Bitcoin

The global online gambling market was worth USD35.97 billion in 2014 and is estimated to reach USD66.59 billion by 2020.

Bitcoin (BTC) is attractive to gamblers. As a peer-to-peer, decentralized digital currency, BTC has the potential to reduce processing fees to almost zero and can be used anonymously worldwide without the need of a daily currency conversion rate. As of April 22, 2017 one Bitcoin (BTC) is worth USD1049/GBP974.

A Game Of Dice

Though poker is growing in popularity, the most popular form of Bitcoin gambling is dice. A gambler sends their BTC units to one of a number of public addresses and receives BTC units back in return, depending on the outcome of a game determined by a random number generator. Sites like SatoshiDice, PrimeDice, Just-Dice and others help to facilitate the bets, in exchange for a service fee, usually less than 1 percent.

As Bitcoin uses open-source software, gambling sites cannot rig the outcome of the game as the maths can be verified. The server seed is random, the player selects their own seed and the secret variable is publicized the next day. Players can also use similar algorithms to gamble on Roulette, Baccarat, Pai Gow, Blackjack, lotteries or minesweeper.

A Jurisdictional Struggle

Market growth for online gambling is geography specific. Europe has the largest online gambling market in the world with a fully regulated online gambling system in place. Some countries only allow gambling with their government-owned monopoly. In the USA there is a federal ban, but state-level permission. The Asia-Pacific region bans online gambling in many countries including Singapore and China. The legislative landscape is constantly moving, further complicated by the game-specific laws, divided into skill-based and luck based gambling.

The Bitcoin marketplace is self-monitored and maintained by users from all over the globe, so does not fall into any specific government’s jurisdiction. The Bitcoin economy also remains almost anonymous, making it difficult for anyone to determine who exactly is profiting and how to tax it.

Whilst some European countries recognise BTC as legal tender, the US and Thailand do not. However, all countries have determined that those who mine or convert BTC to dollars are subject to ‘money services business’ which has curbed money laundering.

Bitcoin Here To Stay

Bitcoin is becoming increasingly more mainstream. It is fast, secure and inflation-proof with transaction fees just a fraction of bank processing charges. If BTC is ruled to be real money, taxation and regulation are sure to increase the processing fees. In addition, some economists fear a crash is inevitable given how volatile the Bitcoin market has been, making it difficult for companies to effectively price their goods accurately.