The casino industry that was once dominated by land-based casinos encased in four walls and a roof has been totally disrupted by the online environment. There is even speculation that online gambling could eventually overtake its more traditional predecessor, and that bitcoin will be at the heart of it.
How realistic are such assumptions? That depends on who you ask. However, the place to start any discussion is in the actual numbers online casinos are producing. According to Statista, the online gambling market generated revenues in excess of USD $37.91 billion in 2015 alone. That number is expected to climb to just under $60 billion by 2020.
It is abundantly clear that online gambling is a robust business. There is as much money to be made by gambling operators online as there is in land-based casinos. Moreover, the profit margins for online operators tend to be higher because they do not have the additional expenses (think overhead) of operating a physical building.
So let's assume online gambling does overtake land-based gambling at some point in the future. That still doesn't address the idea of bitcoin being at the core. That's what will be discussed in the remainder of this post. Below are five reasons bitcoin could very well become the default currency for online casino operations.
1. It remains the dominant crypto force
Bitcoin was the first ever commercially viable cryptocurrency. It laid the groundwork for the thousands of additional cryptocurrencies that eventually followed. And even with so many alternatives out there, none even come close to bitcoin in terms of market capitalization or value. Bitcoin clearly dominates the crypto space.
With that foundation, understand that there have been multiple attempts in the past to come up with a cryptocurrency that would be exclusive to online gambling. As the thinking goes, a dedicated coin for gambling would allow online casinos an isolated marketplace with a common coin, allowing players from all over the world to gamble online without worrying about security, legal restrictions, etc.
Every one of those past attempts has failed. More importantly, bitcoin is the first crypto that online casino operators turn to once they make the decision to begin accepting alt coins.
This is not to say that bitcoin is better than all its competitors. Fundamentally, it is not. It's just that old habits are hard to break. Just about everyone already into crypto is comfortable with bitcoin. Traders are familiar with it, they know how it works, etc. So until Bitcoin gives them a reason to abandon it, they will not.
2. The market tracks bitcoin
Because bitcoin continues to dominate the cryptocurrency space, the entire crypto market tracks it. While there are some exceptions, the value of most other cryptocurrencies rises and falls in line with bitcoin. What does that tell you? It tells you that as bitcoin goes, so will virtually every other cryptocurrency.
If that is the case, it doesn't make sense for online casinos to delve into dozens of other cryptocurrencies to satisfy a smaller minority of players. If everything tracks on bitcoin, why not just stick with it exclusively?
There is the obvious fact that some cryptocurrency investors would rather put their money into coins other than bitcoin. That's fine and reasonable. But it doesn't take much to convert other coins into bitcoin before making a casino deposit. And in fact, the casinos themselves can accept other coins and then convert them to bitcoin on-the-fly.
Whichever way you slice it, there is no need to transact with another coin. So until such a need presents itself, it's not likely that online casino owners are going to bend over backwards to take a look at other coins.
3. Protecting the integrity of online gambling
The last three reasons explaining why bitcoin could become the default gambling currency are all predicated on the first two. Each of these three reasons also applies to other cryptocurrencies as well, so they would be true even if bitcoin didn't become the default.
With that said, let us talk about protecting the integrity of online gambling. Unfortunately, the growth of online gambling is such that it has attracted plenty of shady players looking to use the industry as a way to launder money. Running an online gambling site in order to launder income from illegal activities is a growing problem.
If there is any good news, it lies in the fact that shady operators rely on fiat currency to do what they do. Laundering does not work well in the crypto space because of the fundamental mechanics of blockchain and crypto transactions.
In order for money laundering to work in a traditional land-based casino operating on fiat currency, those doing the laundering need to move financial assets in, through, and out of the casino without raising suspicion. The only way to do this is through a process known as skimming.
Skimming is nearly impossible with cryptocurrency for one simple reason: no single transaction can be undertaken without it being entered into the blockchain and being made permanent and irreversible. In the simplest terms, it is virtually impossible to complete a cryptocurrency transaction without leaving a data trail behind. And while that data trail is secure and anonymous, it is still a record that anyone can access. That makes skimming very difficult to do.
At the end of the day, it is a lot more difficult to launder money through a crypto-based online casino than one operating on fiat currencies. We could see the industry turning exclusively to Bitcoin at some point in the future in order to protect its own integrity.
4. Bitcoin offers better security
Fraud perpetrated against both casino operators and players is another concern. Just consider your own gambling habits. You would be none too pleased to have signed up for a casino account, invested your hard-earned cash, and won a tidy bundle, only to lose it all to cyber criminals.
Cybercrime is always a risk when you are dealing with fiat currencies and electronic payment systems. Despite all the efforts made to improve online security, fiat systems are still incredibly easy to break into. They are very easy to manipulate to the advantage of the criminal. Not so with bitcoin.
Trading bitcoin, whether to play or buy new pair of shoes, is rooted in a technology known as blockchain. What is blockchain? It is essentially a distributed ledger that provides a running record of transactions.
Bitcoin's ledger is freely available to anyone who wants it. But it is encrypted, so it is not useful to anyone who does not have the means to decrypt it. But that's not the best part. The best part is that transactions are not considered official until they have been added to the blockchain. And once added, transactions are irreversible.
The last thing to note is that traders remain anonymous in the blockchain ledger. Transactions are identified only by digital wallets and the addresses assigned to them, and even that information is tokenized and encrypted.
The combination of blockchain technology, irreversible transactions, and anonymity makes Bitcoin more secure than any fiat system. It offers online gambling operators a means of conducting business between themselves and players with very few risks of cybercrime.
5. Bitcoin gambling is cheaper
It is difficult to discuss any sort of motivation for modern business without talking about money itself. Businesses do what they do to make as much money as possible. Therefore, any opportunity to make what they do cheaper is worth exploring. This could ultimately be why bitcoin becomes the default currency for online gambling.
Transacting business online using fiat currency involves third parties. Whether it's credit card companies, online payment systems, prepaid cards, or even direct electronic transfers from a bank account, there are always fees and charges involved. After all, those third parties have to make their money too. They do so by assessing transaction fees.
Bitcoin and other cryptocurrencies are traded between buyers and sellers with no third-party interference. There are no banks involved. There are no payment processing companies involved. There are no prepaid cards, vouchers, or anything else.
When you deposit bitcoin at your favorite casino, the coin moves directly from your digital wallet to the casino's wallet. No one else is involved. The casino isn't likely to charge you a transaction fee out of fear that such a fee would chase you away. You obviously won't assess a fee on yourself. So bitcoin gambling is less expensive for both you and the casino.
Online casino gambling is fast approaching what could be considered critical mass. When it reaches that point, the success or failure of cryptocurrency as a gambling medium will ultimately determine the industry's fate. It is both exciting and terrifying at the same time.
Fortunately, the future looks very good at this point. All indications point to greater adoption of bitcoin gambling around the world. And if things continue as they are now, bitcoin could eventually become the default currency for gambling online.