Betting on bitcoin

A look at the rapid rise of a new type of betting.

Bitcoin Betting

September 2017 marks the beginning of the end for online poker in Australia. The Interactive Gambling Amendment Bill 2016 starts coming into effect and if you have any type of overseas betting account as an Australian resident, you’ll likely be told you’re unable to place real money bets or you’ll be asked to withdraw your funds completely.

Australian regulators are doing their best to continue the crackdown on wagering with overseas operators, which is making it incredibly difficult to place bets with decent bookmakers. What is interesting though, is that we are at a time where there is a rise in a new type of betting account, or more correctly a new type of currency in which to fund those accounts.

Anonymity

One of the appeals of digital currencies is that they are relatively anonymous. Users are able to have multiple bitcoin addresses and they aren’t linked to names that can easily identify you. However bitcoin does store records of all transactions in what’s known as the blockchain. The blockchain is a distributed public ledger which records all bitcoin transactions and ownership. You just can’t tell who owns them.

Sports betting

With the level of gambling regulation around the world, digital currencies seem like an obvious fit. You might feel like a second class citizen when trying to place a bet in Australia and being shut down, but spare a thought for the US, where online gambling laws are incredibly restrictive.

As bitcoin and other digital currencies grow, we’re going to start seeing more and more online sportsbooks that accept only digital currencies. The US market in particular is massive, so as you can imagine there are going to be new players entering this space in the near future.

A number of major sportsbooks already accept bitcoin as a method of payment, however we are increasingly likely to see bitcoin-only style sportsbooks that are largely anonymous.

The Rise of Bitcoin

Digital currencies have slowly been making their way into the mainstream for the last couple of years and there’s a lot of hype around some of the major players like Bitcoin and Ethereum.

Digital currencies are held and created electronically. Unlike a traditional currency, they are not printed, centralized or unlimited. They’re a combination of cryptography, computer science and mathematics. People all over the world can use open-source software that follows a mathematical formula to produce a currency like bitcoin. However only 21 million are able to be produced. The success of Bitcoin has seen literally hundreds of other cryptocurrencies enter the market.

Early Days

While the concept is good, there are still a few hurdles to betting online with digital currencies.

The first is that obviously you need to purchase them to begin with. To do this you need a digital wallet and from that point you can buy bitcoins and use them for transactions.

The other thing to consider is the level of volatility. At this point in time bitcoin is trading around $5750 AUD. However only a month ago it was around half that price. Bitcoin is incredibly volatile and that makes it difficult to use for transactions – although speculators will be happy with those kinds of moves.

There are also security concerns for punters wanting to use new betting sites that are popping up and are largely anonymous. They may well take your bets but you need to consider just how secure your funds might be.

Some new entrants are attempting to get around the requirement for a trusted third party by offering peer-to-peer betting, similar to an exchange like Betfair, but built on the blockchain.

New players

Herosphere have a launch scheduled for September and claim to ‘allow users to interact directly with each other and keep the process, and money flow secure, transparent and immutable. In other words only community controls all the operations.’

Cash Poker Pro are claiming to be in the ‘final development stage for a modern poker room with a network structure and a mechanism for fast and confidential money transfers based on the blockchain technology.’

Monster Byte is a technology company which owns a suite of long-standing and profitable Cryptocurrency Gambling websites. They recently raised funds for their Inital Coin Offering – crowdfunding via cryptocurrency.

Those are just a couple of many new players and by no means are we endorsing any of them at this stage.

The Government is Coming for your Taxes

As most punters know there are a fair few hurdles to deal with when betting online. None greater than the Government. The motivation of most Governments is to generate revenue through taxes. So when something like bitcoin comes along that is sidestepping regulation while growing in popularity then you can be sure that they are thinking of grabbing their slice of the pie.

This week it was suggested that Vietnam will be looking to legalise digital currencies joining Japan and a handful of other countries that have specifically legalised bitcoin and digital currency transactions. The US is also taking steps toward regulating digital currencies, however to date that has been through the regulators.

As getting a bet on in Australia becomes more difficult than actually finding winners, it might be worth looking into the rise of bitcoin and finding new ways to bet. At this point a number of the key sportsbooks already accept bitcoin however it will be interesting to see how the landscape changes for Australians in the coming months as The Interactive Gambling Amendment Bill 2016, amongst other regulation starts to bite.