Bitcoin is a crypto-currency who’s usage has risen drastically in popularity in recent years. While the currency started off several years ago with just a few hundred users, the market cap of bitcoins currently in circulation is now over $10 billion USD.
One of the most distinct differences between bitcoins and traditional fiat-based currencies is the lack of government oversight or a central bank. Bitcoin does not operate within the laws of a particular country, making bitcoins invulnerable to government seizure. This factor is one of the reasons for its rise in popularity.
If you have just casually heard of bitcoin in the media, it may have been due to something negative, such as the US Department of Justice’s bust of the online drug marketplace, the Silk Road. Many of the mainstream media, also perhaps to government’s influence, has painted bitcoin as a fringe idea and something that is popular purely with money launderers and those who want to buy drugs online.
This is purely a myth. Bitcoin is now being adopted at a rapid rate by many mainstream retailers and is expecting even more growth in 2014. Online furniture giant, Overstock.com recently added Bitcoin as a form of payment, and the company did over $130,000 in bitcoins sales the first day the virtual currency was offered.
Online blog webpage, WordPress.com started accepting bitcoin in late 2012. The Pirate Bay, a large directory for music, movies and other applications started accepting bitcoins for donations in 2013. Social media and entertainment site, Reddit, also accepts bitcoins for purchases of Reddit Gold.
These are just a few of the companies or services that accept Bitcoin, the number of sites and businesses continue to grow each and every day. Many local businesses now accept the currency, from restaurants to real estate.
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Bitcoin may seem daunting to those who are new to the technology, but buying and selling the currency is becoming easier and easier each passing day. Bitcoins can be transferred with little to no fees across the world and can be bought instantly in many cases, through a number of mediums.
Bitcoins are transferred by sending digital signatures to the bitcoin protocol or network. This is where Bitcoin miners come into play. These users will verify these signatures and receive transaction fees and even new bitcoins for their work. The process of mining can be complicated and is best explained here. Mining is crucial because it records the transactions across a public database called the block chain, which is filled with Bitcoin addresses. On the block train, transactions across the network are not identified by a name, address or phone number, instead by using these addresses. To break things down simpler, a Bitcoin address is similar to an email address.
Addresses are between 27-34 letters and numbers that begin with the number one or three. These simply represent a potential destination for a Bitcoin transfer or payment. Addresses can be generated for free within most bitcoin wallets or exchanges. One can have many different Bitcoin addresses, and for ultimate security, should use a unique address per transaction.
Bitcoin addresses are the lifeblood of the currency, and it is worth noting that once bitcoins are sent to a particular address, the transaction cannot be reversed. Chargebacks or transaction reversals are not possible. In many ways, this is a strong aspect for security of funds. But, it leaves victims of fraud or hacking with nowhere left to turn for help.
The ability to move funds quickly and process payments with little to no cost is something that every industry can utilize, but Bitcoin is valuable for online sportsbook operators and other online gambling operators, especially those that operate in non-regulated markets, such as the United States. While all sites that process payments can benefit from little or no fees, the fact that Bitcoin is off limits from the courtrooms across the world is what make them so attractive to online sports bettors and online bookmakers.
Over the past few years, Bitcoin sportsbooks have been popping up online, and the number is rapidly growing. In addition to the reasons listed above, these sites have a number of advantages compared to their traditional fiat-based counterparts. Most importantly, is the cost of doing business.
Nearly every Bitcoin transaction is free of charge. There is no fee for sending bitcoins from one Bitcoin address to another, which means the large overhead cost of processing payments is not a factor for Bitcoin based gambling sites.
Processing payments is the number one expense that online gambling sites face, not just online sportsbooks. With Bitcoin, these costs are nonexistent. Not only does this mean fewer funds to be set aside for processing costs, but less money for support staff and other payment processing associated costs.
Most fiat-based sportsbooks employ a large support staff, and many of that group is heavily focused on the deposit and withdrawal process. They have to juggle dozens of deposit options, which they also provide customer service for, creating a lot of extra work for both the book itself and for prospective bettors.
Not to mention, the fees associated with these costs. In regulated markets, like most of Europe, there is rarely a time that consumers pay a fee to deposit or withdraw into a traditional sportsbook. These payment processing fees do not vanish into thin air, however. They are picked up by the sportsbooks themselves.
Though the customers do not have to pay the fees themselves, they are paying for them with smaller bonuses, and perhaps fewer promotions and/or a less lucrative VIP program. The sites pay a fee for every deposit or withdrawal, which can add up to millions of dollars a year for some of the largest sportsbooks in the world.
For bettors in unregulated markets, their wallet gets hit a lot harder. With many laws being passed in the United States to limit online gambling transactions, it has become tougher, and consequently more expensive to deposit online. While the sites may pick up the fees in some cases, more often than not, the burden falls onto the customer. Depositing and withdrawing in the US sports betting market can be tough, expensive, and takes a lot longer than Bitcoin to process.
Most Bitcoin sportsbooks process their withdrawal requests in just a few hours and at the latest in a few days. This is not the case with their fiat counterparts, which can take several business days in regulated markets and even longer for United States customers. Bettors may have to wait several weeks to receive checks or bank wires, which usually require a fee, as well. Want faster payouts? These are only possible via Western Union or MoneyGram transfers and come with more expensive fees. Depending on the amount requested, these can come with fees up to $200 per request.
Furthermore, many non-Bitcoin sportsbooks require a long list of documentation before bettors are able to withdraw their funds. This may include bank statements, utility bills and scanned copies of your credit or debit card. These are just safeguards to protect yourself and others from fraud, but can be annoying to produce for customers and extend the withdrawal process. Which brings us to one of the best things about Bitcoin.
I say “nearly-anonymous” because Bitcoin itself is not fully anonymous, though it is quite close. Transactions can be tracked via the block chain, but this would take considerable effort and even then it would be hard to narrow down where the funds were headed. But, for practical uses, bitcoins leave no “paper trail.”
As I mentioned above, traditional sportsbooks need a laundry list of items before they will process withdrawals, but even during the sign-up process they require a litany of personal information. Your name, phone number, home address, age, and email are the minimum amount of information they require.
Bitcoin sportsbooks require none of this information. At most, they will ask for an email address, but this is usually optional, as well. However, it may be worth signing up using an email as it can be used in case of a lost password. In some cases, accounts are not even required for to place bets. Since each Bitcoin address is unique, users can simply send the amount they wish to bet to an address assigned to a particular side or total. If they win their wager, the original stake will be send back to the address it was sent from, plus the winnings.
Anyway, with Bitcoin sportsbooks you are essentially anonymous. There are no restrictions based on IP address or location, and your right to privacy is not infringed upon. The vast majority of Bitcoin sportsbooks offer no country restrictions of any kind. Everyone in the world should be free to do what they want with their own money, regardless of governmental laws or restrictions – Bitcoin allows sports bettors to do just that.
Due to the decrease in operating costs when running a Bitcoin gambling site, bettors will generally find more competitive odds on Bitcoin sportsbooks rather than fiat-based online bookmakers. While this is not always the case based on each particular book, the industry as a whole offers some of the best odds online.
Bitcoin sportsbooks have grown in substantial numbers over the past six months. While the digital currency is just breaking ground into online gambling, the impressive number of sportsbooks dealing just in bitcoins has already created a new online sportsbook industry. There is no doubt that these sites are stealing customers from the offshore giants that have dominated the business for years.
When I first began playing at Bitcoin sportsbooks over a year ago, the selection was relatively limited compared to today’s choices. In today’s climate, it is rare to find a market that is not offered at a Bitcoin sportsbook, but that is available at a traditional online bookmaker.
Parlays, teasers, if-bets and reverses, futures and prop betting markets are available at just about every significant Bitcoin sportsbook. There is also a surprisingly large amount live or in-play betting options. American sports are well represented, along with international competitions and domestic soccer leagues from all over the world. This is not some fringe market. There is serious cash being bet on sports with bitcoins.
One area they do lag behind on is deposit bonuses. This is due to the anonymous nature of Bitcoin sportsbooks, and the potential of bonus abuse by bettors who create multiple accounts. Still, some sportsbooks do offer deposit bonuses, albeit at normally a higher rollover rate compared to conventional sportsbooks. This is merely to prevent bonus abuse.
Overall, Bitcoin sportsbooks have many distinct advantages compared to their non-crypto currency counterparts. In just a short time, they have firmly laid down the battle lines against the establishment. As Bitcoin continues to rise in popularity, the sky is the limit for Bitcoin sportsbooks.
While betting on sports with Bitcoin is now second nature to some, many bettors new to the currency and perhaps to online betting itself may have some questions. Below, I’ll address some of the most common issues bettors have with Bitcoin and its uses for online gambling.
Is Bitcoin legal?
Laws on Bitcoin depend on your local laws and jurisdiction, but for the most part the crypto currency is legal or in a bit of a grey area. Bitcoin is just over four years old, so regulations have not yet been adopted in most states outlining its use. Governments around the world are still trying to understand the virtual currency.
However, this does not mean that bitcoins are not on the radar screen of many governments. For one, regulators fear that bitcoins could be used to illegally launder money due to its ability to be used basically anonymously. It is also a threat to fiat-currencies, such as the US Dollar and Euro if it began to catch on in a much larger scale.
While the United States and Europe have been relatively fair in their treatment of Bitcoin, their eyes are certainly on the currency. The FBI has published documents warning about the illicit uses of Bitcoin and the European Banking Authority has published a similar memo.
How world governments regulate the currency will undoubtedly influence the world’s acceptance of Bitcoin and the legality of its use. Of course, this will also influence its price. For instance, the Chinese government cracked down on what was the largest Bitcoin exchange in the world until their interference. BTC China lost its payment processors, and the price of Bitcoin dropped several hundred dollars. This brings us to another topic in regards to Bitcoin, their volatility.
Is Bitcoin’s price unpredictable or unstable?
This has been the most critical, but yet truthful reason for some of the bullish opinions on Bitcoin’s potential as a worldwide currency. It is true that Bitcoin has had some rapid fluctuations in price since its inception. This presents a problem for users who may buy the currency, only for it to drop within a few hours or few days. This is a real concern, but let’s consider how far the currency has come in just a few years.
When it premiered back in 2009, it was just around $6 USD per bitcoin. It has increased exponentially since then in price, and while it is volatile to government regulation and other factors, its value continues to rise each consecutive year.
Sure, there will be bumps along the road, and it is a risk bettors must think about if they are holding a large stash of bitcoins. Users of bitcoin are partly investing in the currency itself, in addition to using it to buy goods and services and transfer funds.
I am personally rather high on the prospects of Bitcoin. It is unique in the sense that it offers customers privacy, unlike any other currency and is cost-effective. What other currency can you transfer money anywhere in the world freely and in just a few hours or less? Most banking systems are archaic compared to Bitcoin. With that said, there is always risk, but my personal opinion is that the future is bright.
What is the best way to purchase and store bitcoins?
This can be done a variety of different ways, including in person with cash, through money transfer services, but the most popular, safe and cost-effective way is through Bitcoin wallets. There are hundreds of Bitcoin wallets across the world, but the most popular one for US citizens is CoinBase.com. CoinBase is the leading marketplace for US-based bitcoins and allows customers to buy bitcoins instantly with a fee as small as 1 percent.
Bitcoin wallets allow you to buy and sell bitcoins, and store them for safekeeping. They are essentially a collection of private keys and Bitcoin addresses that provide safeguards and password protection for users.
How trustworthy are Bitcoin Sportsbooks?
This can vary wildly, and like most other markets, regulated or non-regulated – it all depends on the sportsbook. Generally, Bitcoin sportsbooks are not as safe as top regulated online sportsbooks. These include London’s High street bookmakers, such as William Hill and Ladbrokes or online giant Pinnacle Sports. However, they are probably on the same level as most US-facing online sportsbooks.
It all depends on the individual Bitcoin sportsbook. Like any online gambling site, it is best to do your own research before depositing. Just typing the name of the sportsbook into Google and looking for complaints is a decent start. As the Bitcoin community continues to grow, there has been some self policing, as well. One of the best sites for feedback on all things Bitcoin, including gambling sites is the Bitcoin Talk Forum. The owners of many sites post on the forum and bettors are able to get direct feedback and support.
Is Bitcoin vulnerable to hacking?
Since Bitcoin transactions are essentially all done electronically, it does leave the currency especially vulnerable to hackers. One of the reasons many love Bitcoin is due to its inability to be interfered with by governments or law enforcement. This, however, is a double edged sword. There is no law enforcement to help a user if a Bitcoin wallet or address gets hacked.
While this is not a problem for the vast majority of Bitcoin users, it is best to be as secure as possible when sending and receiving bitcoins. Remember, that if you store something online, it has the possibly of being hacked. Using different Bitcoin addresses for each transaction and storing coins with private keys can help reduce the risk, along with keeping sensitive addresses or passwords on paper and off your hard drive.