A cryptocurrency is best described as a virtual or digital currency. Designed to be used as a medium of exchange, cryptocurrencies are becoming increasingly popular amongst online gamblers. As the process uses cryptography to control and secure transactions, accounts rarely experience fraudulent activity. In this article, we explore cryptocurrencies in more detail and discuss their connection with casinos and gambling.
Let’s start with a brief history of cryptocurrencies. The currency first came about in 1983, after an American cryptography named David Chaum invented the electronic money known as ‘ecash’. By 1995, the currency had transformed into ‘Digicash’ and was being used as a form of electronic payment. To use Digicash, users would need to get their hands on the required software. Essentially, this software withdrew notes from a bank account and encrypted the cash before it was sent to the recipient. This process meant that Digicash was untraceable by the bank, the recipient, and even the government.
Over the next few years, cryptocurrencies were often in the public eye. Various reports were published describing the pros and cons of the electronic system, notably in journals such as the American Law Review, and a paper by the NSA. In 1998, computer engineer Wei Dai invented a cryptocurrency known as ‘b-money’. In the same year, cryptographer Nick Szabo created ‘bit-gold’. Regarded as an early version of Bitcoin, bit-gold was a digital currency that worked using a ‘proof of work’ system. This system was designed to prevent email spam and ensure that bit-golds users were trustworthy and secure.
In 2009, cryptographer Satoshi Nakamoto created Bitcoin. Regarded as the first decentralised cryptocurrency, Bitcoin quickly became popular worldwide. Much like bit-gold, Bitcoin used a proof of work system to prevent email spam. To do this, the currency used the cryptographic hash system, SHA-256. In 2011, Litecoin was released. Using scrypt as its hash function rather than SHA-256, Litecoin was seen as the most secure cryptocurrency of its time. Unlike SHA-256, the algorithm of scrypt made it costly to perform large-scale hardware attacks. Since 2011, various other cryptocurrencies have been invented though few of them have introduced new technology.
As cryptocurrency cannot be influenced by the government or economy, it is described as decentralised. Because of this, cryptocurrency is often described as the most independent finance in the world. As cryptocurrency has no geographical affiliation, the currency can be purchased and used to gamble anywhere in the world. Additionally, the currency makes online gambling transfers flexible. As it is not influenced by the government, gamblers have no limit on the size of their transfers.
Another reason the cryptocurrencies are popular amongst online gamblers is their tax leniency. As most of the world’s tax laws were written before cryptocurrency was created, it is almost un-taxable. That being said, some countries require residents to pay tax on any general income, which unfortunately covers cryptocurrencies.
The speed of transactions also makes cryptocurrencies popular in casinos. When gambling using a regular currency, payments can take a while to process. This means that gamblers can’t enjoy the instant play they could at a land-based establishment. However, the transaction speed of cryptocurrencies is almost instant. Whether players are withdrawing their winnings or depositing more cash, they can enjoy the same instant play that they would in a brick-and-mortar casino.
One of the main draws to gambling with cryptocurrency is the security. Whilst some of the earlier cryptocurrencies made the fraudulent activity easier, today’s currencies make it almost impossible. Equipped with state-of-the-art proof of work systems, currencies such as Bitcoin and Litecoin make hardware attacks longwinded and costly. Additionally, these currencies have security measures to resolve these issues if they crop up. The blockchains of the main cryptocurrencies are mostly public. This means that any transaction can be traced with the right equipment.
As Bitcoin was the first successful digital currency, it’s often thought to be the only one that matters; however, this is not always the case. While Bitcoin is the most renowned cryptocurrency, many casinos work with other digital currencies, too.
The incredible success of Bitcoin resulted in the creation of thousands of other cryptocurrencies. However, few of them brought any new technology to the table so their success was minimal. Because of this, some online casinos choose to only accept Bitcoin. Many of the forward-thinking betting sites accept other digital currencies, though, with notable alternatives including Ethereum, Dash, ERC20 tokens, and Litecoin.
Money is still being poured into the development of cryptocurrencies. With this in mind, the number of casinos that accept digital currency is rising by the day. Over the next few years, all of the worlds main casinos are expected to accept cryptocurrency transactions. Currently, one Bitcoin is equal to 6,249.63 British pounds. Whilst this shows that Bitcoin holds the highest value, it is not regarded as the most promising cryptocurrency. Instead, Ethereum is thought to be the most hopeful for future success. Though Ethereum holds less value per coin, the currency has shown to be more stable than any of the others. When using a digital currency to gamble online, stability is essential.
Whether you’re hoping to enjoy instant transactions or you’re more interested in the tax leniency, cryptocurrencies can be a great way to gamble online. Whilst digital currency is beneficial when used correctly, it can sometimes feel like you’re not spending real money. This makes it important to consider your financial situation before visiting an online casino.