GPWA Times Magazine - Issue 28 - April 2014

Bitcoin'sboom-bust cycle letsplayersgamble twice ByAaronTodd B itcoin has been getting a lot of buzz in mainstream media lately, thanks in part to recent events surrounding the crypto currency. Newsweek published a largely discredited article contending that the author had located the secretive founder of Bitcoin. Meanwhile, MtGox, which once dominated the Bitcoin online exchangemarket, suspended trading and filed for bankruptcy, announcing that $480million inbitcoinsweremissing. While Bitcoin hit the public consciousness when the price of bitcoin rose to over $1,000/coin last year, it has been a subject of debate in the gambling industry for more than two years, withmany herald- ing it as the solution for a lot of the prob- lems the industry faces. "This type of thing has never really been done before," says Bryan Micon, affili- ate manager and brand ambassador for SealsWithClubs, a Bitcoin-based online poker room. "It justmakes sense tome. It makes sense to somany nerds out there, andnow the general population is taking a look at it as a legitimate thing." Considerme a part of that general popu- lation. (You can also consider me a nerd – I do own the entire Star Trek: The Next Generation series on DVD – but when it comes to Bitcoin, I've always been a skeptic.) I decided to seewhat all the fuss was about. On March 7, I purchased 0.1 bitcoin at Coinbase.com, an online Bitcoin ex- change, for $63.78. I then created an ac- count at SealsWithClubs and transferred my 0.1 bitcoin to my new account. After waiting about 30 minutes, the deposit showed up in my account and I was all set toplay. What isBitcoin? Bitcoin is both a digital currency and a payment processing system. (The cur- rency is generally referred towith a low- ercase "b"while theoverall systemusesan uppercase "B.") Since the system includes a payment processing system, users can instantly transfer bitcoins to anyone any- where in theworld at virtuallyno cost. The first bitcoins were mined in 2009 (more on that later), and every 10 min- utes, 25 new coins are distributed as a re- ward tominers, whose computers secure the network. That number will halve ev- ery three or four years until 2140, when therewill be21millionbitcoins in circula- tion. At that point, the reward formining will consist entirelyof transaction fees. Users can either download Bitcoinwallet software on a computer ormobiledevice, or theycanholdbitcoin inanewallet.User accounts are long strings of numbers and letters and have no personal information attached,meaning thatall transactionscan be conducted (for the most part) anony- “ Bitcoincanbe obtainedeither by purchasingcoins (or fractionsof a coin) throughan exchange, byselling something for it, or throughmining.” 13 Bitcoin'sboom-bust cycle letsplayersgamble twice