Key takeaways:
- With an ever-increasing share of consumers willing to pay for goods and services on online platforms, the security aspect of transactions is getting more and more important
- The online gambling industry is uniquely positioned to benefit from a growing number of users who are willing to use cryptocurrencies to pay for goods and services online
- Cryptocurrencies protect the consumer from hacking attacks as well as from shady business practices
One of the key features of every blockchain, be it Bitcoin or Ethereum, is the inability of a third party to falsify or in any way tamper with the transaction data stored on the network. The so-called immutability is one of the core aspects of blockchain technology and a cornerstone on which trust in the crypto industry is built upon.
Why is immutability such an important concept?
Over the last decade, but particularly in the time period since the first Covid-19 related lockdowns started, various online businesses experienced a massive increase in user growth. While a growing share of users is not concerned about using credit cards to pay for goods and services provided over the internet, there are some who are still wary of sharing their personal financial information of any kind on the internet, and for good reason.
According to a study conducted by Javelin, about 5% of consumers are victims of fraud incidents ranging from fraudulent account openings to full takeovers of checking and investment accounts. Credit card fraud is especially rampant. Fraudsters may hack a victim’s computer or gain vital personal information via phishing attempts to gain unauthorized access to a credit card account.
“One of the key features of every blockchain, be it Bitcoin or Ethereum, is the inability of a third party to falsify or in any way tamper with the transaction data stored on the network.”
While every kind of business venture that has an online presence can benefit from online transactions being more secure, the gambling industry is uniquely positioned to benefit from the rise of cryptocurrencies and the general populace’s growing willingness to use crypto as a payment method.
The reason for this is simple as the workflow of the gaming industry, such as crypto casinos, highly depends on the security of transactions. In order for an online casino to flourish, users must be in control of their funds at all times and be certain that their funds are safe.
Cryptocurrencies provide a solution on both ends. They offer superior security. Crypto wallets are way harder to crack than conventional online banking accounts. Not only are crypto assets more secure in regards to various malicious attacks, but they also can’t be tampered with by a business with nefarious ulterior motives.
Looking back at the Full Tilt Poker fiasco with a new perspective
One example of a business that definitely had ulterior motives for its customer’s funds was Full Tilt Poker. In 2009, then one of the biggest US-based online poker sites, started showing signs that something shady was going on. Players were reporting missing funds, withdrawals were canceled without explanation and many of the sponsored pros started distancing themselves from the site.
“After “Black Friday” hit, it became apparent that players were defrauded of more than $300 million.”
On April 15, 2011, which later become known as “Black Friday”, the US Department of Justice shut down the online poker sites that were operating within the country’s borders on charges of bank fraud, money laundering and violating the UIGEA. In the following months, it became apparent that Full Tilt Poker was running a sort of a Ponzi Scheme as the site never kept player’s funds segregated and in fact used them for daily business expenses and for paying out sponsorship contracts.
When Black Friday hit, the site was simply not prepared for a massive increase in withdrawal orders, which led to players being left unable to cash out their account balances. The CEO of Full Tilt Poker at the time, Raymond Bitar, was arrested for siphoning more than $430 million from users’ accounts to board members and owners, while the users were left waiting for a cumulative $300 million in withdrawal claims.
Benefits of using cryptocurrencies
If player account balances were stored in cryptocurrencies, a Full Tilt Poker-like scenario would be much harder to unfold. Since blockchain immutability provides the ability to audit all historical transaction data at any point in time, Full Tilt’s inappropriate handling of funds would become known much sooner.
In recent years, we have experienced a growing trend of online casinos implementing cryptocurrency-related solutions into their platforms. While Bitcoin transaction speeds can be a hindrance at times as the network can process only up to seven transactions per second, there are numerous benefits to using Bitcoin instead of fiat.
“Bitcoin transactions are pseudonymous, have no third-party interference and are completely transparent.”
Bitcoin withdrawals are often less expensive than international bank transfers and are usually processed more quickly despite the network’s limitations since they don’t require the bank’s approval, which can often take up to several business days. Additionally, Bitcoin transactions are pseudonymous, have no third-party interference and are completely transparent.
Due to a long list of benefits, many well-established businesses, such as Tesla, PayPal, KFC and many others have started accepting Bitcoin payments over the last couple of years. Going forward it is all but certain that the list of major companies that accept Bitcoin will continue to grow.
