Most people already know about the origins of Bitcoin and how, in 2008, the mysterious Satoshi Nakamoto published a white paper proposing a whole new kind of currency. A currency that was truly decentralised with no ties to any government or financial institution which would herald a whole new concept in the ways that transactions could be carried out quickly, securely and anonymously.
A decade later, Bitcoin has a market capitalisation of an estimated $191 billion and has become the generic definition, particularly for those not really immersed in the crypto-world, of a cryptocurrency.
The last 12 months have seen more and more people wanting not only to find out more about the cryptocurrency phenomenon but also to start acquiring them for themselves. One only has to look at the huge acceleration in the number of blockchain wallet users worldwide that has risen from around 3.5 million in early 2015 to 21 million by the end of 2017 and which still continues to rise. Then there’s the market price of Bitcoin, which peaked at $20,000 in 2017 and is now hovering about $6,000.
But Bitcoin is far from the only game in town and new cryptocurrencies seem to be popping up on a virtually weekly basis many, no doubt, hoping to simply jump on the bandwagon and make a quick profit for their originators.
Bitcoin’s key competitors
Naturally, not all cryptocurrencies are simply intended to be get-rich-quick schemes with very little else behind them and a number of other clear leaders have emerged.
Ethereum, for example, currently has a market capitalisation of around $116 billion and many see it as the platform on which a far wider range of applications can be built than the essentially financial ones of Bitcoin. It’s the brainchild of Vitalik Bitarin, who published his own white paper in 2013 positing the idea that a new scripting language should be developed that also allowed for applications to also be created.
Ethereum made big news in the cryptocurrency community in 2016 when a decentralised autonomous organisation (the DAO) used crowd funding to raise $150 million to finance further development. However, somehow $60 million worth of this went missing and in the controversy that followed the community was split with many believing that the blockchain should be altered to try to reclaim the missing funds. Others felt that the integrity of cryptocurrencies would be compromised and this led to the now well-known split into Ethereum and Ethereum Classic – the latter being the currency favoured by the interventionists.
The third of the ‘big three’, Ripple, has origins going back as far as 2004, when a system called Ripple Pay was originally developed by a Canadian developer by Ryan Fugger who had the ambition of creating a decentralised payments system long before Satoshi Nakamoto. It was further developed to avoid needing to use Bitcoin’s mining system in order to use less computing power and be quicker to complete transactions. The currency that has emerged, the XRP, has both of these advantages over Bitcoin and this accounts for its growing popularity among banks for fast and secure money transfers. With a market cap of around $52 billion it’s a distant third behind Bitcoin and Ethereum but observes believe that it may soon start to gain even more ground.
Looking to the future
Whatever some bank heads and other financial experts think about cryptocurrencies, it looks like they’re here to stay. In fact, the next generation has already started to emerge. A prime example is the IOTA, which doesn’t rely on the blockchain at all but a so-called “tangle” of data for the confirmation of transactions – leading to far greater speed and, hopefully, no reduction in security.
Many people believe that the next important step for cryptocurrencies will be for them to be more widely accepted as a form of payment. Some high-profile organisations like Microsoft will take Bitcoin payments for certain products and services. They can also be converted into virtual vouchers via shopping app Gyft to spend at everyday stores like Amazon, Walmart and Nike.
The online casino conundrum
The world of online gambling has also been influenced by cryptocurrency. Online betting site SatoshiDice used to make up 50% of all Bitcoin transactions – and now a growing number of online casinos are accepting cryptocurrencies as payment.
However, what is yet to be introduced is the option to pay using cryptocurrencies at any of the longer established and market-leading online casinos. This doesn’t look like this is going to change any time soon, as the UK Gambling Commission currently forbids it because of concerns over money laundering and supporting terrorism – which some accuse Bitcoin of supporting.
That’s why when you look at the 888casino accepted payments, you’ll see that despite welcoming upwards of 30 different deposit methods, cryptocurrencies aren’t among them.
It’s certainly not because online casinos are reluctant to embrace innovation. After all, their success has been consistently built on using leading-edge technology to improve the online experience for its players. And it’s not because they don’t want to minimise transaction times and costs, which make cryptocurrencies a tempting move for any business.
It’s the lack of transparency, primarily, that puts online casinos off. In such a heavily regulated industry, they need to have a certain amount of information about their players – such as their age, address, email address and perhaps even their occupation – to allow them to gamble. Before fully committing to the effort and expense of adding cryptocurrencies to their list of payment methods, it could be that the biggest online casinos will need to feel more confident that this is the sort of information that potential customers will be happy to give up.
There may also be a concern that the general public are receiving mixed messages about the wisdom of getting involved with cryptocurrencies, too. For example Bitcoin’s recent price volatility has been widely reported and Lloyds Bank in the UK has even banned customers from using their credit cards to purchase Bitcoins. Finally, both online casinos and their potential customers are probably also very aware not just of the risk of hacking but also the suspicion that cryptocurrencies are favoured by criminals and others involved in underhand activities.
Reasons to be in favour of using cryptocurrency in gambling
There are several credible reasons why some people want to see the expansion of cryptocurrencies in gambling. The main reason is that, with no intermediary to pay for handling payments and transactions, casino operators and customers would be saving money – as there would be little or no fees to pay.
Another reason is because it makes players’ winnings more secure. Instead of taking bags of physical cash, they can merely have the jackpot added to their Bitcoin e-wallet.
Reasons to be against using cryptocurrency in gambling
However, the number of reasons why gambling has yet to embrace gambling is far greater, starting with the lack of transparency. In the UK, the Gambling Commission bounds all casino operators to know their players’ sources of funds, and to have robust systems to make sure these are fully investigated. Currently, there’s just not enough transparency in cryptocurrency transactions to know enough information about a player and their source of income.
On top of this, cryptocurrencies have struggled to shake their reputations as being linked to the flourishing of Dark Web trading of drugs, weapons and even women. Also, because a system of cryptocurrency is hosted on a central network, there’s always the danger it could be hacked, and huge amounts of money could be stolen. Finally, cryptocurrencies have quite simply failed to prove themselves as serious alternatives to traditional currencies – particularly with their dramatic increases and decreases in value in recent months.
The only way cryptocurrencies will change the world of finance is to be seen as a genuine alternative to traditional currencies. Cryptocurrency developers will be doing all they can to continue making them as secure as they can be – and hoping a good reputation will follow. If this happens, there’s no reason why cryptocurrency won’t be welcomed just as widely as Visa and MasterCard are today – not just by online casinos but by all kinds of retailers and other service providers worldwide.