online gambling.
- Due to lack of anonymity, players from jurisdictions that do not approve of gambling could not move money for such purposes. For instance, while it is not illegal to bet online in the United States, the Wire Act of 1961 prohibits financial institutions from facilitating transmission of money as payments for such purposes.
- Credit cards and other fiat online payment methods make the cost of online gambling high. This is because the money has to go through a channel with numerous players, with each of them needing to make a cut. Moreover, these fiat online payment methods do not facilitate micropayments, a feature that works well with online gambling.
The Bitcoin technology, by its nature, takes care of each of these issues and gives the online casinos all the qualities of the brick and mortar casino. But, what is Bitcoin?
The Bitcoin Technology
Bitcoin is a decentralized digital currency that a peer-to-peer network generates through a process known as mining. It is, therefore, not issued by a central bank, like the Dollar, Pound Sterling or Euro. The same P2P network is also responsible for facilitating all the transactions involving Bitcoin. These transactions are recorded on a public ledger known as the Blockchain, which is secured by cryptography.
In November 2008, a person or a group of people going by the name of Satoshi Nakamoto published a whitepaper online outlining the basic concepts of Bitcoin. The paper explained how cryptography, Proof of Work and the Blockchain could create a currency that was perfect for the internet. Satoshi went ahead to release the first Bitcoin client in January 2009 and mined the first fifty bitcoins, which are referred to as the Genesis Block. Since the Bitcoin client software is open source, many other developers have joined the project ever since.
In 2011 Satoshi left the project. Even though the identity of this person remains a mystery, the technology s/he or they left behind has convinced almost everyone who has taken the time to study it that it is viable and secure. Indeed, what makes Bitcoin valuable is the cryptography that secures it and the hashing power required to mine new bitcoins.
The term Bitcoin, with capital B, is used to describe the system and bitcoin, with a small b the coin units.
However, you can also download and install a wallet app on your desktop or smartphone. For even better security, you could generate your own wallet, which does not rely on any centralized service provider, using sites like Bitaddress.org.
Your wallet contains your Bitcoin public addresses and the corresponding private keys. Think of the private keys as the password that you will use to authorize the movement of funds from your wallet.