The rise of crypto-currencies has seen Bitcoin reach new heights of popularity and value – recently hitting a record peak over $1,580 per coin. While it was once relegated to the far reaches of the internet, now major online stores like Expedia and Overstock accept payment in Bitcoin, and an increasing number of physical stores – and even pubs – are getting in on the act.
So, in a post-Brexit world where an invisible e-currency is more stable than pound; what are Bitcoins and how can they be used to benefit your bets?
What Is A Bitcoin?
Simply put, a Bitcoin is a type of unregulated digital currency. Bitcoins are generated using a series of encryption techniques (called ‘mining’) which generate a code (or ‘coin’) that can be added into an online wallet and spent just like cash. There are only a finite number of Bitcoins in the ether, and as more and more of the ‘coins’ are encrypted, they become rarer and their value goes up. The encryptions themselves are used to bolster the coding and make the currency stronger. This means that Bitcoins are essentially a crowd-sourced currency, and no part of the process is formally regulated or managed by a bank. Of course, that’s exactly why a lot of people love them.
How Do Bitcoins Work?
To help get our heads around this, let’s explain the difference between physical and digital transactions using the example of getting your friend a birthday gift.
You know that your friend is a huge film buff so you get her a copy of her favourite movie ‘Casino Royale’. You then turn up at her house and hand her a copy of the Blu-Ray disc. So now she has the movie and you do not – this is a physical transaction. But imagine you decide to buy her a copy of the movie on iTunes and send her a digital copy of the file. Not only is this horrible gift-giving, but as you give her the present, she has zero guarantee that you haven’t copied the movie one or hundreds of times, passed it around your entire circle or uploaded it to the internet for free so anyone can have it.
Bitcoins have the same problem, which is referred to as ‘double-spend’, and in the early days of cryptocurrency it was used to fund a lot of illegal activities and organised crime. The currency’s creators have very cleverly gotten around this problem by using a huge publicly available ledger called the blockchain. This ledger, like all elements of Bitcoin, is open source and visible to all its users. Because Bitcoins themselves are constructed by ‘mining’, we know that there are a finite number of coins that will ever be found – 21 million to be exact. Currently, 15.2 million coins have been extracted and are in circulation. Once a coin has changed hands, the ledger is updated to reflect the transaction by the miners in that block who are then paid for their work in Bitcoins. This makes every user aware of the transaction, but those making the trade remain completely anonymous.
As Bitcoins are decentralised – no one person, bank, company, or country controls the coins – this leads to greater security and potential ease-of-use. External events such as bank failures or quantitative easing will not reduce the value of the currency. It also cuts banks out of the process entirely, with the system acting as its own payment network. This makes it perfect for punting as it is quick and easy to move small transactions with minimal effort.
How Do I Get My Bitcoins and Why Should I Use Them?
You can buy and sell Bitcoins on any one of the growing number of verified coin-exchange sites online. Bitstamp, BtcMarkets, Coinbase and BTC-e are all widely-used and streamline the purchase process as much as possible.
However, as with any currency, if you’re going to use it, you’re going to need a wallet to keep them in. These wallets will then be accessed by the sites where you are placing your punt.
There Are Three Different Kinds Of Wallet:
An Online Wallet (Block Chain) – These are stored online in digital cloud servers and allow you to back-up your information online to make sure it isn’t lost. This process is straightforward and is recommended for most users. However, like all cloud technology, it is the most vulnerable to being hacked.
A Software Wallet (Electrum) – These are kept locally on your computer, but require regular manual backups to maintain them. They are much more secure than the cloud but more difficult to maintain.
A Hardware Wallet (Ledger) – The most difficult to maintain, but most secure. Using this type of wallet requires you to use a USB memory stick as a unique key that unlocks a wallet stored on your computer – meaning only the individual with the ‘key’ can access it. This is the most difficult to configure and maintain and is most often used by knowledgeable users with large amounts of Bitcoins to protect.
Why Would You Make The Switch To Bitcoin?
It’s cheap: All transaction and deposit fees are kept to a minimum and it potentially allows you to circumvent any costly international fees on transactions.
You retain your anonymity: Bitcoins are hard to trace and are maintained through private keys. There is no credit card data that can be stolen or personal information that can be obtained for nefarious purposes.
It’s quick: Deposits and withdrawals are quick as Bitcoin circumvents the banks; on average taking just 10 minutes to confirm compared to the highly variable transaction periods with online banks or punting sites.
What Sites Use Them?
As the currency grows in popularity, a greater number of sites are adopting them as acceptable tender.
Bitcoin Games: Launched in 2016, the site offers a range of casino games from video poker, blackjack, slots and dice and keno. With a maximum win of 202 BTC, you can win big, but it is such a new player that there is a lack of detailed information and historical stats.
CloudBet: Reviewed by us here, covering sports and casino featuring instant withdrawals 100% deposit bonus.
Loki Casino: Well reviewed online and the perfect choice for international players, Loki offers the chance to make hybrid deposits of cash (in a variety of currencies) and Bitcoin. The site includes video slots, table games including dice, poker, and live dealer games through mobile. The main issue is that it is currently restricted in the UK, but open to players anywhere else.
What Should I Know?
Understand the technology: It’s important that you weigh up the positives before you start investing. If you’re not up to speed on finance or technology, it’s worth taking a quick crash course and making sure that you’re full happy with how the theory behind it works. And remember, take care to back up all your information – if your wallet is corrupted or if you lose access, your coins are gone forever!
Volatility: It’s worth noting that even with a deregulated currency, the market will fluctuate. Famously, on one day the Bitcoin crashed from $266 to $105 dollars before returning to $160 in the space of a few short hours. This means that, potentially, you can find the value of your pot rising or falling over the duration of a long game of tournament. Make sure you factor this in to your funding.
Uncertain Future: One unknown about the use of Bitcoins is what will happen when all the Bitcoins are finally unearthed. Once these have been discovered, miners will have to rely on their transaction fees to maintain themselves. This could potentially lead to a rise in transaction fees or, at the worst, more and more miners dropping out and causing the network to centralise and fall apart.