GPWA Times Magazine - Issue 28 - April 2014

Perhaps even more difficult, however, is the accounting an everyday consumer would need to do to utilize bitcoin and follow the latest IRS regulations. Because bitcoin is viewed as property (like stock, not currency) and its value fluctuates, ev- ery time someonemakes a purchasewith bitcoin, theywill experiencea capital gain or loss. If the value of your bitcoin goes up between the time you obtain it and whenyou spend it, youexperiencea capi- tal gain. If it goes down, you have a loss. I have enough trouble doingmy taxes at the end of the year. I can't imagine trying to figure out what I owe if I used bitcoin every time I filledupmy carwithgas. Anddespitewhat its adopters say, it'snot an infallible system. In March 2013, the systemwas split in twowith both halves operating independentlyof eachother. Even Bitcoin's chief scientist, Gavin Andresen, admits that it isn't perfect. "Working on Bitcoin's core code is re- ally scary, actually, because if youwreck something, you can break this huge $8 billion project," Andresen told Newsweek . "And that's happened.We have broken it in thepast." Allof these issuesmake itharder forme to believe that bitcoinwill be something that theAverage Joe is going towant toutilize for everyday purchases, unless he has something illicit in mind. Which brings meback tomydeposit at SealsWithClubs. Gamblingnot once, but twice As a resident of Massachusetts, I can't play online poker at a site regulated where I live. BeforeBlackFriday, I played at PokerStars and Full Tilt Poker. Since then, the only time I've made a deposit into an online poker account was when I was traveling inNevada and played on sites that have Internet gaming licenses in that state. SealsWithClubs accepts players world- wide and has attracted traffic roughly on parwithNevada'smostpopular intrastate online poker room, WSOP.com. While that doesn'tmake the experience quite as goodaswhat Ibecameaccustomed topre- Black Friday, it still has enough traffic to offer the types of low-stakes games that I like toplay. Each bitcoin deposited gets players 1,000 chipsatSealsWithClubs, so Ihad100chips atmydisposal. I jumped intoa few .05/.10 games over the course of a few weeks and increased my balance to 117.61, or 0.11761bitcoin. OnMarch 31, I checked to see howmuch myBitcoinwould beworth if Iwithdrew it tomyCoinbaseewalletaccountandsold it on the exchange. The price of Bitcoin had dropped a whopping 27.8 percent in the 24 days since I made my deposit, meaning that even though I'd increased my bitcoin holdings by 17.6 percent, the U.S.-dollar value had dropped 15.1 per- cent. I felt like Iwas gambling twice, once at thepoker tables and againon thevalue of bitcoin. "When the price goes up, everybody gets this brand-new interest in Bitcoin and SealsWithClubs and bitcoin poker," saysMicon. "When the price goes down, people lose interest, it seems. The value massively swinging, it changes the limits that peopleplayon the site. If thevalueof bitcoin skyrockets versus other fiat cur- rency, well then people play lower and lower. Theydon'twant to bet the equiva- lent of thatmuchfiat." All other concernsaside, this, tome, is the cruxof theproblemwithBitcoin. Sure it's excitingwhen thevaluegoesup. But peo- ple have a reason to distrust a currency that increases its value 20,000 percent in 18months, and then fallsbymore than50 percent in the courseof a fewweeks. Compare this with the fluctuations seen in other world currencies. In the same period of time, the U.S. dollar gained 0.1 percent when compared to the euro, 0.5 percent when compared to the pound, fell 2.3 percent when compared to the Australiandollarand fell0.8percentwhen compared to theSouthAfrican rand. "Hit me in like 10, 20 years, I'll probably have a stablypricedbitcoin for you," says Micon. "People would rather it be stable. It'snot. It'snotgoing tohappen forawhile. Sodefinitelydon'tpurchasebitcoin think- ing, 'This is a nice stable investment.' It's speculative right now." Regardless of the fluctuations in value, he's still excited about the future of Bit- coin and thinks that its pluses outweigh itsminuses. "Idon'tunderstand thecurrentfiat system of U.S. dollars that dominates the world markets," saysMicon. "I've researched it, but I can't figure out how exactly the fed works.… Idon't likeknowing that there's a central authority that can randomly issue more (money) and devalue mine. I don't like that it takes threeandahalfdaysafter I write a check for themoney to go from me toyou. I don't knowwhybanks close. These are of course things that Bitcoin does well and better than every financial institution, for damn near free. It's hard tobeat." As forme, I'm just going tohave to grind awayuntilmywinsat thepoker tableout- weighmy losses in the markets, or hope there's another Bitcoin boom and I get to cash in. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . AaronTodd is theGPWA senior editor. Hehasmore thansixyears’ of editorial experience in theonline gambling industry, covering major industry innovations and trends. Youcan follow himonTwitter @CasinoCity_AT. 15 Bitcoin'sboom-bust cycle letsplayersgamble twice