Satoshi Nakamoto (a pseudonym for a person still unknown) mined the first Bitcoin in January 2009. At first, only a few people had much awareness of it. The cryptocurrency was mostly of interest only to tech-savvy people and so-called “computer geeks,” who were the first to use this new technology that had the potential to profoundly change the way the world viewed currency.
These days, many more people are interested in bitcoin. This interest is not surprising, as the price for one bitcoin almost reached $20,000 in mid-December of 2017. More importantly, you can now use bitcoin to purchase a wide variety of goods and services online.
The online gambling industry has also shown a strong interest in bitcoin. The cryptocurrency is a perfect fit for online casinos, sportsbooks, poker rooms and other types of gambling platforms.
This guide will give you the information you need to understand how to gamble using bitcoin.
Bitcoin is a cryptocurrency, also known as a digital currency system, that is used for financial transactions worldwide. Since the currency is digital, it does not use physical representations of value, such as coins and notes. Instead, its value is stored online, and you access it via public and private keys stored in your bitcoin wallet. You can also trade it via bitcoin exchanges for other currencies.
You can think of having a bitcoin wallet in the same way as having a bank account. you can use the funds in your wallet to buy goods and services or transfer money to other peoples’ wallets. The big difference is that you cannot “physically” withdraw your bitcoin from your wallet, but you can exchange it for fiat currencies, such as the Euro, US dollar, British pound and the Japanese yen.
One of bitcoin’s defining characteristics is that it is decentralised. Therefore, a government agency or other authority does not issue bitcoin or control the transaction process associated with using it. Rather, each individual user has direct access to the blockchain, which is the system that registers all bitcoin transactions.
The decentralised blockchain system makes bitcoin both anonymous and transparent simultaneously. This combination of anonymity and transparency is one of the main reasons that bitcoin has become so successful. It is also the reason why it has become so popular for use in online gambling.
The different types of bitcoin gambling platforms
The first bitcoin gambling platforms were not very complex. They offered dice and a small selection of casino games that were easy to develop. Now that some time has passed, you can find just about any type of gambling platform to meet your gambling preferences.
There are numerous bitcoin sportsbooks available online. You can use bitcoin to bet on the outcome of just about any mainstream sports, and the online sportsbooks offer you many betting options to make your participation on the site more exciting.
The number of online casinos that accept bitcoin as a method to fund your account, as well as bitcoin-only casinos, has increased dramatically. You can now use the currency to play the games of some of the most popular developers, including NetEnt and Microgaming. Online casinos offer a wide range of options for you, including roulette, blackjack, baccarat, slots and live-dealer games, which give you the feeling of playing at a land-based casino rather than online. Some online casinos also feature a sportsbook for your convenience, making some online casinos a one-stop location to meet all your gambling preferences.
Poker rooms are another online gambling platform that are very popular. As with online casinos, you have a choice of playing at hybrid poker sites that use both traditional payments methods and bitcoin, and at poker rooms that only accept bitcoin and/or other cryptocurrencies.
In the future, you can expect to see more and more gambling platforms become available that support bitcoin. You can also find sites where you can play bingo and other enjoyable games, and don’t be surprised to see the development of some unique new gambling options.
Fair games with bitcoin
One of the principal reasons so many operators of gambling sites enjoy working with bitcoin is that it gives them the opportunity to develop provably fair games. This is part of the beauty of the technology behind blockchains, which verifies the fairness of every deal or spin on the site or any other aspect related to gambling. When you play on a site that uses this technology, you can rest assured that the games are fair and that you are not being cheated.
The structure of the bitcoin blockchain makes it the ideal platform to provide transparency for online gambling. The various game developers have some differences in their approach, but the main concept they employ is very similar.
The cryptographic hash that the provably fair system uses is just about unbreakable. The process begins before you place your bets and the game round begins. It is at this point where the random number generator (RNG) that works behind the scenes generates the outcome of the game.
The RNG creates two distinct seeds of random numbers. The end result of the game is determined by the combination of both seeds. At this point, the software encrypts both seeds and sends you your version of the seed. You can then use your bitcoin hash after the end of the game to confirm that the end result was random.
Hybrid casinos vs. bitcoin-only casinos
It’s worth pointing out that you have your choice of two types of bitcoin gambling sites. The first type are platforms that only let you fund your account with bitcoin or only with other cryptocurrencies. The other type are platforms that allow you to fund your account using bitcoin as one of the many payment options that it offers in its cashier section.
The hybrid casino’s main advantage is that they have been operating longer than bitcoin-only casinos, which means they have a longer operating time on which you can judge their reputations. Both types of sites offer a wide variety of games for you to play, and both types are licensed (or should be!) by recognised regulatory authorities.
However, bitcoin-only casinos utilise all the capacities and advantages that come with bitcoin use, as we discuss in the next section of this article.
Advantages of gambling with bitcoin
There are many reasons why Bitcoin is so well-suited for use with online gambling. The many advantages of this cryptocurrency work both in favour of the site and the players.
Keep in mind that some of the advantages of using Bitcoin are only available at those sites that exclusively allow you to fund your account with cryptocurrencies.
Some of the benefits are available only if you sign up for a platform that only works with crypto, so bear that in mind.
- Privacy. You can remain anonymous, as you will not have to complete numerous “know your customer” questions or undertake other time-consuming procedures. Many bitcoin-only online casino sites will not ask you for any information at all.
- Speed. Transactions made using bitcoin are completed quickly. Withdrawals using bitcoin are much faster than those using traditional withdrawal methods, such as credit cards, debit cards or bank wire transfers. You will not have to wait several days to receive your money.
- Low transaction fees. The fees for using bitcoin are close to non-existent, and usually, the online casino pays them for you. Also, the cost to the online casino for developing a cashier section is much lower, allowing it to have less overhead and to provide better odds.
- Promotions. Some of the largest online bonuses at sportsbooks, poker rooms and casinos are available to players who use bitcoin. The amount of extra money you can receive is much more substantial than the amount you would get when using fiat currencies.
- Security. If you implement the proper procedures to protect your bitcoin wallet, you eliminate the risk of someone hacking your account, because you don’t share your personal details with anyone as you would do when using traditional gambling sites.
- Tax-free withdrawals. Bitcoin withdrawals are currently tax-free, so you will not have to declare anything or pay any taxes to a government authority.
Disadvantages of gambling with bitcoin
Of course, nothing in this world is perfect, so there are a few disadvantages of gambling with bitcoin you should know about before you decide to use it at an online gambling site.
- Volatility. The value of bitcoin is constantly fluctuating. The fluctuations could end up being to your benefit, but it’s hard to know what might happen. This volatility adds a degree of uncertainty when you use bitcoin to fund your online gambling account.
- Not necessarily user-friendly. If you are not a tech-savvy person, it could take a little time for you to become accustomed to working with bitcoin. However, the good news is that the user interface of most online casinos and bitcoin wallets is becoming much easier to navigate, and you should be able to master using bitcoin fairly quickly.
- Security. It may seem strange to discuss security as both an advantage and disadvantage of using bitcoin; the explanation for that is simple. While an online gambling site cannot steal any funds from a bitcoin wallet, there have been a few problems at bitcoin exchanges that offer wallets. A few have been hit by hackers in the past. Even though it occurs very infrequently, it is something to consider. We address the security issues associated with bitcoin wallets later in this article.
A step-by-step guide to gambling with bitcoin
If you have decided that gambling using bitcoin is right for you, you must complete several steps.
1. Choosing a bitcoin wallet
Obviously, you must buy some bitcoin before you can begin to gamble with it, but before you can purchase it, you need to open a bitcoin wallet. After you open your bitcoin wallet, you can then go to a bitcoin exchange and purchase your bitcoin using a credit card, a debit card or via a direct debit from your bank account.
While bitcoin exchanges offer wallets for you to use, getting a wallet from an exchange may not be your best option. There are several different types of bitcoin wallets from which you can choose. Some offer more safety but less convenience, while others offer more convenience but less safety. If you are a beginner regarding the use of bitcoin, you might want to choose a wallet that gives you a more accessible way to store your currency, while a highly secure wallet may be a better choice for a seasoned bitcoin user.
Here is a discussion of four types of such wallets and the advantages and disadvantages of each that will help you choose the one that’s best for you.
2. Online wallets. Online wallets are based in the cloud. You can use a web browser on any device to access them. GreenAddress is a popular bitcoin wallet, and many bitcoin exchanges provide wallets to accompany their trading platforms.
Online wallets are among the most popular options, as they are practical, convenient and feature-rich. Their popularity stems from their providing you with easy access to your money from almost any type of computing device. In addition, many bitcoin exchanges include integrated wallets in their operations, providing you with one platform you can use to both make transactions and to trade currencies.
However, since online wallets operate in the cloud, their security provisions are weaker than some other options, making it easier for hackers to gain access. When you use an online wallet, you are storing your public and private keys on someone else’s server, and if someone compromises that server, you run the risk of a criminal stealing your keys. Also, if that server goes down, you lose access to your wallet and to your funds.
3. Desktop wallets. As the name implies, a desktop wallet sits on your desktop. To get started, you just download the software from a provider of desktop wallets and install and run the wallet on your computer. You run it in the same way you would run any desktop application. Copay, Exodus and Electrum are examples of popular desktop wallets.
That type of wallet provides a middle ground between online wallets and other, more secure wallets. However, with a bit of online research, you can learn how to improve the security of desktop wallets by instituting wallet rotation and implementing backup procedures. They are very easy to use, have many features and provide access to your funds from your main computing device.
However, should a virus compromise your computer, someone could steal the information in your wallet. Also, if your computer is damaged, you might not be able to access your wallet. Finally, a desktop wallet downloads the complete blockchain ledger to your computer. That ledger is very large – about 50GB – an inconvenience that consumes both bandwidth and time.
4. Mobile wallets. Mobile wallets are just applications that you install on your smartphone. They are the most convenient wallet option, and you can even use them to make purchases at stores. Airbitz, Mycelium and Bitcoin Wallet are examples of popular mobile wallets.
However, mobile wallets are not very secure and are only slightly more secure than online wallets. It’s relatively easy to hack a mobile phone, so it’s not a good idea to use a mobile wallet as the primary method to store your bitcoin. If you lose your smartphone or someone hacks it, your money is probably gone for good.
It’s best to treat a mobile wallet in the same way that you treat cash in the wallet you carry in your pocket – just keep enough funds in your mobile wallet for the activities you plan to do during the next day or two.
5. Hardware wallets. Hardware wallets are the best option if you plan to store a significant amount of bitcoin. When you use a hardware wallet, you are not storing it on any specific device or in the cloud, as a hardware wallet is not connected to the internet. Usually, a hardware wallet comes as a USB drive that you connect to your computer system whenever you need to make a transaction using bitcoin. You generate your private keys offline, making it very difficult for hackers to steal them. For additional security, you can also protect your hardware wallet with a password. Trezor and the Ledger Nano S are two hardware wallets that have an excellent reputation.
However, there are a few downsides to using a hardware wallet. They are relatively expensive, and you need to have some understanding of blockchain technology. Also, you must be very careful not to lose the USB drive. If you do, you’ve lost your hardware wallet, and you will no longer have access to your funds.
Finding a bitcoin gambling site
Now that you have chosen your wallet, your next step is to find a reliable online gambling site that accepts bitcoin. As we’ve previously stated, you can either choose a site that exclusively accepts bitcoin and other cryptocurrencies or choose a site that accepts bitcoin as one of its deposit and withdrawal options.
Whichever type of online gambling site you choose to join, there are several factors that you should evaluate. First, check out the reputation of the gambling site operator and be sure that the site is licensed by a reputable regulatory authority. While most online gambling sites are reputable, it never hurts to be careful.
Next, look at the variety of the gambling options that the site offers. Some bitcoin-only sites offer a complete range of products, including virtual casino games, live dealer games, video poker and a sportsbook. If you’re looking for variety, be sure the site offers it before you open an account. Of course, if you want to spend your time gambling at one type of game or activity, you might want to find an online site that specialises in what you enjoy the most.
Finally, the quality of the online gambling site you choose is important. The variety of the games offered, the scalability of the site’s mobile version, the clarity of the user interface and other factors you deem important should be included in your evaluation.
Depositing and withdrawing bitcoin
After you open an account at an online gambling site that accepts bitcoin, you need to make your first deposit. Typically, it’s a very easy process. The poker room/sportsbook/casino will provide you with the address of its bitcoin wallet. Open your own wallet and send the desired amount of bitcoin to the site. The money will appear in your account almost immediately.
The process to make a withdrawal is very similar. When you want to cash out your winnings, open the cashier section on the gambling provider’s website. The site will ask you to provide the appropriate keys from your bitcoin wallet, and you will then enter the amount of bitcoin you wish to withdraw.
Many online gambling sites will provide bitcoin withdrawals instantly, and you will receive your finds very shortly after making your request. However, some sites have a pending period before they process your withdrawal request. However, there is no need to be concerned unless it takes more than one or two additions days to receive your withdrawal.
Tips for gambling with bitcoin
Many of the usual tips for online gambling in general also apply to gambling using bitcoin. Always choose online gambling sites that guarantee fair play, have reliable operators with a good reputation and are licenced by a reputable regulatory authority. Also, pay attention to the promotions that the site offers, as it’s in your best interest to get as much value for your money as possible.
However, there are some tips that apply exclusively to gambling with bitcoin. Always check for casinos that offer games that have a house edge of zero, sportsbooks that offer no betting margin and poker rooms that offer no rake. Many bitcoin-only gambling sites offer these types of products, which are almost impossible to find on traditional online gambling sites.
Whenever you can, stick with playing provably fair games. These types of games are bitcoin’s bread and butter, and it’s impossible to compromise the fairness of those games. No gambling regulator can provide a better guarantee of fairness.
Bitcoin gambling options are developing quickly, and its future seems bright. If you decide to give gambling with bitcoin a try, you’ll discover a lot of interesting opportunities.
Just be sure that you completely understand the journey you’re about to begin. The information in this article tells you the basics of what you need to know, but it never hurts to broaden your knowledge base even further.