Bitcoin Poker Sites and How it Works
Though Bitcoin may still be foreign to some who play online poker, the crypto-currency has caught on in a big way in online gambling markets. This is especially true for jurisdictions that have prohibitions on iGaming or where the activity is still a grey area under the law.
Though we know that playing online poker is legal federally, and only criminalized in a few states, that doesn’t stop the government from going after offshore sites. Bitcoin is extremely advantageous in this respect, and it’s also free at most sites for players to send and receive bitcoins.
What is Bitcoin?
Bitcoin is a form of digital currency that is created and held electronically. The currency uses encryption technology to regulate the creation of currency, corroborate the transfer of funds, and most importantly it operates independently of any central bank or government.
That makes it different from any other currency in the world. It can be used just like any other currency, to purchase products online, but the significant difference between Bitcoin and fiat currency is that it is decentralized.
Bitcoin, in a sense, allows users to be their own bankers. Funds cannot be frozen and transactions cannot be reversed. This is a double-edged sword when it comes to using bitcoin, but is one that makes it especially attractive for offshore operators.
Bitcoin’s Rising Popularity
Bitcoin was first launched in 2008 by a software developer named Satoshi Nakamoto. The name is widely accepted to be an alias [A], and the true creator(s) of Bitcoin is not known to the public. At the launch there was little noise about the crypto-currency, except for a few internet forums.
In 2011, Bitcoin began getting mainstream coverage as more and more people started using it. Bitcoin exchanges began popping up on the web, and suddenly, merchants around the world began accepting it as well.
Today, million and billion dollar companies, like Dell, Overstock.com, and Newegg.com accept Bitcoin, along with tens of thousands of other offline and online merchants. Bitcoin is surely out of its infancy, but still has a long way to go in terms of being adopted by the masses.
However, the currency has now become a regular option at offshore poker rooms due to a variety of advantages when compared to fiat-currency and more traditional payment processing methods, such as credit cards, money transfers and bank wires.
Costs
Payment processing is one of the biggest costs that a gambling site has to endure. Not only does it cost money to process credit cards, bank wires, and money transfers, but transferring funds between banks can be troublesome for offshore operators.
Not only that, but with the US government viewing the activity of these as criminal, they invest time and money into freezing their assets, seizing their domains, and if possible charging their owners criminally.
The issue of chargebacks is another problem. Many players will call their credit or debit card company and issue a chargeback if they’ve lost all of their deposit funds at an online poker room. It’s relatively easy to issue a chargeback against a “foreign transaction” on your card that you “have no idea about”.
Making matters worse, there are some situations where a player may receive a payout and also file a chargeback. In this case, the poker room doesn’t just lose the deposit amount, but they can lose double the amount, if they process a withdrawal for the player and the chargeback is successful.
Bitcoin eliminates chargebacks completely, but even putting fraud issues aside, it vastly reduces processing costs, to almost nothing. Sending bitcoins is free, or costs very little (usually just a few cents), making them an ideal currency for transferring money not only in gaming markets but for any business that wants to save money on transaction fees.
Other Recommended Banking Options
Speed
If you take a look at our monthly processing report, which tracks monthly processing speeds from the top offshore poker rooms, the difference in speeds between Bitcoin and traditional fiat-currencies is stark, and as mentioned above, they cost a lot less too.
Check and bank wire withdrawals normally take 1-2 weeks, and withdrawals back to cards can take up to a week as well. Both have associated fees. Money transfers are quick, usually processed in 48 hours or less, but come with hefty fees compared to other methods.
“Most sites process bitcoin withdrawals within 24 hours. Some sites process them instantly.”
Some sites charge small fees for processing bitcoin transactions, but most are free. Once sent, bitcoins can be received in a matter of minutes, and typically doesn’t take longer than a few hours. This beats just about every withdrawal method in terms of processing speed, and obviously cost.
Most sites process bitcoin withdrawals within 24 hours. Some sites process them instantly (usually bitcoin-only poker site), and the withdrawal process starts immediately after players request it.
Using Bitcoin
Although Bitcoin has grown immensely in the less than five years that it’s been in the public consciousness, it’s still tough for the average person to wrap their head around the idea of a digital currency.
Choosing a Wallet
The first step to obtaining Bitcoin is by signing up for a bitcoin wallet or exchange. We recommend Coinbase.com [B], as it’s extremely simple to use for people who are new to Bitcoin. There are plenty of other wallets available, including mobile-only options, but Coinbase is extremely user-friendly and has excellent security.
Coinbase links to your bank account, so it makes buying bitcoins easy when you link your bank account. Users can link a credit card to allow instant buys. Selling bitcoins, or converting your bitcoins back into USD can be done instantly as well.
The fee for both buying and selling Bitcoins on Coinbase is just one percent. Which, if you have read the above costs for other deposit and withdrawal methods is an unbelievable bargain. However, there is one aspect of Coinbase that may be troublesome for online gamblers.
Coinbase has banned users from using their service [C] if they send bitcoins to online gambling sites. For this reason, we recommend players first send their bitcoins to another wallet before depositing them into an online gambling site.
Coinbase can still be utilized for buying and selling bitcoins, but we recommend sending them to online poker rooms through another wallet and storing them there as well.
Blockchain.info [D] is one of the best online wallets on the web. It’s totally free to store, receive and send Bitcoin payments. We highly recommend it as a wallet.
Bitcoin Addresses
A bitcoin address acts similar to an email address, but also has the ability to receive funds. Addresses are between 26-35 alphanumeric characters with each being a destination for a possible bitcoin transfer.
Sample Bitcoin Address: 3J98tWpEZ73mQivernRywt
Sending bitcoins to someone else (or to an online poker room) is as simple as getting their bitcoin address and sending the coins through a wallet or exchange.
Bitcoin addresses can be generated automatically, with no cost. For security purposes and for extra anonymity, we recommend that users use a unique or new Bitcoin address for each transaction.
Bitcoin addresses are case-sensitive and must be entered exactly as they appear. Remember, bitcoin transfers are not reversible, if you make a mistake, there is a good chance your bitcoins may be lost forever. Check, and double-check your address before you send your bitcoins.
Using Bitcoin Offshore
Online poker rooms that accept Bitcoin will provide players with an address when they choose that option in the cashier. When it comes to cashing out, players simply provide the poker room with the BTC address where they want the coins sent.
Bitcoins will be converted into USD for play at the tables (unless you’re using a BTC-only poker room) once they are received by the poker room. The conversion rate will vary depending on the exchange that the poker room uses for their conversions, but most should be around the same amount, give or take a few dollars.
One of the issues that players may fear with Bitcoin is price fluctuations. The crypto-currency’s price does change daily, and there have been notable crashes, but for the most part it’s relatively stable.
For those worried about that, risk can be minimized by holding limited Bitcoins. Keep in mind, your funds are kept in USD when inside the poker room, so the value won’t change while it is in your account or at the tables.
Once the funds are cashed out, players can sell the coins for cash almost instantly, reducing the risk of price fluctuations. They can also use a different method for payouts, if they absolutely don’t want a price change from their original deposit.
Bitcoin’s value does change daily, but it has been one of the best investments in history over the past several years. On January 1st 2013, one Bitcoin was worth $13. As of late November 2017, it has a price of $8,238; a substantial increase to say the least.
Author: Tania
(C) Copyright PokerWebsites.com, 2018
References and Citations
RIGHTS RESERVED BY © POKERWEBSITES.COM OWNERS - ABOUT US
2008-2018 - Please consult a lawyer before playing online.
