Online gambling boosts the virtual currency ecosystem
SatoshiDice, an online casino that operates using BitCoin (BTC) virtual currency, has reported earnings of $500,000 (approx. £300,000) just six months after its launch. Another two BitCoin gambling communities, bitZino and Seals With Clubs, have also posted record results for 2012.
BitCoin offers many benefits over traditional currency: instant payouts, transparency and the novelty of BitCoin-based games. In addition, the virtual money can be transferred without any transaction fees, cutting out the middleman and resulting in bigger jackpots.
However, the legal status of such establishments is still under question. Since the BitCoin transactions cannot be tracked, they enable gambling in regions where it might be illegal. Although operating an online casino itself is not against US law, all financial transactions related to online gambling are strictly forbidden in most states.
The ace of spades
BitCoins, or BTC, make up a decentralised virtual cryptocurrency commonly used online among people interested in keeping their transactions anonymous. It is not tied to any real money, but traded on various electronic exchanges to establish its price. Last year, several start-ups have combined the digital currency with online gambling, and the results have been impressive.
SatoshiDice is currently the most popular BitCoin game in the world. In it, players have to choose a random number greater than the one rolled by computer-operated ‘Ghost of Satoshi’. Within weeks of its launch, the site became responsible for more BitCoin transactions than all other uses of BitCoin combined.
Participating in the game doesn’t require an account, and SatoshiDice instantly publishes information on all bets made. Overall, players have very favourable 98 percent odds to break even. So far, users have placed over 2,650,000 bets, netting the site 33,310 BTC (£367,100) in profits for six months of 2012, May through December.
SatoshiDice is operated by Erik Voorhees, director of marketing and communications at BitInstant – the BitCoin deposit service which promised us the world’s first officially certified BitCoin debit card back in August, but so far has failed to deliver.
Meanwhile, bitZino has been running a very successful ‘traditional’ casino service, with online poker tables, blackjack, craps, and roulette, all paid for by BitCoins. Even though the results statement doesn’t show any profit, between June and December the gamblers cashed out 28,986 BTC (£319,400) through the website.
“We’re excited that bitZino can be a part of history in the making,” wrote Larry Taad, the founder of the online casino. “BitCoin empowers us to accept payments instantly, and it allows us to pay out our players quickly with almost zero fees. The advantages of BitCoin are obvious.”
“We predict that at least one “traditional” online casino is going to wake up to the obvious benefits of BitCoin, and start accepting BitCoin in 2013,” he added.
Finally, there’s Seals With Clubs – the anonymous European poker club that offers 30 second registration and a community of over 10,600 players. This little jewel of the gambling world has paid out a whopping 110,587 BTC (£1,219,000) in 16 months since its launch.
“These tiny startups are hitting some major online casino pain points, they’re crushing it on those fronts and as an entrepreneur, I think that’s rad—they are leveraging a disruptive technology to try and kick a large-scale industry in the balls,” Peter Vessenes, CEO of BitCoin business CoinLab told Ars Technica.
Last year, WordPress.com became the biggest merchant to accept the virtual currency. Analysts predicted that this move would improve the reputation of BTC and promote it as a dependable payment method.
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