Online casinos are finding a second chance at life thanks to an alternative digital currency known as Bitcoin. Bitcoins are a completely digital currency managed through a decentralized network of exchanges, based off the research of mysterious computer scientist, Satoshi Nakamoto, who dreamt of developing a currency immune to politicians or banks. As trust in the currency emerged after its launch in 2009, Bitcoins developed a steady exchange value with the U.S. dollar and gave once-banned industries a legal crevasse to thrive in. This week, one of the largest online casinos reported profit of $596,000 (or ฿33,310).
“These tiny startups are hitting some major online casino pain points, they’re crushing it on those fronts and as an entrepreneur, I think that’s rad—they are leveraging a disruptive technology to try and kick a large-scale industry in the balls,” said Peter Vessenes, the CEO of CoinLab, which helps companies earn Bitcoins from gamers.
Bitcoin creation and distribution is built into the very software algorithms that underlies the digital transactions. Independently operated Bitcoin “mines” are allocated a specific amount of currency based on the expensive computing power they dedicate to the intensive number crunching necessary to track and confirm transactions. In this way, Bitcoin avoids the legal and political difficulties of a central issuer.
While Bitcoin has stabilized against the U.S. Dollar, the currency is still a risky bet (no pun intended). Bitcoin operators have been subject to file corruption and hacking, causing hundreds of thousands of dollars to literally disappear. In 2011, Bitcoin transactor, MyBitcoin, was hacked for nearly a million dollars worth of currency ($896,0000).
“Users don’t have to trust us with their funds any longer than necessary,” said Larry Taad, CEO of bitcoin gambling website, bitZino, which was not profitable last year. “Even though I am extremely bullish on the long-term outlook of Bitcoin, I still keep my assets properly diversified”.