One of the newest and most exciting payment systems, Bitcoin has been making headlines for a few years at this point. This cryptocurrency exploded in popularity over the last two years and users have seen the benefit of widespread adoptions.
The same is true for the online sports betting industry, with many gambling websites accepting Bitcoin as a legitimate banking option. This has led to an increase in the number of sportsbooks that accept Bitcoin deposits and many prospective gamblers have become interested in the cryptocurrency. With this in mind, we will cover everything that you need to know about using Bitcoin for the purposes of online gambling, giving you insight into the good and the bad aspects of this new payment method.
How Bitcoin Functions?
Bitcoin is different from any other payment service type that you will find on the Internet and this is the primary reason why it has gained popularity since it came out about a decade ago. Bitcoin is a cryptocurrency, which relies on so-called blockchain technology. This type of system is completely different from other payment infrastructures in a variety of aspects. So what is a blockchain and how does it affect Bitcoin? In the sense of cryptocurrencies, all transactions are stored in a public ledger where each user shares the same records with all other users. In order to create a stable system, all users need to share the same records down to a single letter and even the smallest desynchronization on a user’s version of the blockchain. Essentially, this means that there is no option to change already recorded transactions and tamper with the ledger as the changes would invalidate their version of the blockchain from the main one.
But then again what is a block? A block is like a page in the ledger where a given number of transactions are recorded. Each block is tied to the next one and that to the one after it. This is where the term blockchain comes in since every block is connected to subsequent blocks. Furthermore, it is practically impossible to change the transactions in the blocks as you would then have to alter the records in the block after it and so on. This is what makes Bitcoin so secure.
One of the defining aspects of Bitcoin is the fact that the whole system is decentralized. There is no central body that controls all of it, rather governance is placed in the hands of the people who process the payments. You may have heard of them, they are called ‘miners’. These people use dedicated computers to solve complex algorithms and process the transactions for which they are rewarded with Bitcoins. They are located all over the globe and each of them has a small fraction of the blockchain. Therefore, for major changes to occur in the Bitcoin infrastructure, there needs to be a majority of miners that support the new additions. This makes Bitcoin a more democratic system and more fair for all involved.
Another all-important aspect of Bitcoin is that it is in no way connected to the traditional banking systems that we know. It is a completely separate system and transactions are carried out in different denominations of Bitcoin. The value of a Bitcoin is also entirely dependent on the current state of the market. It is not pegged to any particular currency and it is set by the demand at any given moment. The abbreviation for Bitcoin is BTC which is used to refer to 1 unit of Bitcoin. Another common denomination used is the Satoshi, name after the supposed creator of the platform, which worth BTC0.00000001 or one-eighth of a Bitcoin.
Opening an Account
Unlike many other payment services, Bitcoin does not have accounts in the classical sense. Instead, users create wallets which they can use to store and move their Bitcoins. These wallets are part of the blockchain system but are more commonly provided by third-party services, providing users with some convenience. A Bitcoin wallet is characterized by two integral parts – a public address and a private key. The public address is what identifies a particular wallet and it is made up of up to 35 alphanumeric characters. The private key serves as a password, hence the ‘private’ description. It is a unique string of characters and is specific to a particular wallet. With access to the private key of a wallet, you can fully control your wallet and send transactions. However, it is very important to either memorize it or keep it written somewhere safe. You should never give out your private key to anyone as that would give them full control of your wallet and the opportunity to drain your balance.
Depositing to your Sportsbook Balance
It is quite easy to deposit to your online sportsbook balance using Bitcoin, once you actually have everything set up. To do so, you would need to know the sportsbook’s public address in order to send the transaction. This can be in the form of a string of text or presented to you as a QR code, which you can scan with your smartphone. It is very important that you enter the correct public address down to the last letter. Any mistake will result in you sending the funds to a different address and they will be lost.
Once you issue the payment, it should clear in a few minutes after it has been verified and recorded on the blockchain. Something that you should keep in mind is the exchange rate for the particular time of day and which rate the sportsbook is taking into account when exchanging your Bitcoin for traditional currency.
Withdrawing from your Sportsbook Balance
The withdrawal process using Bitcoin is no different to depositing. Once you have finished placing your bets, you can head over to the Cashier page and select the Bitcoin option for withdrawal. There you would need to enter your own public address in the form and confirm the amount that you wish to cash in.
Once you complete the request, the sportsbook will take some time to review it and when this process is done, the staff will issue the payment. It should take a few minutes to clear and you can have your cash back in your wallet.
Cost and Fees
As far as the cost of using Bitcoin is concerned, there is no clear-cut answer how much it is going to set you back. This is due to the fact that Bitcoin – and other cryptocurrencies of the same type – use a scaling system to determine transaction fees. Users are able to determine what fees they are going to pay for a transaction, within certain limits, which is not really seen in any other payment solution. The caveat is that transactions with higher set fees are prioritized by miners and those transfers are processed faster. Essentially, the quicker you wish your payment to go through the more you have to pay. Is this a detriment or a benefit? That depends.
In normal market conditions, a typical Bitcoin transaction is processed after 10 minutes or so and you can pay as little as $0.30 in BTC, for example, to have your payment cleared. However, during periods of increased usage, the Bitcoin blockchain is known to become overloaded and transactions become slower. In such cases, the users who pay the most in fees take precedence over others. In the worst case scenario, it could take a couple of hours for your transaction to clear, which is still faster than a traditional bank transfer.
Something else you have to take into account is the fluctuating price of a Bitcoin. Since the value of Bitcoin is not set in stone, you can end up paying more. When the value of Bitcoin is high, the $0.30 example above could very well be worth $0.60, $1.60 or more, while the amount in BTC remains the same. The same is also true for when the value comes down. It all depends on the current state of the crypto market.
Security and Privacy
As far as security and privacy are concerned, you will not find a more suitable service than Bitcoin. The whole idea behind this experiment was for users to have full control of their funds in a way that none could interfere. Bitcoin is disconnected from traditional payment solutions and this means that you can use it without anyone figuring out who you are. This level of anonymity is unprecedented and no other service can offer it.
As for security, we have covered above how the blockchain is designed in such a way as to be practically impossible to change. It is entirely improbable for someone to falsify payments or make changes to already completed transactions. Your personal Bitcoin wallet is also secure more than you would believe. It is nigh impossible for anyone to correctly guess your private key and much less to match it to the correct public address. Though it should go without saying that this security is only present for as long as you keep your private keys hidden.
Advantages of Bitcoin
Having covered all of the important basics of Bitcoin, it is a good idea to take a look back and see which aspects of the service are to the benefit or detriment of users. Below, we have outlined the features that you will certainly appreciate once you start using the service.
First and foremost, one has to address the speed of the transactions. Bitcoin has some of the fastest payment speeds in the world, at least when compared to more traditional banking solutions. A Bitcoin block is mined every 10 minutes, clearing a number of transactions each time this happens. On an average day, it should not take longer than 15 minutes for your deposit to go through. While one could argue that other payment methods such as credit cards offer instant deposits, this is only a half-truth. A credit card transaction takes up to several business days to process on for the recipient, which we experience first hand when we cash in our winnings via a credit card. With Bitcoin, you can count on incredibly quick deposits and withdrawals in real time.
Another aspect that you have to consider is the anonymity and privacy extended to you by Bitcoin. Since cryptocurrencies are completely separated from the traditional banking infrastructure, nobody ever knows who owns the wallet, unless that is made explicitly clear by the owner. Therefore, you need to worry about the sportsbook, or anyone else for that matter, gaining access to your banking information. There is simply no possibility for them to obtain that data. Additionally, the decentralized nature of blockchain technology ensures that nobody can simply steal your funds. The blockchain is stored on hundreds of thousands of computers all over the world and even if a few go off the grid, the rest still carry the same distributed ledger. This means that your funds are safe, as long as you keep your private key safe.
Disadvantages of Bitcoin
While there are some very significant advantages to using Bitcoin, we would be fooling ourselves if you said that it is without issues. In fact, there are some very significant drawbacks to using this payment solution and you will find most of them described below.
The first and most common issue that users have with Bitcoin is that there is absolutely no customer support when it comes to utilizing the platform. As we have mentioned above, Bitcoin is a decentralized product and there is no one person that can help you if things go wrong. If you do not understand something there are always community forums and guides that you can read, but more serious problems are practically unsolvable. For example, transactions made on the blockchain are permanent and there is no reclaiming your funds after they have been sent unless the recipient is kind enough to return them. With 30-digit long strings of keys, there is always the possibility that you hit the wrong button on the keyboard and send your BTC to someone you do not know.
Furthermore, Bitcoin is not simple enough for you to simply pick and use without reading up on how it works. While many third-party services have tried to streamline the process, the platform is too different from anything else that we know that you can get by from the get-go. The learning curve is real and odds are that when you first get into cryptocurrencies that you will certainly experience difficulties.
Another thing that you have to take into account is that you first have to purchase some Bitcoins before you can use it to fund your sports betting hobby. To do so, you would have to register at a crypto exchange and go through all the hoops that that entails. It is an additional step that you do not normally need to go through with other services.
Then there is the issue of the floating value. Bitcoin’s value is driven entirely by the free market and it can shift dramatically over the course of a few days or even hours. For example, in December 2017 the value of Bitcoin peaked at just shy of $20,000 and after that experienced a quick decline to less than half of that. As of this writing, the value of a single Bitcoin is slightly above $4,000. Such swings are entirely possible in the cryptocurrency market and it is a risk of using the platform. It is entirely plausible that you deposit $100 in Bitcoin one day and then the market shifts, changing your bottom line.
This is a more technical aspect but a vital one nonetheless. Bitcoin is the first cryptocurrency of its kind and it has been almost 10 years since it was released to the general public. In tech that is a ridiculously long time and new cryptocurrencies have come out that do things better and more efficient than Bitcoin. While Bitcoin has been changing over the years, that change has come slow since a majority of the miner community need to accept the new additions to the system.
There is no doubt that Bitcoin is a revolutionary way of banking but as is with every new technology, the early adopters are the ones who have to deal with all of the unforeseen problems. There is nothing wrong with Bitcoin if you can manage the negative aspects of it. You can always read up about how it works and be careful when making transactions, which negates the two largest negatives of the platform. It mostly boils down to personal preference. There are some serious advantages that you have to weigh against the disadvantages and form your own opinion about the subject.