As much as we fully understand the power of cryptocurrency to enhance online gambling here at Coinbet.com, it can sometimes be difficult to explain everything there is to know about crypto. As such, some of our explanations of gambling online with Bitcoin, Bitcoin Cash, etc. fall short.
A recent news story out of the UK could help us explain things a little bit better.
That story centers around Iranian students who are turning to bitcoin to pay their tuition at UK universities. Both their reasons for doing so and the results they are seeing showcase crypto's strength as a gambling platform. Bear with us as we explain how it all ties together. You will better understand at least one aspect of cryptocurrency by the time you finish this post.
The back story
The U.S. government successfully lobbied the Swift banking network to exclude Iran from the global financial system early in 2018. It was a strategy designed to enhance sanctions against Iran in hopes of forcing them to accept political change. For the purposes of this post, the politics do not matter. What matters is that Iran's exclusion from the global financial system has inadvertently caused a hardship for Iranian students studying in the UK.
The added sanctions cut those students off from their finances back home. The students can no longer use Iranian bank accounts to pay for their tuition or access cash to pay their daily expenses. Experts have been telling them to fly home, get all the fiat currency they needed to pay their bills, and then bring it back to the UK.
Such a solution is not very practical. Moreover, you have to seriously consider whether the students would be allowed to bring that much cash into the UK. Carrying large amounts of cash automatically draw scrutiny at airports. Still, the students cannot be left stranded in the UK without access to finances. Enter Bitcoin and other cryptocurrencies.
Using crypto to access money
Long before bitcoin ever became an investment sought after by traders, it was intended to be a buying and selling platform. Individuals who purchase bitcoins can use them to buy goods and services from merchants willing to accept those coins. As a cryptocurrency platform, bitcoin can still be used that way today.
So what have the Iranian students done? They have tapped bitcoin and other cryptocurrencies as a way to get around the sanctions. It is quite simple. Family members back home use fiat currency to buy bitcoins or any other alt coins their students are interested in. Those coins are then transferred to the students' digital wallets.
The students can convert some of their crypto back into fiat - this time British pounds - and then use that currency to pay their tuition. They can convert additional crypto into cash to pay other bills. And if some of their bills can be paid directly via a cryptocurrency transaction, they can do that as well.
By converting between fiat and crypto, students and their families are taking advantage of one of the strengths of the whole bitcoin concept: cryptocurrency platforms cannot be controlled or manipulated by national governments or central banks. Encryption also prevents people who might have an interest in finding out who is trading cryptocurrency from actually getting the answers they are looking for.
Do you see how this benefits online gamblers and operators? If not, step back and imagine yourself living in a country where online gambling is heavily restricted or altogether illegal. All you want to do is play MegaMoolah.com, but you cannot find an online operator in your country.
Play MegaMoolah.com with bitcoin
The key to your online gambling bliss is finding an operator with a website you can access. In all likelihood, this means one located in a jurisdiction where online gambling is not restricted. You can play all your favorite games on that operator's site using a variety of payment methods. But if you use anything associated with fiat (a.k.a. credit cards, bank transfers, etc.) you are still making it possible for others to track your gambling.
What do you do? You look specifically for an online casino that accepts bitcoin or some other cryptocurrency. Then you do what the Iranian students have done. You use fiat currency to buy bitcoins. You deposit those coins at your chosen casino. The only thing banking records show is that you bought cryptocurrency. What you do with that cryptocurrency remains private.
As a side note, you might also find an online gambling site located in your own country that only accepts cryptocurrency deposits. They are allowed to operate because they don't accept fiat currency. Although such arrangements are rare, they do exist. The point is the same: you convert fiat to crypto so that you can play MegaMoolah.com.
Cryptocurrencies are neutral currencies
Moving beyond using something like bitcoin to get around sanctions and restrictions, there is an even more important principle to discuss here. That principle is the fact that cryptocurrencies are neutral currencies. Their decentralized nature structurally prevents any manipulation by central banks or national governments.
Bitcoin was the first commercially available cryptocurrency in the world. It is built on something known as blockchain. What is blockchain? It is a decentralized ledger that controls the flow of coins across the bitcoin network by tracking transactions, verifying them, and then making them permanent.
Bitcoin's blockchain resides outside of government and central bank interference. This is accomplished by distributing the ledger to multiple computer nodes located around the world and relying on bitcoin miners to verify transactions and maintain the ledger.
The only way a national government could interfere is to either seize the code and destroy the nodes or declare the whole thing illegal. Neither option is practical at this point. Why? Because bitcoin has proliferated the internet too deeply. Trying to take over cryptocurrency networks would be like attempting to pick up every grain of sand found on an Indian Ocean beach. It is possible in theory, but not in reality.
Government's inability to control cryptocurrency is that which makes it neutral. Control belongs to the actual users, even independent of miners. They exercise that control simply by trading.
The value in practical use
Let us say you decide to buy some bitcoins so that you can start gambling online. You are going to purchase those coins through an exchange but not from the exchange. The exchange acts only as an online intermediary. The coins you purchase are being bought from other bitcoin users.
Whomever you choose to buy from can mark up or down the price of the coins as he or she sees fit. That person can also add fees and charges if so desired. So can the exchange. Based on coin price and fees and charges, you can choose to either accept a coin offer or reject it. You and the sellers you interact with maintain complete control over the eventual value of your transaction.
You could interact with two dozen buyers to trade bitcoins over the next week. When all was said and done, you and those buyers would be in whatever positions you created for yourself through trading. Governments and central banks would have no say in the value of the coins you are left with.
That's not how it works with fiat currency. National governments and central banks continually manipulate the value of fiat with a combination of monetary and fiscal policy. They do it all the time. For example, the U.S. Federal Reserve (America's central bank) purposely devalued the U.S. dollar back in 2016 in order to instigate price growth for goods and services.
This sort of manipulation allows governments and central banks to decide the value of all the fiat in your bank account. If they decide inflation is getting out of control, they can reduce interest rates and stop printing money. If they decide they want people to start spending more, they can artificially force interest rates to stay low. If they want to cool off an economy that's heating up, they raise interest rates and print more cash.
Neutral evaluation and regulation
Have you heard that U.S. President Donald Trump has appointed a cryptocurrency proponent as his acting Chief of Staff? He has, and that's big. A number of officials close to the president are known to be proponents of cryptocurrency. A recent Cryptocurrency News (CCN) story suggests that the current makeup of the White House could encourage American lawmakers to take a neutral stand towards crypto.
What would that mean? It would mean a government that understands it cannot manipulate or control platforms like bitcoin. It would mean promoting cryptocurrencies rather than trying to hinder them with regulation. And where regulation is necessary, neutral evaluation dictates that legislators restrict their own actions to only preventing crypto platforms from becoming tools of illegal activity.
The experience of the Iranian students in the UK shows just how cryptocurrency can be used to get around sanctions and restrictions. As such, it also demonstrates the strength of crypto as a gambling currency. In the end, it is all due to the neutrality of platforms like bitcoin. And guess what? That was the whole idea to begin with.