Daniel Cawrey at CoinDesk argues that Bitcoin has found a lucrative niche in online gambling.
With strict rules governing online casinos at the national level and the use of national currencies limited in that space, offshore servers and an unregulated currency could flourish together in a market that’s already valued at as much as $6 billion.
Bitcoin gaming has become its own industry already, he writes. After gaming startup SatoshiDice sold for $11.5 million (the site blocks American IP addresses), competitors and knockoffs have appeared left and right.
And, really, all that’s needed to launch such a site is an understanding of programming and Bitcoin, Cawrey writes.
Also attractive is the fact that gambling chips are not really necessary when playing with Bitcoins. Chips in casinos always served the function of a private economy customers would buy into, and it would save casinos for having to register as money transmitters or any other such regulations.
With Bitcoin, chips are not really necessary, and so gambling moves are made that much more liquid. It’s effectively like sitting at the poker table with your wallet out (at least in terms of liquidity, not security).
Bitcoin also facilitates a higher level of transparency among gaming sites because the blockchain records all transactions. Many Bitcoin gambling sites call themselves “provably fair” or “provably trustworthy.”
If everything above raises red flags, then you might be of the same mindset as regulators and law enforcement officials. Because they will be very interested in Bitcoin gambling, and probably already are.
Setting aside the dubious legality of some sites, officials worry about money laundering.
Especially when their own fiat currencies come into play. The US government is going to scrutinize heavily and transaction that goes USD - BTC - online poker - BTC - USD.
Bitcoin’s cover at the moment is that some might not think of it as real currency. Recent requests from the Senate mean those days are numbered, though.
But that begs the question: What can be done? How can the US (or the UK, or China, or Brazil) regulate a site hosted in Costa Rica, accessed by a decentralized medium such as the internet, that accepts a decentralized currency?
It remains to be seen, but there are many among us who feel the answer to that question could be awful.