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December 27, 2013 at 7:43 am #27379Poker GuruParticipant
A new virtual currency, bitcoins has taken the poker world by storm with its attractive features that have caught the worldÂ’s fancy. It has become a topic of constant deliberation on whether bitcoins should be used as an alternate to real currency with varied views on its pros and cons. In spite of this contemplation, poker players and the gaming companies around the world are smitten with this newfound virtual currency. Here we take an initiative to understand what bitcoins are along with its future in the poker industry. We will also look at its pros and cons from a poker playerÂ’s perspective.
What is a Bitcoin and how does it work?
In simple language, Â‘Bitcoin is a digital currency you can use for personal transactions or business at high speed and low costÂ’. Founded in 2009, Bitcoin is referred to as a cryptocurrency where there is no actual exchange of digital notes or coins between the buyer and the seller. Instead, to complete a transaction the buyer requests an update to the public ledger called the blockchain, which contains every transaction ever processed and the authenticity of each transaction is maintained through digital signatures corresponding to the sending address. A decentralized network maintains the ledger and the operators of this network are known as Â‘minersÂ’.
Unlike real currencies like dollar and euro, bitcoins do not come under the ambit of any bank or government. Bitcoins have cash value that allows users to exchange bitcoins for their chosen form of currency online in a matter of minutes through bitcoin-driven eWallets similar to PayPal, Neteller, and other virtual currency-exchange sites on the Web.
What is the acceptance of Bitcoin in the poker world?
Using bitcoins in poker has its own set of advantages and disadvantages. The value of bitcoin has also surged dramatically with China joining the group of countries supporting bitcoin transactions. The beginning of 2013 saw bitcoin (BTC) valued at $13 and the value of bitcoins has increased exponentially. Though the current bitcoin is valued at $712, in November it was valued at around $900 per bitcoin.
Despite the fact that the central banking community does not endorse bitcoins, several countries are now recognizing them as a legitimate form of currency. In August 2013, GermanyÂ’s Ministry of Finance declared bitcoin a Â“unit of accountÂ” that can be used for private transactions, enabling the country to tax users or creators of the new currency. Apart from Germany, the US has also made necessary amendments to ensure the right usage of bitcoins as it poses speculative risks that can lead to fraud.
In the last year, several offshore online poker sites like Infiniti Poker, Sealswithclubs.eu and Satoshi Poker opened their doors to players around the world, including those in the U.S., using bitcoin as their currency. A lot of questions arises with the thought of using bitcoins in poker such as why poker players would want to use bitcoins, whether they are safe to use, how the gaming industry and government will respond to this new currency? If you as a poker player also have these questions in mind, itÂ’s absolutely justified to think like that and only a proper analysis of the pros and cons can get you to make the right decision.
What are the advantages of using Bitcoin in poker?
With the immense popularization of this virtual currency, itÂ’s only the right thing to do to evaluate the currency in question. So letÂ’s look at the advantages of using bitcoin.
If we look from the perspective of a poker player, he/she would compare the transfer with the non-bitcoin site used by them. So what difference do the bitcoin sites offer? The most important factor is the speed of transaction involved in a bitcoin site that is much faster than the usual non-bitcoin site (PokerStars take a minimum of 48 hours to cash out from their last deposits because of the company’s security policy). On the leading Bitcoin poker site, Sealswithclubs.eu, players can make instant deposits, and cash-outs take less than 12 hours at most. Satoshi Poker claims to offer deposit and withdrawal capabilities that take less than an hour. Michael Hadjuk, owner and CEO of Infiniti Poker said Â‘Cash-outs are processed immediatelyÂ’ and explains the process of withdrawal which can be as fast as 15 minutes to an hour.
All online poker sites require a player to input certain amounts of personal information about themselves to play and deposit or cash out on the site, including their place of birth and citizenship. Whereas a bitcoin site like SealswithClubs.eu and Satoshi Poker don’t require personal information and allow players to play anonymously and without any documentation. This also arises a question of transparency that is exactly why Infiniti Poker is following an approach similar to that of traditional online sites. “People will register on Infiniti Poker in the exact same manner as any traditional online poker operator. I am of the mindset that transparency is a very important virtue in the realm of business and customer relations. It is difficult to become accepted in the mainstream when you operate in the shadows,” Hadjuk said.
U.S. players who are residents of Nevada, Delaware and New Jersey can only play online poker in their respective states but the bitcoin driven sites offer a better playing market as these sites let players from all over the world play with one another. Because bitcoin is not yet regulated as an official currency within the U.S., as long as a playerÂ’s state doesnÂ’t have laws making it illegal for them to participate in a live wagering poker site, they can play without fear.
Playing on the bitcoin driven sites offers a double advantage in terms of the ROI. With the fluctuations in the value of a bitcoin, it is as good as making an investment. Based on its current trading price players can make money if the value is high at any point of time. If we were to see the history behind the bitcoin prices, the graph would show a dramatic increase in value over the past one year with the recent high of over $1,000 per coin. However, just like the stock markets, the value of a bitcoin can also go down depending on several factors.
The other advantages include the potential for large rakebacks for all players and the smaller player pools on bitcoin sites can be an advantage to skilled players owing to the larger pool of recreational players at these sites.
What are the disadvantages of using Bitcoin in poker?
Like the two sides of a coin there are a few cons too of bitcoins.
The biggest disadvantage of the bitcoin driven sites is the lack of a proper regulatory. In the past there have been incidents such as the case of the infamous Black Friday that forced the shut down of Full Tilt Poker and blocked players money, as they did not have segregated bank accounts. Though bitcoin sites like SealswithPoker.eu promise that funds are segregated, no regulatory body backs this promise, meaning poker players’ bitcoins could potentially be at risk. Moreover, for U.S. players there is also a risk that government might try to take action against an online site offering bitcoin backed transactions.
With a drastic fluctuations already witnessed in the past, the future doesnÂ’t look any different. The value of a bitcoin is based on factors that change within minutes and this speculative nature of the currency can pose serious risks like any stock market product. According to Stuart Hoegner, the iGaming lawyer, “BitcoinÂ’s volatility is a function of its novelty and having thin liquidity. As more people adopt and transact in it, I would expect to see its volatility subside somewhat. This is a bit of a chicken-and-egg problem, as its reduced volatility may induce more people to enter the market and try to use bitcoinsÂ”.
Although the bitcoin sites claim to allow players to play poker without giving any personal information but the use of bitcoins can be tracked within the blockchain at the point of financial exchange to a personÂ’s personal bank account.
Just as in the case of stocks, it is assumed that the profits or losses from bitcoin will have to be declared and it will be taxed accordingly. Though nothing has yet come out for the US, but for Germany the government has declared that profits realized from bitcoin investing are taxable.
As the bitcoin sites don’t require player details and allow players to play from different ISP addresses, safety measures to deter collusion and give poker players the confidence that they are not being cheated are weak. Kleptography occurs when someone uses a “back door” Â— encrypted software code used by unscrupulous software providers for personal gain. There have already been cases in which bitcoin wallets and exchanges have been hacked by people seeking to beat heavily encrypted codes, but bitcoin itself has not yet been hacked.
What is the Indian perspective on using Bitcoin?
Bitcoins are fast gaining favor in India. According to SourceForge, an online platform that connects consumers to open-source projects such as bitcoin and facilitates downloads, there have been 35,648 downloads in India since the launch of Bitcoins.
Bitcoins are not yet regulated by IndiaÂ’s central bank. The Reserve Bank of India (RBI), though, is closely watching the developments in the industry. Â‘There are about 2,000 active Bitcoin users in India. Most of the users are individuals and want to explore the possibilities of an alternative investment opportunity,Â’ says Nilam Doctor, an Ahmedabad-based software professional who has invested in bitcoins and also developed an online trading platform for the currency, rbitco.in.
Growing exponentially in value, bitcoins has become a fast moving currency but at the same time it has been facing strong criticisms from the RBI for not being authorized by any central bank or monetary authority. The RBI has time and again warned the public against the use of virtual currencies such as bitcoin, pointing out that users expose themselves to potential financial, legal and security related risks.
The future of bitcoin in poker in still uncertain and only time will tell if this new virtual currency finds favor with poker players, investors and the government!
December 30, 2013 at 2:50 pm #36862
January 12, 2014 at 7:41 am #36873Poker GuruParticipant
Some good news for the future of Bitcoins in India: http://www.coinspectator.com/india-gets-the-green-light/
January 24, 2014 at 12:00 pm #36905sean williamMember
“…only time will tell if this new virtual currency finds favour with poker players, investors and the government!” – You have a point! Bitcoin may be booming right now, but we cannot deny the fact that it can become obsolete sometime in the future. Online casino websites like Betcoin™ should think through their next step if this thing happen.
December 10, 2014 at 3:56 pm #27380AnonymousInactive
PokerStars Looking to Accept Bitcoin Payments in Near Future
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