Bitcoin is a digital currency, or cryptocurrency, that is created and stored electronically. It is decentralised, meaning that is controlled by its users rather than any country or central authority. Whereas banks can simply print more currency to cover debt, which devalues the currency, there is a limit (21 million) on how many coins can ever be created, and its value is based on mathematics rather than gold or silver.
Bitcoins are transferred via the web from user to user, without requiring a bank to process the payment. All you need is an input (the source of the coins), an output (the address of the receiver) and the amount. The benefits of this are that the payments are quick and the transaction fees are normally tiny or even non-existent. Transactions are verified by ‘miners’ and then recorded in a public ledger called the ‘block chain’, which contains every Bitcoin transaction ever processed.
The lower processing costs make Bitcoin an attractive proposition to online businesses like betting and casino sites, and the number of Bitcoin-only casino sites is growing. Deposits and withdrawals cost nothing, giving them more funds for promotions and bonuses and enabling them to potentially offer more generous payouts. Depositing and withdrawing at a casino site using Bitcoin is simple and not dissimilar to using an e-Wallet service like PayPal or Skrill – all they need is the wallet information and the amount you want to transfer.
Bitcoins are purchased either through exchanges or from individuals. Because Bitcoin is still a relatively new technology and has yet to be accepted as a mainstream method of payment, it can be difficult to acquire the currency. For example, most exchanges do not allow you to buy Bitcoins by credit card or PayPal due to the risk of chargeback, while some banks are reluctant to get involved in anything to do with it. However, the options for Bitcoin users are growing, depending on where you are in the world.
Most regular users have a Bitcoin exchange account where you can buy and sell currency. There are a number of Bitcoin exchanges operating in the UK as well as some abroad that are available to UK customers. The other option is a peer-to-peer service where individuals trade Bitcoin with each other, and there are also several of these in the UK. Another alternative is a Bitcoin ATM, which allows you to insert cash into or take cash out of your digital wallet. Again, a number of these have appeared in the country in the last few years, mostly in London.
Technically, Bitcoin isn’t stored anywhere. What you store in a Bitcoin wallet are the secure digital keys used to access addresses and sign transactions. Bitcoin wallets come in five forms: desktop, mobile, web, paper and hardware.
Because Bitcoin is decentralised and can be anonymous, there are concerns about its potential use for criminal activities. It is still in its infancy and is not recognised as legal currency in most countries. As a result there is no standard international regulation around Bitcoin. A handful of countries have gone as far as banning Bitcoin, while others have issued warnings about its risks. However, those involved in Bitcoin argue that it is inherently secure because of the anonymous, peer-to-peer nature of the transactions. Personal and credit card details are not involved, and you’re not trusting anyone else to handle your money.
Bitcoin casino sites in the UK still have to be licensed by the UK Gambling Commission, and they should also carry out regular independent tests to confirm that their random number generators are fair. If your Bitcoin casino site is not registered in the UK then check whether it is licensed by another authority.