Anyone new to Bitcoin is undoubtedly going to have questions over its legitimacy. After all, this “money” is nothing more than bytes and bits with absolutely no central arbiter. For these reasons, some might say that “Bitcoin is a scam” or – famously by one such individual (later retracted) – that Bitcoin is “a fraud”. Understanding the legitimacy of Bitcoin requires a small investment of time, a willingness to learn and an understanding of the current financial system. This article will briefly touch upon the Bitcoin movement but with a focus on the casinos that operate in this space and the possible scams that may await new users.
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This is a question that TheBitcoinStrip.com gets asked frequently. The short answer is “no”, it is not a legitimate currency because it cannot be used to pay taxes. Legitimate money (also known as “legal tender”) is currency that can be used to pay taxes to the state. This property of legal tender is a key reason as to why we still believe in the worth of printed bits of paper. The longer answer is far more nuanced; particularly when we consider other properties of both Bitcoin and legal tender outside of paying taxes. For example, how many counterfeit Bitcoins are in circulation? Thanks to some clever cryptography, and publicly verifiable data, the answer is none, while the answer for “legitimate currency” is impossible to determine. Another question that arises in the comparison between Bitcoin and the existing financial system is how much of it gets printed each year? In the case of the current financial system, it’s as many as the central bank or government chooses; as with “quantitative easing“, the amount printed can reach well into the billions and trillions globally. The problem with this approach is that for every US dollar printed, your existing holding of US dollars is devalued – known as “inflation”. Unfortunately for the public, we have no idea exactly how many bank notes will be printed this year, or next year, or the year after that. Heck, we don’t even know how many bank notes will be printed today. With Bitcoin, we do. Thanks to the immutable code with which Bitcoin runs upon, the total number of coins in circulation is known exactly. And with a known supply growth rate, we can accurately predict how many coins will exist 100 years from now (ultimately being capped at 21 million).
These are just a handful of simple truths about Bitcoin and the existing financial system. Hopefully with this, or with some additional reading, it will become clear which form of money is the fraud.
How can I trust Bitcoin if it’s not physical?
Many users have a hard time trusting Bitcoin because it cannot physically be held in your hand like gold or US dollars. Unfortunately, the physical side to money is what makes existing money so troublesome. Physical money needs to be transported, secured in vaults or protected from counterfeiting; it can also be confiscated. If a central bank could choose to rebuild money from scratch, you can be certain that their currency would not be printed and issued by physical means. In fact, that is exactly what’s happening, central banks are slowly moving towards digitizing existing “legitimate currency” and moving physical bank notes into 0’s and 1’s. Of course, the current infrastructure makes this transition incredibly arduous, and the process is likely to take decades. In the case of Bitcoin, this process has been leapfrogged, with an entirely new infrastructure separate from the current system known as “the blockchain”. The blockchain is a decentralized and distributed ledger that records every transaction that takes place; the ledger is secured by “miners” who are incentivized to secure it through payments in Bitcoin (which incidentally gave life to Bitcoin’s value proposition).
It’s clear then, that Bitcoin or otherwise, those that cannot trust digital money will eventually struggle to trust both Bitcoin and existing legal tender.
If Bitcoin is so valuable, why would I gamble it?
The number of Bitcoins being “printed” is slowing down until it reaches the cap of 21 million (currently at 17.1 million) in about 100 years time. This slowing of the supply of Bitcoin is known as “deflation”. This is the opposite to inflation, and instead of existing holdings devaluing over time, they should – in theory – increase over time, and certainly that has been the case for Bitcoin in its 10 year history so far. Of course this then raises the question, why should I be betting Bitcoin when I could bet my devaluing US dollars? The answer is that yes, most people would choose to bet US dollars as they will be worth less in the future. The opposing side is one with a more optimistic outlook; if I bet and win Bitcoin today, I could make a fortune from the price increases in the future. The decision with whether to bet US dollars or Bitcoin is entirely down to one’s own risk tolerance and outlook on the cryptocurrency markets. Do you see Bitcoin becoming more valuable and are you willing to put that value on the line to win more? It’s a gamblers dream…
Now that we know some of the basic properties behind Bitcoin and its advantages over its US dollar counterpart, we can now move onto the question of whether or not it is safe to bet Bitcoin. Anyone that has followed the market will be aware of hacks and thefts which seemingly take place every few weeks. Millions of Bitcoin can be stolen anonymously and such thefts make major headlines. However, these thefts are almost always at large Bitcoin exchanges where the owners hold millions of dollars worth of cryptocurrency in hot wallets that are easily extorted or exploited. In terms of Bitcoin casinos, there has yet to be a major heist.
Malicious casino operators
If hacks are not a major issue for Bitcoin casinos then the next issue to be concerned with is the chance of a malicious operator “going rogue”. Such events have happened in the past; there have been cases where operators have attracted thousands of new users and the financial incentive to steal deposits and close shop outweighs the longer term value of operating the casino legitimately. The top Bitcoin casinos listed on TheBitcoinStrip do not run this risk as far as we know, and their multi-year operation and positive customer feedback is a testament to that.
A large number of the Bitcoin casinos available are unregulated. Unregulated casinos carry with them a plethora of risks, not least that the operators could go missing with no possible recourse. Given the nascency of this market, regulators have yet to establish clear rules for operating, particularly as these casinos tend to operate across borders with no “global authority” to determine how they must act.
The lack of regulation has given rise to a huge number of “bedroom developers” who have built quite incredible pieces of gambling software. While their intentions at the outset were legitimate, such an influx of popularity could corrupt a young developer quite easily.
There are a range of trusted Bitcoin casinos to choose from, many of which are regulated and have existed for several years without issue. While the following casinos have a strong reputation among our users and colleagues, it is always sensible to store your Bitcoin holdings in your own private wallet and not in the casino’s wallet wherever possible. Simply put – withdraw your winnings straight away!
Our list of trusted Bitcoin casinos
The following list of Bitcoin casinos are curated by the staff at TheBitcoinStrip. Play now or leave a review by clicking on a casino below:
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