Lately, a lot of attention has been given to a new payment method – the bitcoin. Some view it as a refreshingly new take on internet transactions, others place it under great scrutiny, and believe it is too volatile to survive. But what are bitcoins, how do they work, and how do they relate to gambling? Read on to find out!
For the non-connoisseurs, bitcoin is a decentralised cryptocurrency developed by Satoshi Nakamoto (pseudonym) who referred to it as a “peer-to-peer, electronic cash system”. Indeed, the bitcoin is a virtual currency which can be easily transferred via your computer or smartphone without the interference of any banks or governmental institutions. Simply put, bitcoins are entirely controlled by their users. But if bitcoins are stolen from your bitcoin wallet, you lose your laptop or you accidentally delete your wallet.dat file there is no way you can recover your bitcoins just like in the case of cash. This is the reason why many people prefer to use on-line wallet services like Mt. Gox or Bitstamp, which act like a “bank account”.
Bitcoin transactions are transparent and public, that is, every transaction is recorded in a “block chain” which acts as a public ledger. Even so, bitcoins offer some sort of near anonymity, because the identity of their owners cannot be associated with their bitcoin addresses, unless personal information is provided during an exchange.
Bitcoins are generated through mining, a process whereby difficult mathematical problems are solved through the computing power of CPUs. You don`t necessarily need to be a programmer or developer to mine bitcoins. Until recently, however, you only needed a really good CPU that could be kept up and running 24/7. With the increase in difficulty of the mathematical problems even GPUs are slowly becoming obsolete, and hardwares that are developed specially for mining bitcoins are taking their places. Until now, around 10.5 million bitcoins have been created of the total 21 million bitcoins.
If you want to make money out of bitcoins, you should try your hand at trading them. You can purchase bitcoins at bitcoin exchanges such as Tradehill or Mt. Gox.
Given that bitcoin is still experimental, it is very unstable with huge fluctuations in price. For example, this year, the price per one bitcoin increased from $13 in January to $190 in April. Then the bitcoin registered a drop from $266 to $50 and then back again to $100. So careful with the trading as it comes with risks.
Interestingly, bitcoins are not only accepted in the online world but a number of small brick-and-mortar businesses accept them as well (Foodler LLC. and Buyer’s Best Friend Wholesale & Mercantile INC. are among the small businesses embracing the bitcoins early).
With the stunning spread of the acceptability of bitcoins it is only natural that bitcoin casinos have emerged, too. The most popular bitcoin betting game is SatoshiDice, and the advantages of betting with bitcoins are incontestable. For one, you don’t need to register or create an account, which means you can play instantly. Also, the payout procedure is almost instant.
One wonders if bitcoins became a strong anonymous payment system, could it become a solution to the U.S. online gambling prohibition?