GPWA Times Magazine - Issue 36 - October 2016

ANONYMITY AND TRANSPARENCY The bitcoin system is designed to be both anonymous, in that users are identified only by the cryptoaddresses of their wal- lets, and radically transparent, via the blockchain’s public list of transactions. Walters thinks the “elephant in the room” is how the licensing entities and licensing jurisdictions are going to respond to the increased interest in bitcoin, and how they’re going to recon- cile the anonymity of bitcoin transactions with the substantial know-your-customer and jurisdiction-blocking requirements that come along with online gaming licenses.“We’ve seen the toe in the water by the regulators that will allow licensed bitcoin operators, but will only allow bitcoin to be another form of payment that can be made by established, known customers,” he said. “Others will continue to require geoblocking of any users that reside in prohibited jurisdictions.” Ford believes that the blockchain will eventually become a key tool for gaming regulators. “As regulators get more comfortable with the concept, I think the most likely thing you’ll see is that there’ll be required changes to the internal control procedures, reporting requirements, also some record-keeping requirements that are typical of people operating within the gaming industry,” he said. Stronger regulatory infrastructure may also help alleviate public concern about bitcoin’s legitimacy — although regulators are likely to have the same concerns. “Some of the initial press that came out when bitcoin first achieved popularity all seemed to relate to Silk Road and hack- ing and so forth, and so the public got a skewed introduction to what bitcoin is and how it can be used,” said Walters. “So that’s still something that the currency is trying to overcome. It’s a misconception because, like the Internet itself, currency can be used for good things, bad things or anything in between.” On the ground, Garber has found that bitcoin’s checkered his- tory hasn’t stopped either players or affiliates from trying it out. “Most people definitely have a lot of questions surrounding bitcoin and how it works and how safe it is and how secure it is,” she said. “But we haven’t hit any road bumps where it’s actually cost us any partnerships.” Online casinos operating in unregulatedmarkets may see value in using bitcoin to bypass banks, but as bitcoin becomes more integrated into the rest of the financial services industry, its util- ity in skirting regulations may be limited — especially when it comes time for users to convert it back into their home currency. “I think that it’s going to be an ebb and flow,” said Ford. “There are going to be times when law enforcement, regulators or state officials, as they learn more about how bitcoin works, are going BLOCKCHAIN | A publicly visible ledger that dis- plays all bitcoin transactions in real time. COINBASE | A popular digital currency exchange, based and licensed in the U.S. COINDESK | A website that tracks the price index of bitcoin on various exchanges and posts news related to digital currencies. COLD WALLET | A downloadable program that al- lows users to store bitcoins on a computer or other device, as opposed to keeping it online, where it is more vulnerable to hackers. CRYPTOADDRESS | A string of characters that identifies a bitcoin wallet. It works much like an account or routing number for a bank transfer, except that it is the only identifying information on a bitcoin wallet. CRYPTOCURRENCY | A digital medium of ex- change that uses cryptographic techniques to secure transactions and regulate the creation of the currency. HOT WALLET | An online wallet, usually estab- lished with a bitcoin exchange, in which a user can store bitcoin. KRAKEN | A prominent bitcoin exchange. Kraken oversees the claims for lost bitcoins resulting from the Mt. Gox hack. MT. GOX | A now-defunct bitcoin exchange. Once the largest exchange, handling 70% of all bitcoin transactions, it shut down in February 2014 amid the fallout from a massive security breach in 2011 that resulted in the loss of 850,000 bitcoins. SATOSHI | The smallest unit of bitcoin, worth one hundred millionth of a bitcoin. SATOSHIDICE | An online gambling service. First announced in April 2012, within weeks it was responsible for more than half of all bitcoin transac- tions. It sold for $11.5 million in July 2013, making it the first major bitcoin business buyout. SILK ROAD | An online drug trafficking marketplace that conducted sales in bitcoin. The FBI shut it down in October 2013 with the arrest of its founder. The FBI seized several million dollars’ worth of bitcoin from Silk Road, most of which it has since auctioned off. glossary Bitcoin ‘Bullish’ on bitcoin Illustration by Sentavio/Shutterstock 23 W W W . G P W A T I M E S . O R G