Some scams are easy to see, but others might look like a worthwhile investment opportunity. Here are some crypto red flags to look out for.
Fancy a spin of the wheel?
While some Bitcoin enthusiasts prefer the calculated gamble of investment and day-trading, others have taken to high-roller casino websites to roll the proverbial dice.
Read: Where to trade your cryptocurrency: the world’s biggest exchanges
What are Bitcoin casinos?
Simply put, the term ‘Bitcoin casino’ can refer to any online casino or sports betting agency that accepts Bitcoin either in preference (or alongside) fiat currency.
In recent years, several large-scale Bitcoin casinos have emerged to offer a tailor-made list of games and services for gambler seeking to transact in Bitcoin as opposed to fiat currency such as the US Dollar.
Bitcoin casinos can not only offer traditional casino fair such as roulette, but can further offer sports-based betting, online lotteries, or spread betting. Rather than use the term Bitcoin or ‘BTC’, many Bitcoin casinos instead use the term ‘mBTC’ or ‘millibitcoin’ – a term denoting one-thousandth of a Bitcoin, or 0.001 BTC.
How do Bitcoin casinos work?
Save for the process of transferring or ‘cashing out’ Bitcoins after a successful (or unsuccessful) bet, most Bitcoin casinos function similarly to their ‘traditional’ counterparts.
For those who’re wishing to take a chance, Bitcoin casinos typically provide new registrations with an in-house wallet, which users can transfer Bitcoins to.
Bets taken within the casino rely on a user’s stored funds when facilitating games. Typically, a user places an opening ‘bet’ from their wallet, and can either lose or profit on that sum depending on their success in a game.
Some online casinos have gone on to offer immense ‘Bitcoin jackpots’, where users can stand to win sums in excess of 500 BTC.
Once a game is complete, any profits are returned to a user’s in-house wallet. From there, a user can direct a transfer to their private wallet when they wish – however, most casinos implement a withdrawal limit to prevent users from cashing out all at once. It is good practice to fully read an online casino’s terms and conditions before playing.
Why are Bitcoin casinos so popular?
Since Bitcoin’s emergence, the world’s foremost cryptocurrency has found favor amongst internet casinos thanks to its pseudonymity and its ease of transfer.
For much the same reason that Bitcoin initially resonated with online black markets such as The Silk Road, online casinos have quickly moved to adopt cryptocurrency as their base currency to escape regulatory purviews.
Typically, Bitcoin casino sites have gone on to offer zero transaction fees with unlimited free daily transactions – distinguishing themselves from their counterparts which still rely on fiat currency.
In some cases, Bitcoin casinos have gone on to advertise larger jackpots and extensive profits, given that their operating margins can be significantly lower.
Several Bitcoin casinos have again iterated on the formula offered by their ‘traditional’ counterparts, and have customized several ‘standard’ games with new rules and procedures which – depending on their makeup – may or may not be legal.
Perhaps the biggest contributing factor to the enduring popularity of Bitcoin exchanges is that any user’ s profits or losses are not inherently taxable unless declared to a legal authority.
Are Bitcoin casinos legal, or ‘under the microscope’?
Much like their broader online counterparts, Bitcoin casinos typically exist in a legal ‘gray zone’ and regulations or sanctions against such websites can differ from nation to nation.
Many online gambling sites pose a difficulty for international regulators, given the fact that Bitcoin is not facilitated by a central authority and no transaction can effectively be interrupted or mitigated. However, several international regulators have issued strong stances against Bitcoin casinos.
In particular, US citizens are prohibited from running a Bitcoin casino in their home territory – meaning that many operations are incorporated elsewhere and simply cater to US citizens on demand.
Several Bitcoin gambling sites have allowed new users to register pseudonymously – meaning that new registrations typically do not require a user to lodge their real name or any other form of their identity. However, any legal authority would be able to analyze Bitcoin transactions – and potentially identify their origin – through chain analysis tools.
It is important to comply with any and all legislation in your home territory, and only proceed to gamble online should you be legally allowed to do so.
What lies ahead for Bitcoin casinos?
Arguably, the future of Bitcoin casinos may not strictly involve Bitcoin.
While Bitcoin offers immense benefits to the gambling industry – specifically providing an escape from regulation, rapid transfers, and pseudonymity – newer cryptocurrencies may go one to present far more attractive benefits.
In the years since Bitcoin’s debut on the world stage, several privacy-focused cryptocurrencies have debuted that specifically anonymize transaction details and the parties involved. Cryptocurrencies such as Monero or Zcash may one day go one to be widely adopted amongst casino websites thanks to their inherent fungibility.
Read: What are the three generations of blockchain, and how are they similar to the web?
Ultimately, other projects – such as Ethereum – may also offer extremely tempting benefits. Online casinos may one day implement smart contracts to govern gambling activities such as deposits or payouts – effectively ‘decentralizing’ some of the administration of day-to-day duties.
Disclaimer: Gamble at your own risk. Please adhere to your country’s relevant laws when visiting or participating in gambling sites.