Not too many people have probably heard of Bitcoin but I'm guessing within the next year or so you will, particularly if you play offshore. I have been following this new currency for a few months and have found it one of the most fascinating things to come around in a LONG time. Bitcoin or something similar to Bitcoin in the future has the potential to completely revolutionize the world economy much like the internet has done in the past 20 years. This could just be another flash in the pan but I am really starting to think it won't be as there is a lot of angst around the world against government controlled currency with the 08 crash and the quantitative easing (currency manipulation) that has gone on since along with the Euro issues and Greece's basic insolvency. This could be the beginning of a revolution in world currency.
There is no way that I can adequately describe what Bitcoin is so I will post some links below but if you know what torrent is or what the original Napster was supposed to be it works on the same premise. It is a DECENTRALIZED currency that runs on the P2P network. No owns it, no one controls it, and nothing backs it up like gold. For those that want to do away with the FED banking system this may be the answer. If fact it has been mentioned in a senate hearing headed up by RenoChazz's favorite politician Ron Paul. Quite honestly I think governments are scared of something like this as there is very little they could do to control it.
It all sounds creepy and unsafe to be honest and I felt the same way before I got involved. There are actual reputable exchanges similar to the FOREX with the largest being the MtGOX exchange where millions of dollars are traded with various currency's. More and more companies are starting to accept BitCoin and regulators in Europe and the US are now allowing direct bank transfers to purchase and sell Bitcoins as it is SLOWLY starting to be treated as just another currency.
So.... how does this all relate to sports wagering? Well Bitcoin is 100% anonymous and if setup properly is completely untraceable. Basically you have a digital wallet that is setup on your phone or computer with lets say 100 Bitcoins which has an approximate value of $1,350. A second person had a wallet which could be the sportsbook. Your wallet and their wallet are only known by a unique identifier that is just a string of numbers and letters. No names are known and no identity's are relieved. When you send 100 BitCoins to the sportsbook it goes from your address to the sportsbook's address through the P2P network bypassing all banks and regulating agency's and the only thing that is known is the unique address of wallet A and wallet B. Again... no names, no email addresses, nothing. The sportsbook could then keep the BitCoins for paying out someone else or release them into an exchange like MtGOX and get other currency wired right to their bank. If you want to avoid banking all together there are sites like LocalBitCoins.com where people in your area will meet up and buy and sell them for cash.
Now... there are servers and computers all over the world that are supporting the network and of course they would not do this for free. When you send BTC (bitCoins) from one wallet to another you must include a fee of about 1 cent to complete the trade.
Here is the best part that I have found. Remember Matchbook? There is actually a site similar to Matchbook setup for just BitCoins called BTCSportsMatch.com. They are a sportsbook that matches sides based on Pinny no vig lines. That's right... NO VIG. The winner of the bet pays a 1% fee when the wager is decided. The problem with this site is it is still in it's infancy so there is not a lot of people using it yet but for the major games I have found no problem getting my orders matched.
All of this is 100% legal. By using Bitcoin you are not breaking a single US law. As long as people pay there taxes there is nothing wrong with moving money around like this.
So whats the problem? Sounds great right? Well it's not perfect....
To get setup using Bitcoin is not the easiest thing although every month there seems to be a new product come along that makes it easier and easier. Even though it has been around for 4 years now it is still in it's infancy and some of the things you have to know and do are quite techie. It is no where near ready for the mainstream but there are a lot of startups working on making it point and click. Eventually it will become quite easy to use.
If you look at the MtGOX charts of the value it can swing quite wildly. It has been as high as $30 and as low as $2. It takes months to do this but it is not like holding onto an american dollar. If one wanted to simply use it as a vehicle to move money you would want to get in and out of it within a few days as you could lose value just by sitting on it... but you could also make money. Currently there is only 10.5 million Bitcoins in the world with a increase to 21 million in a hundred years or so. There will never be any more so if this where to catch on the value of each BitCoin would be astronomical. For this reason you can trade down to 8 decimal places of a single coin so actually Trillions of smaller pieces.
Theft and security is always a concern and there has been a few issues with this but it was more to do with people being stupid with their digital wallets and companies leaving un-encrypted hard drives laying around. As long as you are not moving your entire bankroll or life savings around around and you are very safe with you wallet you will be fine. Theft and security is just as much an issue with fiat currency as well.
The bottom line is as the UIGA continues to strangle the money flow to and from books and the US govt seems hell bent against internet gambling the books and their clients will have to get more and more creative with their funding options. BitCoin seems to be the answer. Anonymous, virtually untraceable, and not illegal. Additionally if BitCoin or something similar where to take off it sure would be nice to have 100-200 of these coins when prices shoot through the roof.
Does anyone have any experiences with BitCoin? I would like to know what others think and what the computer genius Patrick has to say about it.
BitCoin sports wagering links:
Edited 12/28/12 at 2:14PM by Parker - No reason listed.