When I first started writing about Bitcoin over 3 years ago the currency was trading for around USD$6 each. It fluctuated between $3 and $8 for some time and then after Silk Road (the TOR site that offered contraband for Bitcoins) was reported about in the news, the stock shot up to over $20. It wasn't long after that it settled back to below $10 but in late 2013 the currency really shot up eventually rising to over $1,100. It's uncertain what caused the huge spike in value but most people point to a few reasons. First, Chinese residents decided to start investing heavily in the product. Uncomfortable with their own stock markets and with some concern about the volatility of the yuan, millions of Chinese residents invested in Bitcoins. There was also hope that Chinese businesses and banks would accept the currency as a form of legal tender. Second, was the pending U.S. debt crisis. Just as people turn to gold and silver when times are bad a lot of speculators were worried that a default by the U.S. government would lead to a huge decline in the value of the dollar and many speculators thus deemed that Bitcoins were a safe option. Third, was the eventual shut down of Silk Road. While the site created excitement among some that were holding Bitcoins there was concern that Silk Road was drawing negative attention to Bitcoins and most holding Bitcoins knew that as long as contraband was being traded undetectable, the currency would be under a lot of scrutiny from world governments. The closure after the arrest of its founder brought hope that the U.S. government and particularly the DoJ and Treasury would back off. And the last major reason given was just the amount of venture capitalists around the world who were pouring money into Bitcoins, since they believed it was undervalued.
But as quickly as the price rose it fell and by the end of 2014 the price was almost a quarter of what it was the year prior. There are several reasons for this but the main reason was government interference. The Chinese government told banks not to accept Bitcoins, causing thousands of Chinese investors to drop them, the Russian government said it was going to block Bitcoin websites, causing Russians who were using Bitcoins as a way to avoid the unstable fiat currency to sell them and of course in the U.S. the Treasury said that it was preparing to identify Bitcoins as a taxable product.
As well, Warren Buffet, who was always seen as a prudent and well respected investor effectively called Bitcoins a sham:
"Stay away. Bitcoin is a mirage. It's a method of transmitting money. It's a very effective way of transmitting money and you can do it anonymously and all that. A check is a way of transmitting money, too. Are checks worth a whole lot of money just because they can transmit money? Are money orders? You can transmit money by money orders. People do it. I hope Bitcoin becomes a better way of doing it, but you can replicate it a bunch of different ways and it will be. The idea that it has some huge intrinsic value is just a joke in my view."
Buffet's words proved to be somewhat prophetic as several thefts of Bitcoins took place as well. The famous theft of thousands of Bitcoins at MtGox, the biggest Bitcoin trading site caused the markets to flinch and then when hackers raided Bitstamp out of $5 million worth of coins it became clear that the product, which is still just a series of encrypted numbers, are not as safe as one thought they were. The price of Bitcoins plummeted to the point where one of the largest mining sites said that mining Bitcoins had become unprofitable. It bottomed out at about $250 and has stayed within $100 of that price for over a year now.
But while the fluctuations in the price and the clear ease of hacking into Bitcoins were a concern to many companies considering accepting Bitcoins as a form of payment, more concerning to gambling operators was the fact that American authorities have been able to identify Bitcoin gambling operators and intimidate them into closing down. Several Bitcoin only gambling sites have closed in the last few years after they were told by the DoJ to cease and desist and in February of this year Bryan Micon, one of the owners of the extremely popular Bitcoin only poker site Seals with Clubs, was arrested at his Las Vegas home. According to Micron the police broke down his door and arrested him at gunpoint with his wife and toddler present after the Nevada Gaming Commission enforced a warrant against him. The authorities took computers which contained important files and Bitcoins and led him to the police station in his underwear. Although no charges were laid at the time it was clear the Gaming Commission planned to charge him with operating an illegal gambling website. Micon moved his family and himself to Antigua after the arrest and closed down the Seals with Clubs site. Later in the year Micon returned to Nevada and pleaded guilty to running an illegal gambling site in return for having the charge reduced to a misdemeanor and paying a $25,000 fine. Once the ordeal was over Micon left the U.S. and set up a new site SWCPoker.eu keeping most of his former clients, but without the other owners who decided not to go ahead with the venture for fear of U.S. reprisal.
So with all this occurring it would just be logical that most websites would run away from Bitcoins but that hasn't happened. In fact in the area of gambling many mainstream online sportsbooks have come on board in the last year and those that do offer Bitcoins as a form of payment indicated that they love the product.
Some of the sites that currently offer Bitcoins include Heritage Sports, 5Dimes, Diamond Sports, Bovada, BetOnline, BetAnySports and Switch Poker, the first site to honor Bitcoins, continues to do so. And Bitcoin only gambling sites like Betcoin, Nitrogen Sports and Bitstarz continue to attract bettors. There are likely many other gambling sites that offer the currency as well, but keep it quiet. I asked several online gambling websites a few questions relating to their choice to offer Bitcoin and received a couple of interesting responses.
The first question I posed was why they started offering Bitcoin:
Management at BetAnySports provided some insight. "Bitcoin started trading early 2010. Since then we have kept a close eye on the crypto currency to determine its stability and overall performance for peer to peer transactions. Last year we began testing Bitcoin for our Poker Games (many poker players requested BTC), and just recently we added Bitcoin to our Sportsbook. Transfers are initiated by contacting our customer service department."
Heritage Sports management provided a similar response. "We started offering Bitcoin as a deposit and payout solution about a year and half ago on a limited basis and made it a permanent payment offering for a full year now."
The second question I posed was why they like it as a payment option:
"It's an excellent payment option. As a peer to peer currency Bitcoin fits in perfectly for anyone looking play at an Online Sportsbook, Casino, or Poker Room. There are no fees associated with Bitcoin transactions, there are no charge backs, and you can make as many transfers as you like throughout the day," BetAnySports answered.
Heritage added, "For US customers, it's very similar to the days of Neteller, when a customer could request a payout and have the money delivered to their wallet and under their own control within a short period of time (minutes or hours, always same day with us). It's become a fast and easy payment method for both incoming and outgoing."
The third question I posed is what benefits they perceive Bitcoin offers to the players:
"Bitcoin benefits players two ways: First Bitcoin is quick and easy to use. To deposit with Bitcoin the player only needs to contact our customer support team and they will provide a BTC wallet address. The player can transfer from $50 in value up to $10,000. The transaction can take anywhere from 5 up to 30 minutes to process. Secondly the player is able to keep his transactions completely private and manage his Bitcoin currency without any 3rd party banking institution keeping a detailed log throughout the year," BetAnySports informed me.
"The players ultimately control the funds they keep in their wallet. That kind of flexibility is something I think U.S. customers miss from the days of Neteller and Moneybookers," cited Heritage.
The final question I asked is how they deal with the wild fluctuations in the price of Bitcoins and how they can keep the books balanced:
"We use www.Bitstamp.net to determine the current market value of BTC, or as you say "keep the books" up to date. When you're ready to deposit or withdraw with us, you should reference Bitstamp to determine the current market value of Bitcoin," mentioned BetAnySports.
Heritage on the other hand indicated that they aren't all that concerned about the fluctuations: "We feel a lot of the early volatility is mostly out of the market with some "real world" uses of Bitcoins. It's becoming more mainstream and with that, we think that the fluctuations are more palatable for us. And the ease of the transactions along with the low cost makes it worth it to us. We do monitor the price and keep Bitcoin reserves to manage payout requests along with having an exchange account for buy/sell purposes."
As for players I spoke to a friend in Arizona who told me that Bitcoin has helped him out immensely. "I almost gave up on betting offshore. Just a couple of years ago getting money to any book became a nightmare and the only payout options was by check. And it was obvious my bank was getting suspicious of me as a result of large check deposits from banks in countries I couldn't pronounce let alone find on a map. But with Bitcoin I control everything. It's all anonymous and neither the government nor bank are involved at all. It's fabulous and I don't care about the price of Bitcoins because I'm not going to sell them and I can still use them to buy most products I want, as the market for them has really opened up."
One thing that is obvious from all the online gambling websites offering Bitcoin, is that they still cater to the U.S. market. Sites that no longer cater to U.S. customers have avoided the currency to date, likely because players in other countries have a ton of payment options including credit cards, Moneybookers. PayPal, Playsafecard, Instadebit (Canada) among others so they don't need Bitcoin presently for their players. But talking to gambling companies in the UK and the Caribbean that don't currently allow betting from the U.S. they indicated that they too are keeping a close eye on Bitcoins as a potential payment option simply because a lot of customers are demanding it.
Since Bitcoin is still in its infancy it's hard to tell what the future of the virtual currency will be, but it seems clear that for U.S- facing gambling sites the future is now and they deem the future to be bright. And as gambling operators indicate the success they are having with them, it is only logical that others will come onboard. In fact one site that closed operations to U.S. citizens indicated that they may reopen to American customers but will only allow payments for those customers in Bitcoins. Without question that has to be music to the ears of many American bettors.
Find the top websites for gambling online using bitcoin here.
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