The Bitcoin Series: Article 5, What does Bitcoin Exchange Shutdown mean for Bitcoin Poker Sites?
Bitcoin Exchange Mt.Gox shuts down
There was some virtual drama in the bitcoin a.k.a BTC industry on Tuesday, 25th Februry as Asia’s biggest bitcoin Exchange Mt. Gox went down, allegedly due to a malware invasion/hacking attempt. While Mt Gox attributed it as a ‘transaction malleability’ but the news in the volatile market of bitcoins is that the popular exchange was hacked of 744,000 bitcoins, equivalent to $38o Millions keeping their current market value in mind. The big bitcoin giant came falling down within a day.
Later it posted this message on their website:
“In the event of recent news reports and the potential repercussions on MtGox’s operations and the market, a decision was taken to close all transactions for the time being in order to protect the site and our users. We will be closely monitoring the situation and will react accordingly.”
It is assumed that over 500,000 users will be effected by the shutdown at Mt.Gox and what will happen of their money is not known. But to control the situation and prevent the virtual currency’s value from sliding down, several bitcoin company CEO’s had a online meeting. It triggered several statements from bitcoin bloggers and entrepreneurs claiming Mt.Gox as just one exchange and the others were still there to function. But the bitter truth is that this virtual currency has faced its worst attack ever and its vulnerability has been exposed.
Impact on bitcoin poker sites
The question that looms large over bitcoin poker site users is the same as the other users are asking? Are their funds safe? The currency fell 23% within the news of Mt.Gox shutdown. So what does it mean for poker players who are using bitcoins to play on exclusive bitcoin sites.
To answer this question, it is important to understand the mechanism of bitcoin deposits on poker sites. The first step involves opening a bitcoin wallet. This is a network or program that allows you to send and receive bitcoins online. There are a number of websites that offer bitcoin wallets to new users, and simply require a username and password for signup. The next step is to receive your 33-character bitcoin address which tracks all of the users bitcoin transactions.
Once you have your bitcoin wallet and address, you can purchase bitcoins directly online with any cash exchange method. This includes credit/debit card payments. the moment you have BTC in your wallet, you can deposit them in online poker sites that support them. Sites like sealswithclubs.eu, americascardroom.net are some of the premier BTC poker sites. Now the first repercussion of this shutdown has been the price volatility of the currency. Thus the value of a player’s bitcoins has come down without him even trading them. The moment a BTC poker player decides to withdraw his winnings, the value has also degraded by 23% within 2 days.
It will also effect the player sentiment. BTC sites had just managed to make a market in USA where players were seeing it as an advantage to playing on an international platform. This will be setback as players will be hesitant to play considering the vulnerability.
While prominent bitcoin poker sites were not making any statement on the shutdown and continued to function in their regular mode, it is definitely going to effect their traffic. Bloggers in favour of this virtual currency that was introduced in 2009 are trying to dismiss this as ‘one off incident’ and claim that the currency will be back on its feet soon. But if it is able to sustain in the long run and if poker players continue to patronise it post this incident waits to be seen.
If you want to read what bitcoins are, click here .