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The resurgence of cryptocurrency was absolute in 2019.
Digital assets, in general, were thought to have been left for dead after a horrid 2018 before rallying hard this year. While prices might not have returned to the highs of December 2017 quite yet, any suggestion that cryptocurrency is a fad is slowly being eroded.
Online gambling is often cited as a logical use-case for cryptocurrency, but that promise has yet to materialize in regulated US markets. Will that ever change? And when?
The measure of the success of digital assets isn’t just its price. While “hodlers” can be consumed by monitoring the trading price of Bitcoin and other altcoins, everyday users are more concerned with adoption and meaningful usability.
Thankfully, cryptocurrency has done pretty well on that front.
Citing a report from Chainalysis, finance giant Bloomberg earlier this month reported that market recovery has driven a spike in retail use. The total value of cryptocurrencies sent to merchant providers and payment processors (such as BitPay) rose 65% between January and July — the period in which Bitcoin saw its price surge from about $4,000 to over $12,000 per token.
Per a parallel study from Bitcoin.com, crypto-based commerce amounted to $5.5 million in daily transactions as of July 2019 — up from $3 million in January. Those are still small numbers compared to other forms of commerce, but it’s a phenomenal rise across seven months.
Between 2014 and 2017, Bitcoin.com reported that gambling sites accepted the equivalent of $4.5 billion in total Bitcoin wagers. That number spans a three-year period, which ended during one of the most bullish runs in Bitcoin’s history.
We can’t speculate on the current numbers, but the fact that cryptocurrency adoption has risen in 2019 should naturally influence its usage for betting. What’s more, the underlying blockchain technology could drive the gambling industry to higher dimensions.
If you examine the specifics, the two products are practically perfect for each other.
In broad terms, blockchain gambling can take place in two forms: on-chain and off-chain.
With off-chain gambling, online and physical casinos accept cryptocurrency as a deposit method. Operators can use third-party custodians and processors to convert digital currency into fiat, though some online casinos elect to transact solely in, say, Bitcoin.
On-chain gambling, however, occurs on a blockchain that uses decentralized apps. These apps come with smart contracts that run on the network as opposed to centralized servers.
So what’s the difference?
Due to their nature, off-chain casinos can be more susceptible to government intervention. Some operators, therefore, prefer to ban customers from “unfriendly” jurisdictions.
Most countries have legal and regulatory framework for online gambling, but very few regulate the use of cryptocurrency. Some notable ones that do include:
The UK Gambling Commission approved cryptocurrency for some regulated gambling operators, though its website displays a warning that gamblers should be wary of untrustworthy platforms.
As for the United States, murkiness seems to be the order of the day.
Just as it goes with the regulation of cryptocurrencies themselves, the legality of their use in gambling remains unclear. A number of brick-and-mortar casinos in Las Vegas do accept cryptocurrency, but the glacial pace of regulation is hindering widespread adoption. As it stands today, no regulated US online gambling operator transacts in crypto.
So, while several US states have opened their doors to one form of gambling or another, support for cryptocurrency remains low. And there’s no real indication that this might change anytime soon.
Regardless of the above, cryptocurrency could provide a litany of benefits for gamblers.
Bettors using Bitcoin enjoy a degree of privacy that credit cards can’t offer. Unlike bank transfers, for example, Bitcoin transactions don’t include personal information. Some countries are working to change this, however, requiring customers to convert tokens to fiat currency as a means of identification.
Other assets, like ZCash and Monero, provide users with anonymity, but controversy surrounds their usage too. In a bid to appease regulators, many gaming operators have steered clear of them.
As with most possibilities that involve cryptocurrency, regulatory obscurity has hindered its use for gambling. That said, the potential benefits provide enough impetus to push for adoption as the technology continues to become more mainstream.