Digital currency is considered one of the biggest innovations in the past 20 years. Blockchain technology is changing how consumers transact online. Although Bitcoin looked valueless when it first launched, it has steadily proven the worth of cryptocurrency and opened the door for other altcoins in the process. Consumers are slowly adopting digital coins as payment solutions in various marketplaces, with online gambling as a top contender. New approaches to payments have fueled the dramatic growth of the internet gambling sector. Operators are always looking for the most efficient ways for users to transact online, and digital currencies solve several issues.
Blockchain networks facilitate unalterable, permanent and anonymous, but transparent payments. Without an intermediary to police transactions, crypto coins reduce the costs of operations for gambling operators, which are passed on to customers. The debate of how blockchain technology revolutionises online gambling is an ongoing one. A part of it looks at the risks that cryptocurrency gambling poses. Before embracing any new product, consumers must evaluate the potential pitfalls. As impressive as blockchain technology is, it’s not perfect. The following analysis highlights the main risks that gamblers should be aware of.
Disruption of Online Gaming Regulation
A persistent challenge across the gambling industry is how cryptocurrency eliminates the need for regulation. Every transfer made on the blockchain network is visible, meaning that anyone who wanted to can view and verify it. The transparency of crypto payments means that a third party is not required to check and approve transactions. Regulation is not mandated for gambling operators that support digital currency. This situation leaves the door wide open for sites of questionable repute to offer services to consumers. It also creates a loophole for gamblers in regions that don’t permit the processing of online gambling payments from fiat currency.
The circumstances are changing, though. As the demand for crypto sites increases, some top gambling jurisdictions like the United Kingdom and Curacao have started regulating cryptocurrency operators. Still, only a handful of licensed and registered platforms accept digital currencies. The main issue is that some crypto-only sites hold licences in jurisdictions with minimal standards, which exposes gamblers to limited consumer protection. Such operators might not institute AML (anti-money laundering) and KYC (Know Your Customer) requirements. You can avoid this risk by conducting thorough research into reputable crypto operators. For example, you can look up the best rated Litecoin casinos before you begin gaming.
Initially, cryptocurrency was lauded for being unhackable. It’s among the top reasons blockchain applications have become so popular. How true is it, though? The public ledger that records crypto transactions receives regular reviews from users, which make it hard to hack. Currency holders use private keys to send and receive funds. By design, cryptocurrency is difficult to penetrate. However, every technology has its weaknesses. In this case, security concerns are about coin storage. When you buy Bitcoin, Ethereum, Litecoin or any other digital currency, you need a wallet to keep the coins. Currency exchanges provide these wallets. In the short history of cryptocurrency, there have been numerous reports of exchanges getting hacked and users losing millions in crypto.
Not all exchanges implement solid security protocols to protect customer funds. Coin exchanges don’t have the experience of custodial banks, which have mastered the practice of storing monies. Hackers can acquire private keys and use them to wipe out wallets. Additionally, when creating an account at a coin exchange, you need to verify your identity. If the personal details used are compromised, then your funds are at risk. For these reasons, gamblers should ensure that they use reputable coin exchanges. Even then, they should avoid holding funds for too long in online wallets. Using cold storage or hardware to park your crypto coins is another solution.
The biggest risk to watch out for when using cryptocurrency is volatility. Digital currencies don’t have stationary value. They can spike and plummet rapidly in a matter of hours. It means that you could have a good chunk of change in crypto at the start of the day and by the end of it, you could have nothing. Take Bitcoin, for example. In April 2021, it attained the highest recorded value at more than $63,000 and by May, half of that worth was gone. Volatility is present in all assets, but virtual currency is uniquely susceptible.
Various factors affect the price of digital coins. One is supply and demand. Cryptocurrency is available in limited supply. So, the more people acquire a particular currency, the higher the demand, causing a price surge. Another reason is that crypto is highly prone to pressure and influence. Nobody paid my h attention to digital currencies when they came out. However, as its disruption potential became clearer over time, governments and regulatory bodies started paying more attention. Now there is pressure to regulate blockchain systems, which plays a big factor in a coin’s worth. The more interference there is, the less appealing a digital currency becomes. Cryptocurrency remains a hot debate topic globally and any news impacts value. The most recent example is Dogecoin’s upward trend when Tesla’s CEO’s Elon Musk started commenting on the currency on Twitter. Cryptocurrency is yet to attain the stability of fiat currency. Therefore, gamblers should approach the payment option with caution.
Despite recent uptake in demand, cryptocurrency is still in its infancy and that means that it has various complex issues that consumers must watch out for. Gambling with digital coins has its perks, but users must also consider the implications. Comprehending the risks accompanied by crypto gaming allows bettors to leverage the benefits of blockchain transactions adequately.
Andrew is a writer that does most of his work on cryptocurrency-related topics. While he’s primarily interested in Bitcoin, he also follows major altcoins and the innovative ideas that new cryptocurrency and blockchain projects are bringing to the table.