Bitcoins: What You Really Need to Know
Recently we reported on the improbable success of two online casinos that operate on a revolutionary digital currency called Bitcoins (BTC).
BTC are a fascinating phenomenon that could radically change the online gambling world, and all of online commerce, in a big way.
Here’s a bit more about BTC, where they come from, and how they’re being used.
Where Do Bitcoins Come From?
Bitcoins are the brainchild of Satoshi Nakamoto, a shadowy figure whose true identity is not known. There’s speculation that Nakamoto is a Japanese national with a background in theoretical math, but that just speculation.
What is known is that he/she/they, introduced the digitally secure, untraceable, P2P currency that’s straight out of a science fiction novel back in 2009 and it’s gone gangbusters ever since.
Nakamoto’s original design calls for a maximum of 21 million BTC to be in circulation at any time, though they can be divided into infinite parts as users see fit. The coins themselves are complex mathematical formulas that are unlocked by BTC miners using powerful processors to record BTC transactions while earning Bitcoins.
(Yes, this all sounds like sounds like something your college roommate dreamed up after eating mushrooms for the first time.)
BTC are traded for real cash on currency exchanges similar to FOREX and their daily value fluctuates just like real currency.
Because they are cryptographically protected and traded on P2P networks, tying BTC transactions to individuals is virtually impossible. If you’re thinking that BTC are the ideal currency for illegal transactions, you’re not alone.
Buying Drugs with BTC
In February, 2011, an anonymous entrepreneur launched the Silk Road Marketplace, an illegal drug marketplace that utilizes BTC and is hosted on a TOR P2P client.
Merchants on the Silk Road openly sell everything from LSD to heroin in exchange for BTC. It’s believed that the Silk Road does as much as $1.2 million (USD) in business every month, but no one can be certain.
Though the Silk Road was down for nearly two weeks last fall, it’s back in business now and law enforcement seems unable to shut it down; though they’re definitely trying.
Legitimate BTC Transactions
So are there legitimate uses for BTC? That’s a question that doesn’t have a black and white answer.
Casino operators who’ve got the technical know how can certainly set up BTC transactions, but they’ll never really know whether their players are legal or not.
It’s a risky proposition that could easily go bad.
Are you considering accepting Bitcoins? Share your thoughts in the comments section below.