Bitcoins for gambling....

Have you heard of bitcoins?  If you haven't, you will....

I first heard of them about 6 months ago, when a buddy of mine who is crazy about almost everything (I add the word "almost" only because bitcoin is the only thing he has ever told me that is not crazy).  He told me of this strange online currency - that would change a lot of things - but of interest to me was online gambling.

So here are the cliff notes.  Yes, it is long - but this is a little untidy and complicated because it is still in the infant stages.  I am new to this - so please excuse me if some of my details about the technology of Bitcoin are wrong - just correct me and I will acknowledge it.

As we all know, Americans have been targeted for playing poker and betting on sports online for the last decade or so.  The US govt has fought this on basically two fronts:  by going after the online gambling providers, and by passing the UIGEA which basically limits financial transactions to gambling establishments.  The success of this campaign has been huge - online poker has all but dried up in the US, and we all know the trials and tribulations of online sports gambling in 2013.

Enter Bitcoin.  What is bitcoin?  It is basically online currency. 

* One bitcoin is worth a certain value (more to come), and that bitcoin can be broken down to 8 decimal points. 
* Bitcoin has no physical presence - and I cant really explain what makes you have possession of it - but I assume it is something like a long password that uniquely identifies each bitcoin. 
* Your bitcoins are stored in a wallet, either online or on your local computer.
*  There are a limited number of bitcoins in existence.  There cant be devaluation through printing of bitcoins.  From what I understand - there will be 21 million in existence by 2017 and thats it.
*  Bitcoin can be bought and sold in to regular currency.
*  Bitcoin value goes up and down based on supply and demand.
*  Bitcoin is not owned by anyone.  It is not regulated by anyone.  It is public source code.

So how does Bitcoin translate in to online gambling?  If you had a online sportsbook that took bitcoin, it basically bypasses the UIGEA because it is not trading currency from financial institutions.  Your USD are converted to bitcoin, which are deposited and withdrawn from the SB.  Then you trade your bitcoin back to USD.  It is unlike Neteller in that Neteller trades USD, and are owned and operated by a company.  Bitcoin is an online currency, not regulated by the UIGEA, and it presents a challenge for govts that want to go after someone - because there is nobody to go after.

And there are actually sporstbooks out there, and the most exciting is a sportsexchange that uses bitcoin.  At www.btcsportsmatch.com - there is an exchange that is basically vig free - with the winner paying a 1% commission on winnings.  The exchange uses pinnacle lines, and uses a midpoint between the lines, and you can make offers on sides and totals with bitcoin.

The really interesting thing is the ease of movement of bitcoin.  It is just a couple of mouse clicks to move your bitcoin around - which means a couple of major advantages for both you and the SB.  The first is that you dont need to keep a balance at the SB or exchange.  You simply transfer in the money you want to wager, and when you win, you transfer it out.  And because the movement is free and easy - the SB and exchange are happy for you to do this.  So your bitcoin balance is always in your possession when not in play.  The cost savings of the enormous overhead of transaction fees for currency based sportsbooks is eliminated for both the player and the book.

There is also onlin poker popping up, the most popular is "sealswithclubs".  The poker community is pretty excited about it from what I can tell.

There are a couple of things that worry me.  One is the fluctuation of the bitcoin.  I suggest you look at this chart  https://blockchain.info/charts/market-price .  Bitcoin was at $5 about a year ago, at 15 a month ago, and at $30 today.  The volatility is crazy, and it is very hard to determine what causes the spikes.  But the trend is upward - but who knows.  I tend to think that this is becoming more and more known in the gambling world, and is growing as a result-  but I have nothing to back that up.

There have also been reports of hacking, and stealing bitcoins.  I have read safe ways to keep your bitcoin offline - and they seem to be effective.  But this brings up the fact that if you are not technical (I am not), it is not an easy in and easy out.  This technology is not yet fully dummy proof for the average joe to just click here or there.  There is a learning curve, but it is all out there.

It will be very interesting to see the US Govt reaction to dealing with this.  Obviously, gambling is not the only problem for them - as I am sure the online drug trade, money laundering, and tax evasion are all issues.  Who knows.  But it sure seems like a tougher kill for them.  Im not even sure how they could attack it.

My personal experience is that my buddy set me up, walked me through it, and I bought 3 bitcoin back in December for $13.50 each.  I opened an account at the exchange, and played around there.  I got offers matched and matched some offers.  I think that the exchange itself will evolve and need to make some fundamental changes - but the concept of the bitcoin is the discussion here - not the exchange itself.  My 3 bitcoin turned in to 3.25 bitcoin, and the value is now about 30 bucks for each - so my original $40 investement is now worth about $97.  Not bad.

Who knows - maybe bitcoin will implode and be the pets.com or napster.com of online currency.  But maybe it will become mainstream - and you can say you heard about it here first.

Quote Originally Posted by t6rider:

 Thanks for this. Really interesting. 

I am clearly not an expert.

But my thought was to bring it up here - and have the community help me research it and give their own personal stories.

If you google it, you will find that it is legit.  There is a ton out there about it.  I think gambling might end up being a major reason it does well, but it was not invented for gambling purposes.

Anyway - I hope this thread grows and evolves as more people become exposed and have personal experience.

Here is a 2 min video about it.  There are others, but this is a good starter....

https://www.weusecoins.com/

Quote Originally Posted by t6rider:

I would do anything to have a Matchbook experience again. I joined to browse around. I'll mess around with Bitcoin tomorrow. Thanks again for this. You have really helped me in the past with your expertise in these matters. 

I dont want to overdo this....  Because clearly it is in its infancy....

But this has the potential to dwarf the matchbook experience.  Mostly because of the easy in and out of the money.  Think about being able to keep your balance to yourself, and only move money there when you want to take an offer.  And then move it out and back in to your wallet right after it is graded.

The exchange site itself needs work - but it will get better with time and players.  My biggest gripe is that you cant really set a line - they use the midpoint of pinnacles line - so if you put in an offer the line can actually move on you.  So you have to watch it, or only take offers.  Play around with it - and update the thread.

Please come back and report on your experience.

The Bitcoin thing is not totally user friendly yet IMO.  It takes some work at getting educated.  Im curious to hear your thoughts on it.

This is a very good place to start for a beginners guide to bitcoin.

https://www.reddit.com/r/Bitcoin/comments/18kt6y/psa_to_new_users_due_to_reddit_gold_announcement/

Very good observation.  The fluctuation of the bitcoin value is a major part of why sports betting with bitcoin is essentially gambling twice - once on the game itself - and then on the valuation of a currency that you have no real knowledge or understanding of what makes it go up or down.

I am not an expert on this.  But there are exchanges, coinbase and mtgox are some you should look at.

You can also sell your bitcoin privately - even on ebay!  Or to someone in your neighborhood.  Everyone warns of not selling with reversible methods (paypal or cc) because your bitcoin is not reversible once transferred so you can get scammed.

I also wouldnt be surprised if current books start taking bitcoins.  Not even necessarily that you would bet or use them there - but as a simple transfer device to take the place of western union.

You and the SB would avoid the market fluctuations by simply buying the bitcoins when you want to deposit, clicking your mouse to send it to the SB, and then the SB immediately sells the bitcoins.  The total transaction from dollars on your end to dollars on their end should be very quick, and no WU fees.

Anyone know if any current SB's do this?

Quote Originally Posted by ClubDirt:

i've heard of something like this conceptually but not specific as in your example.  it's interesting.  we said, when all this garbage came down a while back, that smart people would get ahead of the government because there's just too much money to be made.  it's not hard to get ahead of our government, given who makes up our government. 

needless to say, i'll be following this system from a comfortable distance. 

I think the interesting thing about this is that it is not intended for gambling.  It is an alternative currency, with limitations - that is not controlled by any entity.

So while online gambling might be a great accidental effect of this - it is not the driver - which is good IMO.

My worry is that the US Govt will step in and do something about it.  Think about it - if this does actually catch on and reach some kind of critical mass - banks, visa, MC, paypal etc.... would go nuts.  The govt would worry about its own currency devaluation.  What could they do?  I dont really know - but one guess is they could punish any retailers that take bitcoin and therefore try to attack it by making it not useful.

It is interesting stuff.

Great info.  Update this thread with new experiences please.

I am sure that things are changing quickly with regards to buying and selling bitcoin.  Im sure it is easier now than it was a year ago - but still has a way to go. 

10btc is now 300 bucks.  Not bad for the rec gambler.

Keep us posted.

I thought this too.  But when I looked closer - a single bitcoin is really 100,000,000 single units.  In other words, a bitcoin can be divisible by 8 decimal points. 

So currently a bitcoin is worth 30 bucks, so the smallest unit of measurement of a bitcoin that you can send to someone would be .00000001 - which at current value is worth about 3/10,000ths of a US penny.

So if a bitcoin ever reached 1,000,000 USD of value, the smallest unit of a bitcoin would be worth 1 penny.

So while there are only 21 million bitcoins, there are actually 2,100,000,000 bitcoin units on the market.