People have been able to play online casino games like poker and slots using many tried-and-trusted payment methods for years. But recently there has been talk about a new way to pay when you play online: crypto. In this blog, you’ll learn what crypto is, and its role in the world of online gambling.
What is crypto?
In layman’s terms, crypto refers to cryptocurrency, or virtual currency. More formally, financial education website Investopedia defines cryptocurrency as:
…a digital or virtual currency that is secured by cryptography, which makes it nearly impossible to counterfeit or double-spend. Many cryptocurrencies are decentralized networks based on blockchain technology – a distributed ledger enforced by a disparate network of computers. A defining feature of cryptocurrencies is that they are generally not issued by any central authority, rendering them theoretically immune to government interference or manipulation.
Even if all this sounds incredibly confusing, we can break cryptocurrency down into a few key ideas. The first is that crypto is virtual, so unlike other currencies, it’s based entirely online. The second is that it’s secured using cryptography, which refers to encoded communication, to improve its security. Finally, it’s decentralized using a special computer network, which prevents people from tampering with it (for example, if you wanted to alter a record of a transaction, you’d have to alter all the records of it online, which is practically impossible.)
Now that we understand what crypto is, let’s take a look at a few examples of cryptocurrencies that you can find online.
The different types of cryptocurrency
As of February 2021, data portal Statista has recorded 4,501 cryptocurrencies (as per the page, “Number of cryptocurrencies worldwide from 2013 to 2021.”) However, not all these cryptocurrencies are popular or important, which is why we’re taking a brief look at just five of the most popular or significant cryptos today. They are:
- Bitcoin – The cryptocurrency that started it all, Bitcoin, has the largest market capitalization and has been around the longest. Bitcoin has been designed to replace traditional currencies.
- Ethereum – This is the second most popular cryptocurrency, and has the second-largest market cap. While many people like to compare Ethereum to Bitcoin, it serves a very different purpose. This cryptocurrency is associated with the running of smart contracts and decentralized apps on the Ethereum network.
- Tether – Tether was originally designed to be a “stablecoin,” or linked to a traditional currency. In this case, one Tether is worth $1, but the company that designed and released the cryptocurrency has had a bit of a controversial history, as it has failed to release an audit showing it actually has the currency reserves to back Tether. Despite this, it is the third most popular currency by market cap.
- Nano – Like Bitcoin, Nano aims to replace traditional currencies, but unlike Bitcoin, it is far more environmentally friendly, faster, and there are no fees involved when trading. Basically, it has none of the downsides of Bitcoin.
- Dogecoin – This cryptocurrency was originally started as a joke, and is based on the “doge” meme featuring a popular shiba inu dog. However, a tweet by Tesla CEO Elon Musk and the cryptocurrency’s popularity on Reddit have seen the “jokecoin” grow in price and reach seventh place in terms of overall market cap (although it’s virtually neck-and-neck with another cryptocurrency, USD Coin, for this position.)
How do online casinos use crypto?
Quite simply, crypto casinos accept different types of cryptocurrencies as forms of payment to purchase casino credits. That’s right: instead of using your credit card or doing an electronic transfer, you can make a payment using a cryptocurrency. This offers a number of advantages to online casinos and the people who play there, including:
- No banking or financial fees for both the casino and the player – Banks and other financial services charge processing fees, but these don’t exist when you’re exchanging crypto. This makes it a more affordable option for both casinos and the people who play there. Unfortunately, you’ll still have to pay any relevant fees at cryptocurrency exchanges.
- Anonymous transactions for those who prefer to keep a low profile – If you’d like to keep your gambling habit on the down-low, cryptocurrency transactions provide a level of anonymity that’s just not possible with traditional banks and financial payment services.
- Even greater security on your transactions – Since all cryptos are decentralized, with financial records being duplicated across millions of computers, it’s more secure than traditional, centralized payment systems.
- Players can play from anywhere, as long as they have crypto – As long as you’re in a country where cryptocurrency and online gambling are not illegal, you can use your crypto to play casino slot games, lottery games, or whatever else the crypto casino has on offer.
- Relatively instant transactions – Where it can take hours or sometimes even days for money to transfer using traditional banking methods, crypto transfers are virtually instantaneous, meaning you don’t have to wait to play your favorite virtual casino games!
How to gamble using crypto
When it comes to actually playing at these casinos using cryptocurrencies, it’s a relatively easy process. You’ll need to set up a cryptocurrency wallet at a cryptocurrency exchange, and then purchase the cryptocurrency that you plan to spend at the crypto casino. The crypto will be stored in your crypto wallet, ready for you to use.
All you need to do from there is register with the casino and deposit the cryptocurrency into your online casino account. If you play and win, you can withdraw your winnings as crypto into your crypto wallet, and then convert them back into your local currency at a crypto exchange, or simply keep the cryptocurrency in your wallet.
Should you play at crypto casinos?
Wow! This all sounds great, right? You should buy some cryptocurrency and start playing at a crypto casino right away! Sadly, as great an option as this seems, there are a number of risks associated with crypto and crypto casinos. These include:
- Cryptocurrency instability – Unfortunately, crypto is still a fairly unstable method of payment. This means your crypto might be worth a certain amount today, and worth a different amount tomorrow. This not only means the amount of crypto you use at a crypto casino may vary from day to day, but that if you withdraw your crypto winnings at the wrong time, you may lose out if you decide to convert it back to cash at a crypto exchange.
- Legality around the use of crypto – Not all countries allow the use of cryptocurrencies, as governments are unable to monitor and control the types of transactions that take place on these networks. In the US, the Federal Government seems to have taken a positive view on crypto, with the aim of keeping crypto-related business in the country. However, states are divided on this new financial system. For example, Ohio accepts crypto as payment for taxes, while Iowa has banned state systems from accepting crypto as payment.
While this may seem as though some governments are resisting this new system because they cannot control it, bear in mind that criminals can take advantage of crypto networks and the anonymity they provide to commit crimes. This is why many governments have chosen to ban cryptocurrencies instead of leaving them in a legal gray area.
Unfortunately, this means while it may be legal (or at least not illegal) to use crypto to play online casino games in your country today, this may change in the future as more governments take steps to control the flow of money through cryptocurrency networks.
- Crypto casinos can be unsafe to play at – Many rogue casino operators have taken advantage of the fact that crypto is decentralized to launch unlicensed online casinos. There is no government oversight for these operations, so while crypto casinos may be cheap, or offer great bonuses, there’s no legal recourse if they decide to steal your crypto. If you do choose to gamble at a crypto casino, make sure it has the relevant license.
Enjoy secure casino gaming at Borgata Online
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