GPWA Times Magazine - Issue 36 - October 2016

COVER STORY I t sounds like something out of a cyberpunk novel — a de- centralized, cryptographically protected, all-digital currency issued by no government and held in no bank — and its early days sounded much like the plot of one. But amid lingering uncertainty and skepticism, online casino operators and affiliate programs are increasingly optimistic about the long-term viability of doing business in bitcoin. of BitStarz Affiliates, the affiliate program for BitStarz Casino, which launched in 2014. One of the primary attractions of bitcoin for online casinos is the low transaction costs. The GPWA spoke to affiliate managers at programs that use bitcoin, who said that lower costs and ease of use were big draws. “The transaction fees are much, much lower compared to the fees we are paying for credit card processing, ewallets, banking transfers or vouchers like Paysafe,” added Gar- ber. “Bitcoin transactions are instant. There are no chargebacks — the transactions are irreversible. And the transactions are transparent: We can instantly show a player his proof of payment in the blockchain.” “The hassle-free actual processing of it,” said Slankamenac. “It is very easy to open for everyone.” Of course, these have been fea- tures of bitcoin from the begin- ning. According to Internet gam- bling attorney Lawrence Walters (pictured), there are several rea- sons for its recent resurgence. First and foremost is the increase in value: Last year, the value of bitcoin was down in the $200-$250 range, but this summer it was back up around $600-$650. “The value of bitcoin itself contributes to users’ belief in the alternative currency and trust in the currency,” said Walters, who heads Walters Law Group, a U.S. law firm with a focus on issues of free speech. Another factor Walters pointed out is that increased approval breeds more adoption. “Consumers are beginning to adopt bitcoin spending and gaming with more confidence, and in greater numbers,” he said. “That, along with other, larger retail “I don’t know how quickly it’s going to, but I believe it will become one of the dominant currencies in online gaming,” said Simon Slankamenac, marketing manager at Casino Extreme, which added bitcoin to its system last October. It’s been a little more than two years since the GPWA Times Magazine updated the status of the pioneering cryptocurrency (see Bitcoin’s boom-bust cycle lets players gamble twice , April 2014). Bitcoin itself hasn’t changed since then: It’s still bought and sold on bitcoin exchanges, and all transactions are recorded in its centerpiece technology, a public ledger called the blockchain. Users can keep their bitcoins in either “hot” wallets — online accounts — or “cold” wallets — software that stores bitcoins on a computer. It’s still extremely volatile, rising and falling by several dollars on slow days and seeing huge swings in value on eventful ones. The day after the theft of $72 million in bitcoin from Hong Kong-based exchange Bitfinex on 2 August, its price dropped more than 20% — and had recovered more than half the lost value by the end of the week. (In comparison, the value of the British pound dropped 10% following the Brexit vote, its worst day on record. It has not recov- ered as of press time.) GOING MAINSTREAM What has changed has been bitcoin’s level of adoption by businesses and consumers — and in online gaming, the spread has been even more pronounced. In addition to numerous bitcoin-only casinos, several established brands have begun not only accepting player deposits in bitcoin, but also adding it as an affiliate payment option. “The gambling industry is always one of the early adopters of new technologies and payment methods, and bitcoin was no exception,” said Kate Garber, affiliate marketing manager Illustrations by Sentavio/Shutterstock W W W . G P W A T I M E S . O R G 20