Cryptocurrency is digital currency. It does not exist in any physical form, although it has value by dint of supply and demand. During the cryptocurrency boom of Q4, 2017 Bitcoin (BTC) soared to $20,000 per unit. The crypto market breached a market capitalization of $800 billion before this massively overvalued ‘bubble’ began deflating to its current value of approximately $122 billion (January 2019).
There are currently an estimated 2,097 cryptocurrencies operating across 16,019 markets. To put things into perspective, Bitcoin was the lone digital currency operating in 2009, and it now makes up 52.3% of the overall market. The top 5 digital currencies by market capitalisation include:
- Bitcoin – market cap of $64.245 billion and a circulating supply of 17,474,687 BTC
- XRP – market cap of $13.571 billion and a circulating supply of 41,040,405,095 XRP
- Ethereum – market cap of $13.469 billion and a circulating supply of 104,302,880 ETH
- Bitcoin Cash – market cap of $2.379 billion and a circulating supply of 17,559,088 BCH
- EOS – market cap of $2.184 billion and a circulating supply of 906,245,118 EOS
Combined, the top 5 digital currencies have a market cap of $96 billion, or 78% of the entire digital currency market. It is for these reasons that most of the cryptocurrency in circulation for trading, speculating, investing, and payment purposes largely encompasses these top 5. Of course, many other popular cryptocurrencies are used in global markets, including Stellar, Litecoin, Tether, Tron, IOTA, Cardano, NEM, Ethereum classic, and Zcash.
Why Do Online Casinos Accept Cryptocurrency?
Before we answer this question, it’s important to understand what cryptocurrency is used for and why it was created to begin with. Digital currency typically, not always, exists on the blockchain and it is largely decentralized. The blockchain is an open source ledger where transactions can be fully vetted and verified by all nodes in the network. Transactions are immutable, secure, anonymous, and guaranteed secure against hackers. The most popular and established blockchain technology is that of Bitcoin, a.k.a. BTC. It was created by an anonymous individual/s by the name of ‘Satoshi Nakamoto’ who has since vanished from the scene.
Digital currencies do not rely on fiduciary currencies, central banks, governments, or any other established financial systems. In other words, they are an alternative financial paradigm where users can enjoy instantaneous, seamless, minimal cost transfers of value from point A to point B. By cutting out banks, financial institutions, brokerages, middlemen and government entities, true value can be transferred in a matter of seconds. Traditional systems of money transfer to companies including online casinos take the form of bank wires, Skrill, NETELLER, EU Teller, Visa, MasterCard, Moneta, Trustly and at least several dozen other popular choices.
However, traditional forms of money transfer (fiat currency) are laden with complexity including high fees and commissions, use of sensitive personal data, reliance on third-party systems and services, and lack of anonymity. These are but a few of the hindrances that users typically encounter when transferring from one account to another. Digital currencies like Bitcoin, Bitcoin Cash, Ethereum, Litecoin, Ripple, and others do not require users to enter personally identifiable data when transacting online. All that is required is a cryptocurrency wallet, a sending address/receiving address, digital currency tokens, and a stable and secure network.
What types of Cryptocurrency Casino Payment Options Exist?
It’s important to understand that cryptocurrency casinos are not the domain of technical wizards. Anyone with rudimentary Internet savvy can easily acquire a cryptocurrency wallet, purchase digital currency, and transfer funds into their online gaming account. Players enjoy being able to deposit/withdrawal using digital currency, since this adds additional layers of security (anonymity) to the system. Plus, it’s not necessary to go and register with PayPal, NETELLER, or set up a bank transfer which may or may not approve transactions to online casinos. For the most part, cryptocurrencies are decentralized, meaning that they are not controlled by a central bank authority. This means that they are not beholden to the actions of any single entity, or group – that is the theoretical construct upon which they were created.
It’s the cost savings that make Cryptocurrency so attractive to online casino players. The hefty withdrawal fees associated with international bank transfers, PayPal and other options are absent in digital currency transactions. Of course, there are many safety and security considerations which need to be factored into the equation when using digital currency a.k.a. cryptocurrency for deposit and withdrawal purposes at online casinos. Off-line backups of digital currency holdings are imperative, in the form of paper wallets, and other cold storage wallets like the Ledger Nano S. These are unhackable, and highly attractive to digital currency enthusiasts. A cursory study of the online casino market indicates that Bitcoin is the ranking digital currency used by players. This comes as no surprise, given that it makes up 52% of the overall digital currency market.
Other popular digital currencies used at online casinos include the options listed above, namely: Zcash, Ripple, Bitcoin Cash, Dash, Monero, Litecoin, Ethereum, Dogecoin and the like. You may be wondering what benefits players get to enjoy when using digital currencies as opposed to traditional financial payments processing options. Recall that low or zero fees are associated with digital currency transfers. The added benefit of relative anonymity reduces the work and disclosure required to transact (deposit and withdraw) at online casinos, and while all winnings must be declared to the tax authorities, online casinos do not enforce this on their players.
What to Look for in Cryptocurrency-Friendly Casinos?
Online casinos accepting digital currency should be provably fair before players deposit valuable cryptocurrency. Full licensing and regulation, independent auditing and testing, and fully supportive payments processing options encompassing crypto and fiduciary currencies should be supported. Most of the big-name casinos such as 888casino have maintained a traditional banking system, where popular payment options like Skrill and NETELLER are supported. As yet, there are no moves by many of the leading online casinos to adopt volatile Cryptocurrencies as fireball payment processing options. Does this mean that you should avoid cryptocurrency-friendly online casinos in their entirety? Not at all, but caution is the order of the day.
Many shady operators opted to establish payment processing services allowing players to use cryptocurrency. They did this in an effort to skirt regulatory constraints and licensing requirements, and attract high-value players from the US, Europe, and beyond. Whether a casino is onshore or offshore, licensing and regulation is always a priority. Players have no recourse if they play with real money (crypto or fiat) and nefarious activities are conducted on-site. Payment terms are a useful barometer of understanding how much you can withdraw, and what the minimum withdrawal threshold is. The fees associated with deposits and withdrawals should also be factored into the equation. As always, anyone wanting to deposit Bitcoin into an online casino is best served by contacting the customer support team first to ensure customer-centric activities are espoused at the online casino. Other attractive propositions include cryptocurrency bonuses and promotional offers, match bonuses, free spins, and the like. When the term ‘Crypto Casino’ is bandied about, most people immediately revert to Bitcoin Casinos. Fortunately, dozens of Altcoin (any Cryptocurrency other than Bitcoin) are also supported at the world’s leading Cryptocurrency casinos today. Much like a hardware wallet or software wallet supports Bitcoin and dozens of Altcoin, so too do many online casinos today.
Another major benefit of playing a day crypto-friendly casino is that there are no borders limiting players to specific countries or regions. Bitcoin is a global cryptocurrency and anyone, anywhere can transact in real-time. For the most part, registration is anonymous, bonuses are available, and gaming can be conducted on PC, Mac, smartphone and tablet devices. Online casinos will always list the cryptocurrencies they support. It’s worth doing a little research to understand the tickers (symbols) for each Cryptocurrency. For example, Bitcoin is BTC, Bitcoin Cash is BCH, Ripple is XRP, and Ethereum is ETH. The reputable crypto casinos are licensed and regulated. They offer digital currency banking options in addition to fiduciary banking options to better serve their players. Rapid deposits and withdrawals are standard with cryptocurrency-supported casinos, and most of them are fully mobile friendly.
What Are the Major Drawbacks Of Using Digital Currency in the Casino Industry?
Believe it or not, all winnings over a certain threshold are fully taxable whether they are made in the form of digital currency which is then exchanged for any item of value, or cash. The IRS has clear guidelines when it comes to gambling revenues (profits) and taxes. Much the same is true of tax authorities in Europe, Asia, Latin America, and elsewhere. In other words, playing and winning with Bitcoin or Altcoin is not a get out of jail free card to avoid paying taxes. Unlike Visa and MasterCard, if you transfer digital currency erroneously, or if somebody accesses your Bitcoin wallet and uses your funds, there is no recourse. It’s done and you lose.
With credit cards, players will not be held accountable for unauthorized transactions, or theft. If you thought Bitcoin was the best cryptocurrency to use, think again. It is slow to process, expensive to
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