If you had no clue how Bitcoin works, join the club…..we are new to this as well. As a quick preface, Bitcoin is sort of like how you would use a third party payment system like PayPal but without the fees and without the wait.
First off, as a digital currency, Bitcoin is an excellent source for funding one’s online betting account as well as receiving money, especially if one happens to reside within a nation where the activity is either deemed illegal, heavily taxed or just plain difficult to partake in via regular banking methods (i.e. many US banks do not allow their issued credit cards to be used for gambling purposes).
Because today’s banking system utilizes a middleman, sending and receiving funds is often delayed depending on the capabilities of said middleman. While bank wires typically take 1-3 business days, online gambling firms are often left with reduced options for intermediaries and/or limits to the amount of funds that can be processed at any given time. This can result in bank wires taking up to 14 business days, sometimes longer.
Bitcoin payments are typically instant, sometimes within just a matter of minutes and often with limited or no fees at all.
The anonymous digital currency is becoming so mainstream these days that students can even use the method to pay for their university tuition.
But how does it work when compared with regular currency such as a dollar?
What makes a dollar so special is the unique code itself. Most of us don’t even bother to look at those little numbers outside of that big ‘ol “1”.
Bitcoin is no different. All the spending power of a dollar without carrying around a bunch of paper.
Each Bitcoin has a unique code used for verification purposes just as a dollar does.
Now that we’ve offered an introductory primer about Bitcoin, let’s explain how the process of using the digital currency works.
How Do I Buy Bitcoin?
Bitcoin need to be purchased from an exchange such as CoinBase.com, among the biggest out there. You would set up an account there much like you would any other registration-type website. You will need to verify your checking account along with your identity. We suggest opening a small checking account just for use with Bitcoin as a means of separating from your other banking activities, though this is not necessary. A small charge will be made to that account (perhaps as little as 2 cents) as a means of verifying authenticity.
Coinbase will send you a numeric code (typically to your cell phone) and once you have verified receipt, it is time to start spending those Bitcoin.
Create Your Bitcoin Wallet
You create the wallet by using Blockchain.info. The setup typically takes under two minutes. Once registered you will receive a unique code. From CoinBase.com, you will send the Bitcoin you’ve purchased to this address. The wallet is very important for added privacy.
How Do I Send Bitcoin to a Sportsbook or Online Casino?
First, your online gambling site must be able to accept the digital currency. While most do, this does not apply to all of them.
You would simply click on the Bitcoin option from the gambling website cashier page.
You will enter the amount in dollars (or your country currency). For this example we will use US$100 then click deposit.
The online gambling company then provides a string of number code to send your Bitcoin to.
Go to the Blockchain.info website, head into your created Bitcoin wallet and you complete the transaction.
It may take up to an hour for the payment to be credited. Remember, there are ZERO fees.
Follow this same process in reverse once you request a payout from the online gambling site to your wallet, then from your wallet you send the Bitcoin payment to CoinBase.com and you finally get paid into your bank account.
After doing this once or twice we are told you can practically send and receive funds blindfolded.
Bitcoin is a Network Like Visa or Mastercard AND a Currency Using the Same Name
You may read that a single Bitcoin is worth more than $2000. This is great for those who engage in trading the digital currency. It means nada for those who are simply using Bitcoin to bet online or use to purchase goods.
If you bet US$10 to win US$100 and your bet is a winner, you get back US$100 by simply following the procedure discussed above.
When you use Bitcoin to bet, it is like saying you are using your credit card or a gift card to bet. Mastercard conducts transactions in US dollars and Bitcoin (the network) conducts transactions in, you guessed it, Bitcoin.
This may offer an explanation as to why Bitcoin is written sometimes with a capital “B” and other times with a lowercase “b”.
When describing the network, you would use the capital “B” just as you would with “Mastercard” or “Visa” or “American Express”.
When we use the small “b” we are referring to the currency itself.
This concept, however, is yet to be fully embraced across all spectrums.
The dummies here at Gambling911.com typically use the “B” in most pieces appearing on the site with the exception of articles written by special contributors or some descriptive pieces, mostly appearing alongside externally produced video segments.
Are There Security Risks?
They are the same with using any third party processor. We would never recommend keeping monies inside a particular processor or the Bitcoin wallet itself just as we would not even recommend keeping funds in a third party processor like PayPal (albeit PayPal these days is pretty much up there with a top bank, reputation-wise).
Third party payment processors were a common form of sending and receiving funds for online gambling back in the day. And quite a few of them shut down before folks had a chance to get their money out.
The key is to move money quickly in and out using the channels discussed above and right back into your bank account. The process tends to be relatively instant with Bitcoin, thus reducing the risk.
An added layer of security is to open a separate bank account dedicated just for Bitcoin transfers. No need to go to a different bank. The financial institute you currently bank with ideally wants you to open multiple accounts.
We hope this information has helped you to better understand the basics of Bitcoin.
- Aaron Goldstein, Gambling911.com