Interest in cryptocurrency as a payment solution at online casinos grows by the day. Blockchain transactions are experiencing increased adoption across various sectors as big corporations embrace digital coins as legitimate payment methods. Digital currencies are ideal for online gambling because they provide rapid transactions that don’t need to pass through intermediaries. These payment options are also non-reversible, which decrease fraud cases at gaming websites. A few other advantages over fiat currency makes crypto practical alternatives for many players. However, blockchain technology is not perfect, and every consumer should be aware of that.
Before gamblers rush into crypto gaming, they must understand its impact. One element players should analyze keenly is the risks that come with blockchain transactions. Regardless of the positive trends and the growth so far, cryptocurrency remains a newly chartered territory in many aspects. Not every user comprehends the threats they face when sending and receiving virtual currency. If you intend to get into cryptocurrency gambling, then keep reading to find out how to assess particular risks and protect yourself.
The Basics of Cryptocurrency
Some players might not be completely sure about how digital coins work. You might have seen the word ‘blockchain’ thrown around in connection with cryptocurrency but don’t know more about it. Blockchain is a network that monitors transactions on a globally distributed ledger. Although the technology is mainly associated with digital coins, it tracks anything of value, including software, intellectual property, and contracts. The system uses cryptography to record payments from virtual currencies. When a transaction happens, it registers in a block, complete with redundancies and encryptions, then joins a chain.
The security protocols make transactions immutable, meaning they cannot be altered or falsified. Each entry has a timestamp and undergoes verification. Every user on the blockchain can access the records. Therefore, a single anomaly is easily detected. From this explanation, it’s clear that no third party participates in blockchain payments, unlike traditional ones. Your deposit doesn’t have to go through a bank first for authorisation before reaching a gambling site.
Cryptocurrency is a blockchain application, which allows it to leverage all the system features. The absence of government or regulatory control makes digital currencies decentralized. It enables users to send and receive funds with a degree of privacy, which is part of the reason digital coins work so well for gambling. A growing number of operators now support crypto coins, and not just Bitcoin, but also Dogecoins. You can check out examples of best Crypto gambling sites reviewed by Vienne Garcia. Some operators even design their platforms exclusively for crypto games.
Potential Risks to Watch Out For
The benefits of virtual currencies for online gambling cannot be exaggerated enough. However, it would be irresponsible not to factor in the downsides as well.
One obvious risk of using cryptocurrency use is the dramatic value fluctuations coins experience. No better example exists than Bitcoin. In early 2021, the asset attained an all-time high price of over $63,000. In a month, it lost almost half its value. Then started peaking again a few weeks later. Gamblers must understand from the get-go that digital coins don’t have a stationary value. They respond to various market trends, thus, gaining and losing their worth when provoked. Of course, fiat currency does as well, but crypto is extremely volatile.
A few unfavourable opinions about Ethereum, for instance, can cause the coin to shed a significant chunk in value. When gambling, a price surge would boost your bankroll, but the biggest risk is a value drop. From one minute to the next, your budget of $500 could be worth $100, meaning a substantial loss before you even start betting. Alternatively, you could win a significant prize, then find out it’s almost worthless because your chosen coin took a price hit. Online casinos institute certain measures to protect customers, though. Some sites convert crypto to fiat immediately after a deposit.
Loss of Funds
Similar to fiat currencies, digital currencies face different theft threats. However, crypto coins come with unique challenges. Hacking is one. Instances of coin exchanges being attacked and customers losing money are rampant. Some companies, particularly unregulated ones, go bankrupt and fail to pay back users. If you decide to store funds in an exchange, then accept the possibility of something similar happening. You can reduce those risks by vetting crypto exchanges rigorously.
Another way you could lose money is if you lost your wallet password. If you are using a non-custodial wallet that gives you control of your login details, losing them would lock you out of the coin storage, with no means of recovering the funds. Sending money to the wrong address can also wipe out your gambling budget. Blockchain transactions are irreversible. So, if you mistake a recipient’s address, then your money is gone forever.
Hindering Responsible Gaming Efforts
A growing concern among regulatory authorities and other stakeholders in the gambling section is that using crypto payments can make it hard to implement RG strategies. Licensed operators must ensure customers access responsible gaming tools. Some casinos also track gaming behaviours to detect any issues. Digital coins can pose some problems, though. Cryptocurrency price fluctuations can affect AML triggers and deposit limits.
For example, say your limit is $50, but during a deposit, a coin’s value doubles, you would end up with a bankroll of $100. At-risk players can fall for the temptation to gamble with everything available in their accounts. Gamblers under self-exclusion can also use highly private coins like Monero to bypass the tracking features at some casinos. Presently, gambling operators are working on improving KYC and AML protocols for cryptocurrency payments, but loopholes still exist. Cryptocurrency gambling doesn’t seem to be going anywhere, especially as virtual coins gain increasing popularity. Players who believe gaming with Bitcoin and altcoins suits their needs should ensure they learn the risks involved.