Online Gambling Accounts for More Than Half of Bitcoin Transactions
Bitcoin is becoming big business in the world of online gambling. Earlier in the month, Gambling911.com reported that one of its ad sponsors, SportsBettingOnline.com, had become the first online sportsbook that was not bitcoin exclusive to begin offering the anonymous digital currency.
Gambling911.com will be bringing on a bitcoin-specific online sportsbook during the month of September as well.
The online gambling sector is slowly beginning to embrace the sometimes controversial currency that in recent months has come under more intense scrutiny of the US Government.
One firm is now reporting that online gambling actually accounts for half of all bitcoin transactions.
Jeremy Liew, a partner at a venture capital firm called Lightspeed Venture partners, made that incredible claim in his blog recently. Transactions in the biggest Bitcoin Web gambling site, Satoshi Dice, accounted for 25 to 50 percent of the digital currency’s overall transactions during the month of June.
Once considered a virtual underground clearinghouse for illicit drugs, Liew notes that such transactions now account for less than half a percentage point of bitcoin.
US Government Worries Over Bitcoin
Peter Ferrara, a contributor to Forbes.com, suggests that the US Government’s reaction to bitcoin "is an acknowledgement of the dollar's vulnerability".
It is not Bitcoin that will arise as the alternative global reserve currency, because as discussed above, it has no inherent value either, so it is subject to wide swings in market value too. The real threat to the dollar is a different, private, alternative currency that can arise, that is based in real commodities with inherent value.
Such a currency will not be rooted only in the imagination of cyberspace, but will look more like the currencies of old that gave rise to booming capitalism. A foreign financial institution free from meddling, destabilizing, self-interested, U.S. policy interference can issue a currency where each unit entitles the bearer to specified quantities of a diversified basket of precious commodities, like gold, silver, copper, oil, diamonds and similar commodities that inherently hold their value over the long run.
The market value of such a currency will inherently be stable, tied to real value in the real world. When the market value of the underlying commodities declines, the issuer of the currency can buy more, and expand the currency, which will stabilize its value, and accommodate a growing economy.
New York State Investigation, Senate Committee Letter to Regulators
New York State and federal law enforcement agencies are beginning to investigate the shortcomings of bitcoin.
From the New York Times:
The Senate’s committee on homeland security sent a letter this week to the major financial regulators and law enforcement agencies asking about the “threats and risks related to virtual currency.” These currencies, whose popularity has grown in recent years, are often used in online transactions that are not monitored by traditional financial institutions.
“This is something that is clearly not going away, and it demands a whole government response,” said a person involved in the Senate committee’s investigation, who spoke on the condition of anonymity because the inquiry is continuing.
The letter went out the same day that New York’s top financial regulator, Benjamin M. Lawsky, sent subpoenas to 22 companies dealing directly with bitcoin.
Online Gambling May Get Caught in the Crossfire
With Web gambling making up half of all bitcoin transactions, we now have a double-edged sword. The US Government has had a long history of cracking down on illegal gambling businesses. The industry is resorting to the use of bitcoins, in part, as a result of laws prohibiting financial institutions from permitting online gambling transactions.
So far, the bitcoin-niche sector is enjoying great success it appears.
According to Blockchain, there were about 48,400 transactions per day in June for Satoshi Dice. The Dublin-based site does not even accept customers from the United States.
Web gambling companies that only last year scoffed at the idea of offering bitcoin now realize the potential in this digital currency. At the same time, they understand the vulnerabilities and need to tread carefully, especially in the face of intensive US Government scrutiny.
- Alejandro Botticelli, Gambling911.com
