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A Brief Look into Cryptocurrencies and Digital Payments in Online Casinos
It was last year when I heard about a couple of Russian grandmothers investing in Bitcoin, watching their investment skyrocket that I decided to give Bitcoin a chance. I didn’t know much about this cryptocurrency but once I purchased it, I too, was happy to watch my investment rise and rise, until one day, it didn’t. The disappointment hit me, and I was instantly curious about how a brand-new currency’s value is created and how it actually works. In this blog post, I’ll explore the concept of cryptocurrencies and link this to how online casinos are incorporating this method of payment in their daily payments practice. However, it’s not only Bitcoin but also e-wallets that are the latest developments in the financial aspect of online casinos. If you’d like to read more about this and how to find the best electronic-wallet casinos, why not have a look at the following article on PayPal payments on the following site, www.bestcasino.co.uk?
What is a Cryptocurrency and Where did it Originate?
Now, as we get started, firstly, let’s look at what a cryptocurrency is. In general terms, it is defined as a “digital currency in which encryption techniques are used to regulate the generation of units of currency and verify the transfer of funds, operating independently of a central bank.”
It all started with Satoshi Nakamoto, the father of Bitcoin, who initially didn’t know what he was inventing. Bitcoin was an invention that emerged on the side of another invention still in progress. In late 2008, Nakamoto said that he had developed a “peer-to-peer electronic cash system … [that prevents double spending].” It is completely decentralized with no server or central authority. The most important part of this invention was that he succeeded where many others failed. After seeing many of his peers fail at creating digitized cash, he tried to build a digital cash system without a central entity, akin to a peer-to-peer network for file sharing which became the birth of cryptocurrency.
So how does digital currency work? Let’s look at the details behind this system. Firstly, it is important to know that if you want to realize digital cash, you need a payment network with accounts, balances, and transactions. However, there is the problem that every payment network has to solve which is to prevent ‘double spending’. In other words, it means preventing the situation where one entity spends the same amount twice. This is usually done by a central server which keeps a record of the balances. However, there is no server in a decentralized network, therefore, every single entity of the network is required to do this job. “Every peer in the network needs to have a list with all transactions to check if future transactions are valid or an attempt to double spend.” There needs to be complete consensus on all transactions, otherwise, the system is essentially ‘broken’. Normally, a central authority is required for this but in the Bitcoin system, there is no such authority.
And how is consensus achieved? This is where Nakamoto comes in. He proved that it was possible to do these transactions without a central authority. Essentially, he created a digital currency which is a “database that no one can change without fulfilling specific conditions.” A cryptocurrency like Bitcoin consists of a network of peers where every peer has a record of the complete history of all transactions and therefore also the balance of every account. The transaction is known almost immediately by the whole network, but it gets confirmed only after a certain amount of time has passed. Confirmation is critical here as if a transaction is not confirmed, it is classified as pending and can be forged. When a transaction is confirmed, it is no longer forgeable and can’t be reversed. “It is part of an immutable record of historical transactions: of the so-called blockchain.” Only “miners” can confirm transactions.
Once a transaction takes place, it has certain characteristics. These are the fact that a transaction becomes irreversible, anonymity (as neither transactions nor accounts are connected to real-world identities), the transactions are fast and global, they are secure, and finally, they are ‘permissionless’. This means you don’t have to ask anyone to use a cryptocurrency.
The Future of Cryptocurrencies
What is the future of cryptocurrencies? Basically, they’ve been referred to as “digital gold”. In other words, they are sound money that is secure from political influence. They are also a fast and comfortable means of payment with a global scope. After being in existence for seven years, Bitcoin’s price has increased from zero to over $650 and its transaction volume has reached over 200,000 daily transactions. The growing volume of transactions means that many companies have now had to adapt to cater for this currency. This means that online casinos have jumped on the bandwagon too and many are now offering the option of Bitcoin as a deposit currency to work with.
The Benefits of Bitcoin in Online Casinos
Next, let’s look at some of the benefits of Bitcoin use in online casinos. Firstly, the payments are decentralized. As there are no third parties involved in Bitcoin, the entire system is decentralized. Bitcoin operates only between users, which means banks and other companies don’t have access to it. This, in essence, means that the funds in your account are not connected to any other corporation and “cannot be seized or interrupted in any way.” As Bitcoin isn’t being run by a specific country or is linked to your personal profile in any way, the funds obtained in Bitcoin can’t be taxed. This means that purchases and investment gains cannot be taxed, and your payments are tax-free. Moreover, using Bitcoin to purchase products or services online, sending funds to other users, or simply holding onto the coins to gain value, has low fees as there are no third-party companies to apply fees or exchange rates. The only possible fees that can be involved are those from the wallet. These fees are, however, minimal when compared to credit cards. As Bitcoin doesn’t use your personal information to complete transactions, but rather, an account ID, your personal details are safe and secure. Not even an email address is used as with e-wallets such as PayPal or Neteller. In addition, Bitcoin web wallets have enabled mobile transactions through various apps, which are used as an additional form of verification. This adds more security to transactions and has made it easier to make purchases and complete transactions while on the move. Finally, using Bitcoin with online casinos or other online services provides a great benefit as deposits and withdrawals are carried out much faster and safer. Withdrawals can take less than 10 minutes to be completed, while deposits are nearly instant.
Keeping all the benefits of Bitcoin in mind, it is sure to become a more widely used currency method in online casinos in the future, as more and more casinos offer this aspect of payment. In addition to this, there is also a growth in digital payments in online casinos with e-wallets such as PayPal and Neteller making an entrance on the payment scene.
The Use of PayPal in Online Casinos
And what are the advantages of using PayPal at an online casino? Well firstly, it’s the e-wallet’s privacy policy. This means that it is “bound by the strictest guidelines to keep your information safe and private.” According to these guidelines, your personal and banking information will not be disclosed to any third parties, including the online casino which you’ve chosen to play at. Another advantage is the speed of the transactions as deposits are likely to be available in your account within a period of 10 minutes of the processed transaction. Deposits are not the only payment method that is processed quickly, withdrawals are as well with an average time frame for this being 24 hours. This is in stark contrast to the traditional payment methods such as credit cards, where transactions are usually processed within five days or longer. Keep in mind, however, that there may be some fees involved, as opposed to payments made via Bitcoin.
Conclusion
So, in answer to the question of whether the gambling industry is adopting digital payments and cryptocurrencies, our answer is an emphatic ‘yes’. With fast and anonymous services including e-wallets such as PayPal and Neteller, and peer-to-peer electronic transactions such as Bitcoin, we’re likely to see the growth of digital payments and use of cryptocurrencies in more and more casinos in the future as these options become a safer and more secure form of payment. The future of payments is in the making and we’re definitely going to see more growth in digital payments and e-wallets as more and more people are connected digitally, and who seek more secure methods of payment across the globe. Online casinos are no exception to this, as they too try to cater to the modern, financially-cautious player looking at anonymity, convenience, and speed in processing transactions prior to playing games online.
