The Bitcoins Series: Part 1; Introduction to Bitcoins and their Pros/Cons in Poker

bitcoins1What are bitcoins? What is their relevance in poker?

‘Bitcoins’ have become the new buzz word in the online poker industry and have been creating headlines on regular basis. Bitcoins’ acceptance in global financial circuit has been growing exponentially especially after china joined the league of supporting nations.

But what are “Bitcoins” and how is it connected with poker? 

Bitcoins are a form of virtual currency which is attracting poker players and gaming companies for financial transactions in a big way. This decentralised form of currency was first introduced in 2009 by Satoshi Nakamoto. Bitcoins essentially run on an open source platform which is operated by the public and uses peer to peer computer coding.

The Bitcoin network maintains a public ledger known as “block chain,” which contains every transaction processed through bitcoins. This ledger, or computer program, then uses complex encrypted mathematical equations that let the user’s computer to verify the validity of their transaction. The authenticity of these transactions is protected by digital signatures corresponding to the sending addresses, which in turn gives users full control over sending bitcoins from their own Bitcoin addresses without using any middleman or banks or other financial institutions. Their usage and acceptance in the financial industry is very evident from their ever rising exchange value.

Recently bitcoins have also caught the fascination of the online poker world. Major reasons of this attraction are advantages associated with currency for poker players. Some of them are –

  • Bitcoins have speculative dimension attached to its value, It’s like making an investment in any market stock. Its value in the market has experienced steep growth in last quarter of 2013 and there are high chances of positive growth as this currency finds more demand & acceptances in larger economies.
  • Bitcoins have the advantage of transaction processing speed in on & off bitcoin driven sites. Especially where traditional models take time for payouts.
  • Third advantage of bitcoins is that it has become a universal gaming currency for poker players all over the world unlike dollar based sites.
  • Bitcoins also offer attractive rakeback models to poker players. The amount of rakebacks is higher that dollar based sites, currently satoshi poker offers 20% rakeback to its players which is a kind of best offer in the industry.

Recently two Las Vegas based Casinos have also started accepting Bitcoins as currency giving a thrust to this virtual currency. In the US perspective where only a few states have made online poker regulated, bitcoins are being accepting widely. It gives US poker players the opportunity to play on bitcoin accepting poker sites since they might not be accepted in ‘dollar only’ poker rooms.

Potentially bitcoins offer a great future to poker industry because of its acceptance and speculation factor. However safety issues have been also raised associated with this currency time & time again. Since bitcoins are adopted by few offshore sites it allows poker players to enjoy liquidity and more opportunities than big brands like poker stars, 888poker or any other.

As every coin has two facets “Bitcoins” also carry some cons or we can say disadvantages. One of the biggest cons is Bitcoins based sites are unregulated at this stage and operate from offshore territories especially in case of US. 

  • There is no regulatory body existing to verify promises of bitcoins based site. How funds are segregated from other form of currency is always a worry. Most of the times experts believe its not currency but it’s a problem of nature of game.
  • Second con with Bitcoin is volatile currency, we have seen its value going up in recent times but vice versa can also happen and downfalls can also be steep. 
  • Taxation is another con which is associated with Bitcoins, since there is no authorized institution exists so the rules are also unclear. Bitcoins are not part of taxation sheets in US yet. But profits earned with its value growth are considered, similarly losses also can be steep.

Bitcoins are also not officially supported by banks and that also makes the transactions involving Bitcoins vulnerable sometimes. Poker is a game that involves certain proportion of luck and bitcoins add more into this. ROIs and regulations are questionable in this form of currency but with time this currency can find its way and help in globalization of online poker.  Following the popularity of bitcoins other virtual currency like litecoins, bbqcoins and dogecoins have also come up but it is bitcoins which have gained maximum acceptance.