11 June 2013

Bitcoin Betting Boom

By Buffalo66
Buffalo, NY

If you're an avid reader of this blog you probably are also familiar with Bitcoins.  They are a virtual, decentralized crypto-currency that can be used for online commerce.  And in my opinion, they're making sports betting incredibly accessible and user friendly for the first time in a decade.

How are Bitcoins (BTC) any different than Neteller, Paypal or Western Union?  First off, BTC transactions are irreversible.  There can be no charge backs or disputes.  Once the BTC hit your wallet, they're yours to keep.

Bitcoins can also be anonymous.  Even though all BTC transactions are recorded in the blockchain system, you can use a unique BTC wallet address every time to send or receive a payment.  This is actually a great development for sports bettors because using multiple addresses can get you around being limited if you want to bet big.

Sending payments are efficient and economical.  When you initiate a BTC transaction, there is a possibility of a transaction fee (sometimes there is no fee at all).  The maximum fee is .001 BTC or about 10 cents, based on today's exchange rate.  This is a big issue to money transmitters like WU and MG, because with BTC you can transfer money anywhere in the world in an hour, practically for free.

Bitcoins are decentralized.  The network is an open source software being run on millions of computers worldwide.  This means the only way a government (or other entity) can shut down the system is to take the whole internet offline.  And that is very difficult to achieve.

One of the downsides to BTC is its price volatility.  Because there are still relatively few places to exchange fiat currency for BTC, the prices can swing wildly.  Just this year the price has been as low as $14 USD and ran all the way up to $266.  It been much steadier lately, mostly staying in a range of $110-$125.

Sports bettors are risk takers by nature.  Online poker players are also aware of trying new (and sometimes untested) payment systems.  I think it's just much easier for gamblers to dip their toe in the pool when it comes to BTC.

Once the Bitcoin economy began to grow in 2010, it was only a matter of time before sports books popped up that accepted BTC.  I currently count about a dozen web sites that use BTC, including a couple of betting exchanges.

Based on personal experience, I've found more favorable lines on BTC betting sites.  Much better than Las Vegas or square online books.  In fact, on an exchange I only pay 1% vig versus a standard 10%.  This means I need less winners to turn a profit, because I'm getting paid extra every time I cash a winner.

I also enjoy the convenience of placing a wager from my computer or phone, and the ability to shop for lines.  Only residents of Nevada have those advantages on a regular basis.

I have no idea if BTC will be a long term solution for internet wagering.  It is slowly becoming more accepted every day.  I think it is a revolutionary concept and it will somehow be adapted into our daily financial lives.  My guess is that someday we will shop with our regular credit cards and actually be spending Bitcoins while not even realizing it.

I realize Bitcoins are difficult to understand but they are so EASY to use.  Time will tell when the BTC betting boom will end.

Buffalo66 is a pro sports bettor and the most feared man in daily fantasy sports.

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