In 2010 Laszlo Hanyecz was sitting at home browsing the internet for takeaways when he stumbled across something interesting. Pizza Express accepted Bitcoin as a method of payment, and fortunately for Hanyecz he was flush with Bitcoin.
The young computer programmer picked his pizza and a few sides and paid with just short of 10,000 Bitcoin, a real bargain. However had Hanyecz held onto those Bitcoins today they would be worth $111 million.
This is understandably a sore point for Hanyecz, although he still takes part in the annual ‘Pizza and Bitcoin day’ which pokes fun at his error of judgement. Understandably, Hanyecz’s story has served as a warning to regular Joe’s looking to use Bitcoin as a traditional currency.
9 years on from that expensive pizza delivery there are a host of industries encouraging their customers to use Bitcoin as a regular method of payment. One of those is the gambling industry, with Canada becoming the global home to crypto casinos.
Why is Bitcoin used by the Canadian gambling market?
Online gambling in Canada has become a major talking point in the country over the past decade. Since 2009 the act has been a territorial or provincial matter with no laws at a country-wide level to stop punters from accessing offshore international casinos.
This has led to a lack of consistency across the country and some of Canada’s leading banks have taken a no-nonsense approach to offshore gambling companies. The Bank of Nova Scotia will only process transactions to and from licenced Canadian gambling firms.
Other banks with interests in the United States have also prohibited transactions to and from offshore gambling companies as there is political pressure in the US to do so. These factors have led to the rise of crypto casinos.
Crypto casinos are appealing to Canadian gamblers as they allow punters to freely withdraw and deposit funds. These new breed of casinos are offering staggering bonuses to encourage Canadians to choose them as their gambling operator.
What are the benefits of crypto casinos?
Bitcoin is a form of digital cash that uses encryption to secure transactions and create new cash. It uses cryptography which is a form of secret coding first pioneered at Bletchley Park during the Second World War.
As such, experts claim that transactions made with Bitcoin are more secure than those made in traditional currencies. Hosting cryptocurrency payments is also cheaper in a business sense as it foregoes large fees incurred by a bank or a payment service provider.
In essence, these savings should then be passed on to casino customers in the form of appealing bonuses or enticing odds. Currently we are seeing proof of this with Canadian crypto casinos but it remains to be seen whether this trend will continue or if it is merely a flash in the pan.
On the face of it, crypto casinos certainly seem more appealing than traditional online casinos, but whether that will last is unknown.
The obvious benefit of crypto casinos for the average Canadian is that it widens the market for customers. With many of the major banks only processing transactions to Canadian companies the average punter is limited in choice.
Should you use a crypto casino?
As a one-off, there is relatively little harm in trying a cryptocurrency, but in the long-term it is perhaps wiser to stick with a tried and trusted online casino. When you gamble with a traditional online casino you are doing so in the knowledge that your wins and losses will be financially stable.
That’s not the case with crypto casinos. What could look like a big win today could suddenly become meaningless in a few hours if the crypto market were to crash or take a significant tumble.
Crytpo casinos give customers the edge in terms of ease, helping to facilitate quick and easy withdrawals. But they introduce an extra gamble into an area that does not need any more variables.
What are the downsides of crypto casinos?
Volatility: It is not uncommon for cryptocurrencies such as Bitcoin to rise and fall dramatically. In fact at time of writing news has just broken of an overnight fall of 3.6% in the price of Bitcoin which could threaten up to US$12 billion of investments.
If you compare that volatility to traditional currencies it is worrying from an investment perspective. The Great British Pound (GBP) is perhaps one of the most volatile world currencies in the world at the moment.
The instability posed by Brexit and a Prime Ministerial merry-go-round has seen the price of the GBP drop. News reports often refer to the price of the GBP as “plummeting”, however in the past 3 months the currency has fallen by just 0.03%.
If the GBP is seen by economists as a risky bet, why take a chance with Bitcoin and cryptocurrencies that are immeasurably more volatile?
Safety: Proponents of cryptocurrencies will tell you that digital cash is safer and subject to stricter regulations than traditional currencies. Unfortunately though that is a claim that cannot be verified.
The world is yet to see how crypto markets will respond to threats or downturns. How would cryptocurrency respond to a worldwide hacking threat? That element of the unknown is one of the biggest question marks surrounding cryptocurrency in the modern day.
You cannot look back at history with any deal of confidence to predict the future safety of cryptocurrencies. That combined with the inherent price volatility of digital cash makes the prospect of gambling with it a big risk.