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Bitcoin is many things. One can describe Bitcoin as being:
A digital currencyPeer-to-peer payment systemA non-government decentralized network or currencyOpen source systemA currency that is ”mined” online by solving mathematical problems
At first glance, this might seem like a lot of different things, but it is all connected. To put it in another way:
Bitcoin is an entirely digital currency which means it is an online currency or electronic cash. It allows users to pay each other (peer-to-peer payment system) without the involvement of banks, governments or other third parties.
The Bitcoin system is based on mathematics and is open source. Open source means that the code that Bitcoin uses is free for all to see. This makes the whole system transparent. Since it is based on math, anyone can review it and see how it works. To create new bitcoin computers need to solve complex mathematical problems and are rewarded with bitcoins. The more bitcoins there are, the harder the mining gets.
The system is in contrast to other currencies, not state or government owned. The Bitcoin system is therefore not controlled by a central bank or other governmental institution. In fact, it is not controlled by anyone. Instead, it is based on the Blockchain system.
BTC or bitcoins written with a lowercase b is the currency unit of the Bitcoin system. The easiest way to explain it is to compare it with a government-issued currency.
A bitcoin is the equivalent of a dollar.BTC is to bitcoin like USD is for dollars (the abbreviation)
What is the difference between Bitcoin and bitcoins?The difference between Bitcoins (Capital B) and bitcoins (lowercase b) is that Bitcoins refer to the payment system as a whole while bitcoins refer to the currency. This is a question that confuses a lot of people so let’s take a closer look.
Bitcoin = Protocol, Payment networkbitcoin = the currency, units
Better yet, let’s use an example:
We can compare it with a debit or credit card. You pay using Visa or MasterCard which are the payment method or system. But you don’t use Visa or MasterCard currency. You use Dollars, Euros or any other local currency. In other words, Visa/MasterCard is the equivalent of Bitcoin while Dollars and Euros are the equivalents of bitcoins.
A store accepts payments using Bitcoins but sets the prices in bitcoins.
The blockchain is often associated with Bitcoin but can, in fact, be used to record everything of value. So in spite of what a lot of people think Bitcoin and the blockchain are two different things. However, Bitcoin is using the blockchain technology. So what exactly is the Blockchain?
In simple terms, the blockchain is a public ledger where transactions are recorded and verified anonymously. It is a decentralized system that records information, timestamps it, can’t be altered and is not controlled by anyone.
If we take a closer look, we can explain the blockchain in more depth. The Blockchain is a digital system that uses blocks or more precisely a string of blocks. Each block contains information, transaction data and a timestamp and each new block include a cryptographic hash of the previous block. In other words, each new block contains encrypted data.
So if you imagine the blockchain being just that, a chain containing blocks, and each block in turn containing encrypted information you have yourself a blockchain.
The design of the blockchain makes it resistant to modification. That means that no one can alter the information in the blocks. It is based on the distributed ledger technology which is a system that has no central administration or storage. Instead, the distributed ledger is decentralized geographically across countries, institutions, and sites. The system is consensus-driven which means that each part of the system is verified by another part. It is also shared and synchronized throughout the system.
A peer-to-peer network (like Bitcoin for example) is one way to use the Blockchain as a distributed ledger. The system follows a protocol (in our case a Bitcoin protocol) for inter-node (node = a specific part of a network) communication. This allows the network to validate new blocks. When they are recorded or confirmed the blocks can’t be altered or at least without changing every other block which in turn needs a consensus of the majority.
To sum up. A blockchain is a digital ledger that can’t be altered. It is decentralized and records, timestamps and verifies information in blocks. The blocks are then connected and encrypted.
The Blockchain is a peer-to-peer, decentralized, open-source cryptocurrency that uses the Blockchain system to verify and validate transactions. While a lot of acts like Bitcoin and Blockchain are the same thing, it is not entirely true. One could use the Blockchain to authorize other transactions then Bitcoin.
A cryptocurrency is the umbrella term for digital currencies. A cryptocurrency (or cryptocurrency) is an electronic currency that is decentralized and acts as a medium of exchange online.
While cryptocurrencies come in different shape and form and are the umbrella term for digital, decentralized currencies. Bitcoin is the first and arguably the most known cryptocurrency but is only one of many different cryptocurrencies.
The invention of Bitcoin is credited to Satoshi Nakamoto (also known as Satoshi and Nakamoto). Since the creator used a pseudonym and is anonymous the creation of the digital currency might be a one person, or it could be a group of persons who developed Bitcoin. The cryptocurrency is an open source project which means that anyone can access the whole structure which makes the program transparent and trustworthy. The system is independent of any central government, company, institution, and person including Satoshi Nakamoto. With that said the relevance of who created Bitcoin is not that important, at least not for the functioning of the currency today.
Satoshi Nakamoto authored the white paper, designed the reference implementation and devised the first blockchain database. Satoshi stopped being active in developing bitcoin in December 2010.
2007: Satoshi Nakamoto stared work on the digital currency 2008: (October) Nakamoto publishes ”Bitcoin: A Peer-to-Peer Electronic Cash System 2009: (January) The first Bitcoin software is launched and first units of bitcoins2010: Satoshi left the development of Bitcoin and handed over control to source code repository
Bitcoin uses the Blockchain which is a public ledger containing every transaction processed. The information is saved in encrypted blocks which are stored on the network thus making it decentralized. Since all the information regarding all transactions ever processed are stored a users computer can validate each transaction. The system uses addresses and digital signatures which allows users to send and receive Bitcoins. These transactions are registered on the Blockchain and confirmed by other users. The users on the network can process transactions using their computer, specialized computers and hardware and are rewarded with bitcoins. This is called mining, and you can read more about it under the question: What is Bitcoin mining?
As a Bitcoin user when you are using bitcoin, it is not much different than using another online payment system like PayPal, Skrill or Neteller. Anyone can do it using an app on their phone, a program on the computer or online.
There are three main ways you can acquire bitcoins:
- Sell goods and services online and take bitcoins as a payment2. Buy bitcoins on an exchange or, directly from a person 3. You can mine bitcoins either yourself or using a mining pool
We could also add a fourth way, and that is to get them for free as a gift. Let us take a closer look at the different ways with the next questions.
Receiving bitcoins and accepting bitcoin payments can be done both as an individual and as a business. In both cases, you need to have a bitcoin wallet.
If you have a business selling goods or services online or offline, you can accept bitcoin as a payment in different ways. You can accept them on your website using an API and receive them to your bitcoin wallet. A lot of wallets offer solutions for businesses and is not much different from receiving payments from VISA, MasterCards and other online wallets.
A public key is a numerical value that encrypts data and is linked to your private key. One can explain the public key by comparing it to a bank account number. You can give it out to others so that they can transfer money to the account it is linked to. However, no one can withdraw money from it just by knowing the number.
If the public key is like your bank account number, the private key is the password. This should not be shared with anyone since doing so makes it possible for the person to send money from your account.
A bitcoin wallet is a place where you store your bitcoins. Just like an ordinary wallet, it is the place where you keep your cash. Each time you want to buy something or want to give someone money you pull out the wallet. There are different types of bitcoin wallets each with both pros and cons.
There are different types of bitcoin wallets each with there pros and cons. Often it comes down to a tradeoff between accessibility and security. We have identified six different ways to store your bitcoins.
Online Bitcoin WalletMobile Bitcoin WalletDesktop Bitcoin WalletHardware WalletPaper BitcoinPhysical Bitcoin
Online Bitcoin WalletThe online bitcoin wallet Also known as the web wallet is a wallet that is available on a webpage online. Your private keys are stored on the online wallet, and you can log in as long as you have an internet connection. The best feature is that it is easy to access so if you use bitcoin on a daily basis, it might be a good option. The most significant disadvantage is security. It might be able for a hacker to hack your account or just your password giving them access to your funds. The owners might have access to your private keys, and there is a possibility for them to shutting down the service and stealing money. However, if you choose a wallet with a good reputation and history, this should not be a problem.
Mobile Bitcoin WalletThe mobile bitcoin wallet is an app for your smartphone. It works just like a web wallet, and a lot of web wallets offers mobile apps for the users. The benefits are that it is easy to use and it is accessible. Perfect for anyone that wants to pay on the go. Both online and offline. However, the same problems exist as with the online wallet. It is a tradeoff between accessibility and security.
Desktop Bitcoin WalletThe Desktop wallet is a wallet that you download to your computer. The big difference here is that your keys are stored on your hard drive and not online. That makes it a bit more secure than the online wallet or the mobile wallet. But remember that as long as you are connected to the internet, the same problem exists. The higher security comes with the cost of convenience. It is not available in the same way as the other two wallets above. It suits people that buy bitcoin and don’t use them too often.
Hardware WalletThe most secure wallet that is online is the hardware wallet. This is the least convenient one to use but the most secure. It includes an external device (often a USB) where you store your keys. Since you don’t have it plugged in all the time there is no way of your private keys to get hacked. The only time it is vulnerable is when it is connected to a computer that is online.
Whichever of the wallets you choose to use all of them uses encryption and other advanced security measures to ensure that your cryptocurrency is safe. There are two other types of wallets which are impossible to hack.
Paper BitcoinYes, it is true, the digital currency has a physical paper bitcoin wallet. Ironic right? But it is an excellent way for a person to own bitcoin, receive payments and send bitcoins without worrying of being hacked or losing them in any other way. Accept of physically misplace them of course. A paper wallet contains both the public key and the private key. The advantage is that it can’t be hacked. The only time it can be hacked is when you generate it. So use a safe system in doing so. The disadvantage is that it can be stolen or you can lose it just like regular cash.
Physical BitcoinJust like paper bitcoins physical bitcoins are real (not digital) bitcoins you can buy. They come in a different format (often shaped as coins) and can be used offline and online.
A Bitcoin exchange is a marketplace where bitcoins are sold and bought. Just like any other market, there are buyers and sellers. There are many different Bitcoin exchanges online where you can buy cryptocurrencies. Often they also offer a wallet so that you can store them at the same site as well.
You can buy bitcoins in two different ways. The first way and the most popular way is to buy them on a bitcoin exchange. A bitcoin exchange is a marketplace where you can exchange your local currency to bitcoins. The process is reasonably straightforward, and anyone can do it. You just put in how many bitcoins you want to buy and make the payment or state the amount of your own currency you want to exchange to bitcoins. Another way is to use a Bitcoin ATM which are available in some countries.
The second way is to buy them directly from a person using cash. Even though a bitcoin is a digital currency one can have physical bitcoins. These can be exchanged for cash. However one needs to be careful when doing this.
At this moment it is possible to use your PayPal currency to buy bitcoins using an external service called VirWox. The purchase can be decided into these steps:
- Deposit your currency from PayPal to the VirWox exchange2. Purchase SLL (Second Life Lindens)3. Use the SLL to buy bitcoins4. Withdraw your bitcoins to your bitcoin wallet
As you can see it is possible to buy bitcoins with PayPal however the transactions is not direct. First, you have to buy SLL and exchange those to bitcoins. Unfortunately, there is a lot of problems with fraud surrounding direct PayPal payments t bitcoin exchanges, so most services do not work with PayPal. This leads the user to use services as VirWox at a high cost (approximately 10% in fees).
Unlike paper money or fiat, money bitcoins are not created through a government entity or central bank. Instead, each bitcoin that is in existence have been ”mined.” To mine bitcoins, special software is needed. This software helps the user to solve a mathematical problem which creates a new block. When a block is created, it contains verifications of previously made transactions thus verifying them in the blockchain. The person that creates the block is awarded a payment in the form of BTC. The bigger the network gets, the more complex the problem gets and the harder it is to mine.
As a user, it is straightforward to make a bitcoin payment. First, you have to own some bitcoins and have them in your wallet. After that, it is just as easy as making a credit card payment or a bank transfer online.
Bitcoin is one sense anonymous, but in another, it is not. Let us explain. Bitcoin is in some sense anonymous, and there are three reasons one could claim that it is.
Bitcoin is not tied to an identity of a user. Let’s take PayPal or your bank account. These accounts are tied with you as a person, and you have to identify yourself to create these. The Bitcoin system allows each and every user to create a new random Bitcoin address and private key without submitting this information somewhere.
The transactions are not tied to the identity of any users. Anyone can transfer bitcoin from a bitcoin address to any other address as long as the user controls the private keys without revealing any personal information. One could compare this with the use of physical cash where the receiver does not need to know the buyers’ identity.
Bitcoin transactions use nods to communicate the information. Since each node has an IP connected to them one could trace the transactions. But since random nods send information to each other, there is no way of knowing if a node created the transaction or merely forwarded it.
However, that is just one side of the coin. Here are three ways that make it possible to identify a user.
Bitcoin uses a peer-to-peer network that randomly transmits users. This network is in a sense quite anonymous, but if a person, state or institution creates several nodes in this network, they can combine the data and might be able to identify a user.
Bitcoin addresses that are used in the transactions can be linked to identified users. If you use a regulated exchange (and most do), you are often forced to verify your account which makes your bitcoin transactions traceable. The same is true if you buy bitcoins online using your real identity or use a wallet that requires identification.
Remember that all transactions on the Bitcoin network are available since the network is transparent. Anyone can, in theory, trace each transaction and taking into account that most users have at least one address connected to service where they have used their real name and address changing the bitcoin address is not waterproof since there are ways to cluster multiple different addresses to one user.
The conclusion is that bitcoin is reasonably anonymous, but that does not mean that it is 100% anonymous as physical cash can be. Since bitcoin always leaves some kind of record behind it, there are ways to trace it to a user. This does not mean that there are ways to minimize the chances of this happening.
This leads us to the next question.
There are a couple of ways you can make your use of bitcoins more anonymous. Although remember that it is not always a hundred percent anonymous.
Use an utterly anonymous wallet. This can be problematic since these are companies which operate within a countries borders. Some states have already imposed laws and regulations to force companies ”to know their customers” and to verify them with ID. Some governments have not, but it is very likely that they will impose similar laws. With that said there are anonymous wallets you can use. Use the anonymous web browser TOR and the onion network. In other words, using different layers of VPNs which TOR does automatically. You are still vulnerable when connecting to the network and when leaving the network and thus might be traceable. Use a new bitcoin address for each transaction is a way to increase security. However, it is possible to cluster addresses and link them to real identities.Use bitcoin mixers. A mixer is a service where every user’s transaction goes into a pot and mixes with other users transaction.
The main advantages with Bitcoin are
it is secureIt is easyIt is accessibleIt is cheapIt is fast
But there are a lot of other advantages of Bitcoin and using the payment system.
Bitcoin allows you to receive and send bitcoins to the whole world at any time.The system is not depended on banks or central authorities.Sending a bitcoin to the other side of the world is just as easy as making a payment locally.No bureaucracy involved.Bitcoin gives users greater control of their money.The system is free to use.Many wallets let you control the fee you pay to use their service.The more you pay, the faster the service.The fees are not dependent on the size of the transaction.The fees are often lower than other online wallets and banks.Bitcoin payments can be finalized without personal information at least relatively anonymously.Bitcoin automatically protects you from identity theft online. Bitcoin payments do not include customers informationMerchants are more protected from fraud. Bitcoin transactions are secure and irreversible.Since it is hard to commit fraud merchants can expand into markets where fraud is prevalent and be safe.It is impossible for merchants to force payments, unlike other payment methods. Bitcoin is a transparent system with all the information available on the blockchain. No individual or organization control bitcoin which makes it impossible to manipulate.Since Bitcoin is a decentralized currency, it is neutral and can be trusted.
Above we listed the advantages with Bitcoin but there are some disadvantages as well.
Although Bitcoin and the awareness of the cryptocurrency are growing a lot of users are still unaware of it.To benefit from the network effects, it would need to grow much more prominent.People might need to be educated a bit more about bitcoin and how it works to start using it.Although there are companies that accept bitcoins as payment, they are few in comparison with fiat currencies.The cryptocurrency is at the moment very volatile.This makes it possible for relatively small events to impact the price opening up for manipulation, at least in the short run.There are other cryptocurrencies out there that compete with Bitcoin. Since cryptocurrencies are a new phenomenon, no one knows which will be preferred in the future.There is a risk that governments around the world make the use of Bitcoin illegal. Bitcoin is still developing. Bitcoin is an electronic currency dependent on electricity. If you live in a place without electricity, or in a place that temporarily don’t have electricity you can’t transact with bitcoin.If you don’t have access to the internet it is almost impossible to use (if you don’t have physical bitcoins)
The whole Bitcoin system is a completely transparent system based on mathematics where the code is accessible to anyone. This makes it possible to verify the system and how it correctly works. Further, it is an independent system which means that no person, organization, institution or government can control it. It is decentralized and doesn’t use any third party services likes banks. Instead, the payments are made using the peer-to-peer distributed ledger, and all users verify each transaction which makes it impossible to cheat.
100% TransparentBased on mathIndependentNo third parties Peer-to-Peer
It is a fact that a lot of people have made money on Bitcoin. But it is also a fact that people have lost money with on bitcoin. The reason is that like another venture one can make money and lose money speculating trading and investing.
As with other industries, there are both winners and losers. One should not look at bitcoins as a get quick rich scheme which unfortunately a lot of people do. With that said you can earn money using entrepreneurship and taking advantage of this new market with new good ideas.
Bitcoin is a digital currency and can be compared to credit cards or banks online (although there are a lot of differences). You can use it to pay online or in a physical store using your phone as an example. There are a lot of great wallets and exchanges you can have on your phone which makes it possible to use in stores that offer payments with the cryptocurrency.
Bitcoin is a virtual and immaterial currency however one can store it offline. This can be done using a hardware wallet or paper bitcoins. So even though the currency is a digital one, there are options to keep it offline.
The answer to who controls the Bitcoin network is twofold. No one controls the network at the same time as everyone controls it. Let us take a closer look. The network is decentralized and does not have any person, organization, institution or government controlling it. The network is pre-programmed and fundamentally can’t be changed which means that the mathematics and code are controlling the program and not a person. However, it is important to point out that when using the Bitcoin network you have control over your currency and transactions without anyone meddling. Further, if there is a majority consensus, it is possible to make changes in the protocol. So the network is based on the consensus of everyone using it. In other words, no one and everyone control the Bitcoin network.
With that said there is something called the Bitcoin Foundation. The foundation is a non-profit organization that promotes the cryptocurrency. However, it does not have any authority over the network but can express the communities opinions.
There are several good forums where you can discuss bitcoins. We can recommend the bitcoin talk forum (https://bitcointalk.org/index.php?topic=3352419.0).
Since bitcoin is continually being mined the amount of bitcoins in existence is increasing. Since the mathematical problems that need to be solved to mine a bitcoin are getting harder and harder the inflow of new coins into the system are getting slower and slower. It is also worth mentioning that the amounts of bitcoins in existence and that can be mined are 21 million bitcoins. This will occur sometime in 2140.
The price of bitcoin is determinate by supply and demand. If there is a higher interest to exchange one’s currency to bitcoin the price raises and vice versa. For the bitcoin price to remain stable, the demand must keep up with the inflation in bitcoin. This inflation is caused by the increasing amount of bitcoins in circulation which in turn is an effect of the mining and verification of the blocks. Since the bitcoin market is quite small, small moves can affect the market in a way that makes causes big jumps in the market to occur. This makes the bitcoin price very volatile.
There is not quite a complete consensus of what to call the different denominations of bitcoin. Bitcoin can be split to the 8th decimal (0.00000001) at it most. This means that each bitcoin can be split into 100 000 000 pieces. This is the smallest nomination and is often called a Satoshi, to honor the founder and creator of bitcoin, Satoshi Nakamoto.
Although there is a lack of consensus here are the most common types of the currency:
1 BTC = 1 bitcoin1 CBTC = 0,01 bitcoin - also known as 1 anti bitcoin or bitsent1 mBTC = 0,001 bitcoin - also known as 1 milibitcoin, Mbit, milibit or bitmill 1 μBTC = 0.000001 bitcoin - also known as unit or microbit1 Satoshi = 0.00000001 bitcoin
Bitcoins are generated through what is called mining. The mining is done by letting computers and programs solve mathematical problems. When they are solved a block is created, and a reward is given to the miner. The more bitcoins that are mined, the harder it is to mine them. However, since there are a limited amount of coins, there is an end in sight where no more coins will be created. The total amount of bitcoins that can be mined are 21 million bitcoins, and this will occur sometime in 2140.
Since the miners are the ones that create the block in the blockchain that bitcoin is based on a common question is that when we are done mining will there be new blocks created?
The answer is most probably yes. The incentive to mine is to earn bitcoins when the block is created. However, a miner does also earn fees associated with each bitcoin. This means that the incentive to earn money on the fees will still be there although the block reward is gone. A consequence of this might be higher fees to keep the network going.
Since there is a limited amount of bitcoins, the consequence of losing one bitcoin is that the rest increases in price. The reason is that the price of bitcoin measured in another numéraire (measurement of value) is set by supply and demand. If the supply decreases the demand of each of the remaining bitcoin increases everything else equal.
Yes, bitcoin is money since it is accepted as a payment for a service or good. But that is not the whole picture. For something to be money, it needs to act or behave as money. So let’s take a closer look at what money is and if bitcoin meets the definition.
Money is supposed to:
Be a medium of exchange - An item that is used in transactions that both parties can accept. Bitcoin indeed is used as a medium of exchange.
A unit of account - A unit that measures or represent value or price. Countless goods describe their price and/or value in terms of BTC (bitcoins) A store of value - An asset that can be saved later and still have value. Since there is a limited amount of bitcoins, the bitcoin can be saved and used in a later time without the threat of inflation eating away the purchasing power.
In order to start using an object as money, one needs to have trust that it will be used in the future. At the moment bitcoin can be considered to be money. However, will it be money in the future? The honest answer is that there is no way of knowing. In the past tea and shells have served as money. Even though bitcoin is quite popular, there are risks involving the competition from other cryptocurrencies, government currencies, and legislation and precious metals which can result in bitcoin fading out.
Bitcoins have value since it users finds value in it. The value derives from the mathematics on which the system is based upon. The system is guaranteeing:
The limited supply of the coin. The inability to alter the information in the blocks.
In contrast gold and silver use its physical properties, limited supply, and history to derive value while trust in central authorities backs the fiat currencies. As with all currencies, the value comes from the trust in the system and willingness of other people to accept it as payment now and in the future.
The price is determined by supply and demand on the bitcoin exchange. Read more here.
As with all currencies, the answer to the question if bitcoins can become worthless is, yes. History has shown us that all currencies can become worthless. Since the government or government institutions like central banks have control of the money supply, they can print unlimited amounts of money. The value of each unit decreases as history has shown in Weimar Germany during the 1930’s, Zimbabwe during 2008-2009 and most recently Venezuela.
Although Bitcoin has a limited amount of bitcoins that can be created there are different ways it can go to zero.
In theory, the number of bitcoins can be increased if the users reach a consensus to change the Bitcoin protocol.The government forbids the use of bitcoins through regulation.Other cryptocurrencies are preferred by users.
Many people view Bitcoin as some kind of fraud. We would not call it a fraud since it is a hundred percent transparent. The code, mathematics and the whole system, in fact, is open source, and anyone can access it. With that said we can conclude that it is not a fraud.
However, this does not mean that there doesn’t occur fraudulent activities with bitcoin. There have been reports of price manipulation (buying bitcoins in large quantities, increasing demand thus price and creating momentum in order to sell off everything in the higher price later). But this does not make bitcoin per se a fraud. Imagine all the illegal and fraudulent activities that are being made in Euros, dollars or Sterling pounds. Does this make the currency a fraud? No, it does not.
Bitcoin is not a Ponzi scheme since it has no central authority. A Ponzi scheme (named after Charles Ponzi) is a fraudulent scheme in which a person or several persons lures investors to invest and pays earlier investors with that money instead of profits. The whole idea can work as long as new people sign up to the Ponzi scheme but the design is that it fails in the long run.
It is true that bitcoin benefit early adopters but it is unfair we leave up to you. Some early adopters of Bitcoin had accumulated a large number of bitcoins in the beginning when the price was low and now have seen it grow hundreds and hundreds of percent. However, they did take the risk of buying bitcoins with no guarantee of it succeeding. A lot of users used up their bitcoins early as well.
We can draw a comparison of a person buying Microsoft or Apple when these stocks first were introduced to the public. Is it unfair that some people made enormous gains? Taking into account the risk and the uncertainty of the companies success it does not strike most people as unfair. The same is true with Bitcoin.
The limited amount of bitcoins does not need to be a limitation. This because each bitcoin can be denominated in smaller amounts.
1 BTC = 1 bitcoin1 CBTC = 0,01 bitcoin1 mBTC = 0,001 bitcoin1 μBTC = 0.000 001 bitcoin1 Satoshi = 0.00000001 bitcoin
As you can see the pricing possibilities becomes quite flexible especially compared to other currencies.
The economic theory of deflation or the deflationary spiral is a theory that states that with falling prices people will move their spending into the future. This because they can reap the reward of currency allowing them to buy more with the same of amount of money (nominal value). This leads to a falling demand which can lead to economic depression.
Since Bitcoin has a fixed amount of 21 million bitcoins, this would, in theory, lead to a similar deflationary scenario. However, there is no real consensus among economic scholars regarding the deflationary spiral theory. Also, some markets debunk the theory. If one takes electronics, the prices keep coming down for the same good, but the industry is not in a crisis.
However this theory that deflation leads to an economic crisis or depression is prevalent among mainstream economics and central bankers. A lot of this has to do with the Great Depression which was a deflationary depression. Bitcoin is right now an inflationary currency since new bitcoins are being mined daily. This increases the number of bitcoins every day which leads to inflation. When bitcoin is stopped being mined, it will become stable and might become deflationary.
The answer is yes since there will be fewer bitcoins available. However, this is good or bad is another question. There is no explicit agreement among economic scholars; however, deflation is good or bad. But if for whatever reason the amount of bitcoin decreases it would have a deflationary effect.
One has to remember that this scenario is as likely as one part buying up a fiat currency. Only a fraction of the bitcoins are traded on the bitcoin exchange. Besides more and more bitcoins are being mined every day. But at the moment one could manipulate the market since it is reasonably, new and volatile.
Just as Bitcoin in viewed as a better currency then others there is a possibility that yet another better cryptocurrency will replace Bitcoin. Unlike government-issued currency which we are forced to use Bitcoin is a free currency. This, of course, means that it can be replaced by another, better (or at least preferable) money. One needs to remember that just because Bitcoin is the most used cryptocurrency right now, this does not mean it will be in the future. A side note is that although Bitcoin has a limit of the number of bitcoins, it can have there is no limit of the number of cryptocurrencies that can evolve.
Yes, bitcoin is open to value manipulation even more so that other currencies. At least now when the crypto currency is in its infancy there is a larger risk of value manipulation since it is already volatile and relatively thinly traded. With this in mind we want to point out that in theory this is true with all currencies even our regular fiat currencies. These are being manipulated or affected by central banks, governments and large institutions daily. Bitcoin just happens to be smaller and easier to manipulate.
When bitcoins are sent from one user to another the transaction is made almost instantly. However, before you can use the bitcoin, you must wait for a confirmation.
Confirmation is the transaction being included in a block. Or in other words, being verified. This is done to make sure that the same bitcoin hasn’t been sent somewhere else. Since we are relying on a peer-to-peer system without intermediates, it is the system that verifies it instead of the third party. Although this can be somewhat annoying, it is a lot faster than the average bank transfer.
How long a confirmation takes depends on the fee. Since it is the miners that mine bitcoin by solving mathematical equations that result in forming the blocks that constitute the blockchain, it is them structuring each block and verifying the transaction. The higher the fee, the faster the transaction. Ordinary a transaction is verified when six blocks have been formed.
It depends on the fee. A confirmation of a bitcoin transaction can take anything from a couple of seconds to 90 minutes. The average transaction takes 10 minutes to be verified.
It happens that a transaction gets delayed. If this happens to go to blockchain.info and enter your bitcoin address. There you can see if your transaction is registered. The reason the transaction might take a bit longer is that the fee was to low. Remember, the lower the fee, the longer the transaction takes. If it’s not registered check that the transaction was done and contact your wallet support.
If the fee were too small, the transaction would be dropped. This means that it will be refunded to your wallet and you can make the transaction again. The bitcoins will not be stuck in limbo forever which is a fear a lot of people have. It can take up to three days before the transaction is canceled and returned.
The address is changed for each transaction in order to increase security for the users. Both the owner of the address as well as the receiver and other users.
Don’t be afraid for missing out on a bitcoin payment just because your address has been changed. All addresses still can receive payments even though you have a new one.
The fee is determinate by the person sending the money. Most wallets let you choose the fee you find appropriate, and most wallet will also recommend a fee so that you know that your transaction will be done.
However, Bitcoin is a free network, and you can send money without paying any fee. This, however, means that it will take a long time and there is a risk that the transaction will be returned to your wallet. There are two reasons why there is a fee:
To help pay the miners that make the transaction possible by verifying it when mining.To prevent overload attacks on the network.
The manner in which the fees are being charged is still in a development phase and might thus be subject to change over time.
You will still receive your bitcoin payment even though your computer is turned off. Since bitcoin is being distributed throughout the ledger, it is not tied to your wallet. As soon as you connect your computer, start your desktop wallet, external wallet or log in to your app, the program will download the new information and catch up. So don’t worry you won’t miss out on any payments even though your computer, phone or external wallet is offline.
Synchronizing is the process of the bitcoin client of downloading and verifying all previous transactions from the network.
Mining is the process of generating new bitcoins. However, it is also the process of processing, securing, verifying all transactions in the system. It also synchronizes the whole system so that all users are up to date with the new blocks. No real mining is done instead there are special programs that solve mathematical problems. When these are solved, a block is created. This means that transactions are verified and added to the Block Chain. The miner is rewarded with new bitcoins. The term bitcoin ”mining” is an analogy to gold mining. The difference is that it is done online and that bitcoin mining not only produces bitcoins it also helps with the processing of the network.
There is special hardware that anyone can use to become a bitcoin miner. This hardware listens for transactions that are being made on the peer-to-peer network. The objective for mining is mainly to verify bitcoin transactions. The incentive to mine bitcoins is that the miners earn transactions fees that are paid by users to have faster transactions. The fees and new, mined bitcoins constitutes the reward bitcoin mining generates for its miners.
When a transaction is confirmed it is added to a block together with a mathematical proof of work. Since this proof is tough to generate (it requires billions of calculations per second) it takes a lot of computing power. The average time to find a block takes ten minutes. This means that before a miner is rewarded billions of calculations per second are being made for approximately ten minutes. With more people mining the harder it gets to find and create these blocks.
The creation of the blocks in the mining process is dependent on rules that are programmed in the open source code. One design or rule is that the blocks need to be in chronological order making it very difficult to reverse previous transactions. Another design is if two blocks are found at the same time miners work on the first block they receive and switch to the longest chain of blocks as soon as the next block is found. This allows consensus in the network based on the processing power.
Since the nods in the network would reject fraudulent transactions and any attempt to manipulate the miners reward the Bitcoin network secure. This is guaranteed by the Bitcoin protocol for all to see. So even though some miners or users might want to cheat the network, it remains secure and trustable.
Mining, besides creating new bitcoins helps to secure the system in several ways. It is hard to add new blocks to the blockchain. To add several blocks in a row is basically impossible since then the process is so hard as it is. In the end, it is similar to a hard, competitive lottery. This helps prevent anyone creating blocks at will and thus helps keep the system neutral. Thanks to this structure no single person or party can block transactions at will. Further, this also prevents anyone from replacing parts of a block which could be a way to defraud other users if the system was structured differently. To change a block or reverse a transaction is extremely hard. This because it requires all other blocks to be rewritten. Mining new blocks help to make this harder to do adding an extra security layer to the system.
In the beginning, it was much easier to mine. Now the competition is stiffer which makes it harder and the energy used is significant. To answer if bitcoin mining is a waste of energy depends on if we find Bitcoin useful. All production on earth or energy consumption can be questioned. If people use energy to mine bitcoin as a result of the voluntary action, they find it useful and not a waste.
Bitcoin mining is a part of the system which helps make it secure. If a conventional bank uses energy to secure the system is that also a waste of energy? With that said the Bitcoin network is designed to become more energy efficient over time.
Bitcoin, the protocol, cryptography, code, and structure has a strong security track record. Done and used correctly, Bitcoin is a secure system. The system is most vulnerable in two places.
The wallet serviceYou, the user
In other words, the system is secure, but as always there is human error. To increase the security by eliminating the biggest risk, human error, check out our Security tips below.
Choose an appropriate walletWe recommend an online wallet for daily use and a hardware wallet for storing your bitcoins.
Backup your Bitcoin WalletMake a backup of your wallet and remember to do it regularly.
Encrypt your Bitcoin WalletYou can encrypt your Bitcoin Wallet, app or phone which in practice means creating a password that is required for all outbound transactions.
Remember to update your walletAlways keep an eye for updates to your wallet. This helps to secure it from the latest threats.
Remember the testamentWhat happens if the unthinkable happens? It is always a good idea to plan for the worse so remember to secure the future of your bitcoins, or they might be lost.
There is a common misconception of Bitcoin constantly is being hacked and millions of bitcoin lost. It is true that hacking has occurred, but the loss of bitcoins and the hacking are directed towards the bitcoin wallets. The Bitcoin system has had security flaws which have been solved. Each time is making the system better. Like all systems, there are faults but remember that when you read about bitcoin being hacked or bitcoins being lost, it is almost always the wallets that are being targeted not the system. One could compare it to a bank being robbed. It is the banks’ security that is being breached not the dollar or euros being compromised.
Bitcoin is a decentralized worldwide system with strict rules built in. In theory, there are ways to collude, but in practice it is impossible. Or at least extremely hard.
The Bitcoin protocol excludes any Bitcoin client to enforce their own rules on other users. Thus making the most common worries like double spending and spending without a signature unwarranted. So, in other words, it is not possible to:
Create bitcoins from thin airSpend other users bitcoinCorrupt the network
Any similar worries can also be disregarded as impossible because of the structure of the protocol. However, in theory, there is a way for Bitcoin users to enforce their will. If a majority of users want to change the protocol (the rules and structure), it could be done. However, this requires an overwhelming majority, and since bitcoin is a world-wide distributed network, such a consensus might be very hard to reach. If we pretend that it is reached by this overwhelming majority the chances of the change being harmful, colluding or fraudulent is most highly unlikely since just a common sense rule is that why to adopt changes that are harmful and could compromise your own money and the system that gives value to the money.
In most jurisdictions Bitcoin is legal. Some countries have however special laws that can make it illegal. An example is Argentina and Russia which severely ban the use of foreign currency. Another example of juridical bans might be limiting the licensing of wallets and exchanges. This does not mean that owning a wallet is illegal it is just not allowed to operate a wallet or exchange service in that jurisdictions.
Bitcoin is legal to use in The US, Canada, and Mexico as well as Europe, Turkey and most part of Latin America. It is also legal in Australia, South Africa, New Zealand as well as Japan, South Korea, and Indonesia.
Countries like China, India, Thailand, Vietnam, and Syria have some restrictions. While Russia and Iceland are more restrictive but it is not illegal.
A complete ban of bitcoins can be found in Northern Africa, Bolivia, Colombia, and Ecuador.
The status of bitcoin varies from country to country, and a lot of countries have not defined it yet. Even though bitcoin itself might not be considered as money or currency by law, it does not mean that it is illegal. To see a complete list of countries check out this great link. https://en.wikipedia.org/wiki/Legality_of_bitcoin_by_country_or_territory
As all currencies bitcoin is being used for illegal activities. With that in mind, we should ask yourself if there is a currency or money that is not used for illegal activities? The relative anonymity of the system has been an attractive feature for a lot of criminals. But the same holds true with physical cash and lately even credit card fraudsters and bank wire transfers.
The fact is that all currencies are being used with criminal intent. Bitcoin has features that have increased the security of money. It can’t be counterfeited, users can’t receive unapproved charges, and no fraudulent chargebacks can be deployed. In that sense bitcoin is less of a candidate to be used by criminals.
A government or a state can always impose regulations and laws that can affect a certain product, service or asset. This is also true with bitcoins. Since the Bitcoin network is a competitor to the states and/or central banks monopoly on the money, there is a risk that more countries will impose unbeneficial regulations towards bitcoin and other cryptocurrencies. What effect this would have on users is hard to say. The more people that use bitcoin or other non-governmental, the harder it becomes to forbid completely.
As a system or in other words the Bitcoin protocol, the only way it can be changed is if a big majority agree on a change. The attempt to assign a local authority special access is therefore almost impossible. If a party, however, would invest in copious amounts of mining hardware, it could, in theory, take control of over half the computing power resulting in blocking transactions. This, however, would need them to invest more money than all other miners combined.
Depending on where you live or operate your different business rules will apply regarding taxes. The status of the currency or how you use it will affect the different ways it can be treated and therefore taxed. The most common types of taxes that can be relevant to bitcoins are
Sales taxPayroll taxCapital Gains taxVAT - Value added tax
There might be even more taxes to take into account deepening on where you live.
A crypto casino is a casino where you can play using your cryptocurrency. This is an umbrella term for all casinos where cryptocurrencies are accepted. The most popular currency to play with is bitcoin.
A Bitcoin casino is just as it sounds a casino site where you can gamble with your bitcoins. It might be worth noting that a bitcoin casino sometimes also accept other types of payments than bitcoin. This includes fiat currencies like dollars or euros as well as other cryptocurrencies. At the moment there are no physical bitcoin casinos that we know of, so you play casino with bitcoin online.
We like to divide Bitcoin casinos (and crypto casinos) into two main categories.A casino that accepts bitcoins and other cryptocurrencies (bitcoin casino/ crypto casino)A casino that accepts both cryptocurrencies and fiat currencies (hybrid casino)
There are different advantages and disadvantages to the two types. A casino that only offers crypto payments are in general more anonymous, probably fair, higher payout grades, lower transaction fees and is more available wherever you play in the world. A casino that offers both cryptocurrencies and fiat currencies will most likely have higher requirements of verification, higher fees but also more games and bonuses.
Depending on what you prioritize the choice of bitcoin casino lays in your preferences.
There are a lot of benefits for those that want to play casino with their bitcoins and other cryptocurrencies.Fast transactionsLow or no feesHigh PrivacyAnonymousSecure
These are the benefits compared to playing on an online casino with fiat currencies. However, there are more benefits that also are applicable on hybrid casino or a real a fiat casino:
Convenient and accessibleFree Casino gamesBonuses and PromotionsLoyalty PointsA lot of gamesComfortPlay where you want
Let’s take a closer look at all the benefits of playing on a bitcoin casino and then the benefits of playing on an online casino in general.
Fast transactionsWhen depositing with your bitcoins to on an online casino, you can count on fast transactions. To make a deposit is both quick and convenient. The transaction only needs to be verified through the, and it is done. The average transaction time of bitcoins is 10 minutes. However, if you pay a higher fee to the miners (the ones verifying the transaction), it can go a lot quicker. A lot of Bitcoin wallets have even a recommendation on what fees to pay in order to get a quick payment. This brings us to the next benefit.
Low or no feesLet’s break the fees up into two parts.
The fee the casino takesThe general bitcoin fee
The fee that the casino takes is a fee for a deposit or withdrawal that goes to the casino. Normally a bitcoin casino has no fee at all. This means that the casino does not take a fee, so your deposit is for free. At least from the casinos’ point of view.
However, the transaction is made using the blockchain. This means that there is a fee for the transaction that goes to the miners that verify the transaction. To be perfectly clear, the casino does not gain anything and is not responsible for this. The money goes to the persons that verify the transaction. If you don’t mind waiting before you start playing you can try to send the transaction with no fee. Sometimes it might go through however it can take a couple of days before it does. So the higher the fee you wish to pay the faster the transaction. Fortunately, the fees are very low in comparison with more traditional deposit methods as credit cards and bank transfers.
High PrivacyA real bitcoin casino will respect your privacy even more than a regular online casino. Also though a serious online casino does respect the privacy, it can’t compare with a bitcoin or crypto site.
AnonymousSome might go a further step and calling a bitcoin casino anonymous. The Bitcoin network is anonymous by itself:
It’s not tied to your identityThe transactions are not tied to your identityIt’s practically impossible to trace transactions
Since most crypto casinos don’t register you as a user or only asks for your mail, this makes playing on a bitcoin casino anonymous.
However, we need to point out that this is not the whole picture. There are a couple of ways to trace the owner of bitcoin. This is extremely hard to do, but at least in theory, it might be possible.
So here are a few tips:
Use a completely anonymous walletUse the anonymous web browser TORUse a new bitcoin address for each transactionUse bitcoin mixers
SecureBitcoin in its nature is a secure currency which spills over when playing on a serious bitcoin casino. Not only is the casino transfers secure thanks to the Bitcoin network, but the site also doesn’t keep any personal data. This unlike a regular online casino makes it impossible to hack your personal details.
Convenient and accessibleJust like online gambling, in general, a bitcoin casino is both convenient and accessible. You are never far away from the casino. A few clicks on the computer and you are ready to go.
Free Casino gamesA lot of casinos offer free games to play on. These might be free bonuses, free spins or other free promotions.
Bonuses and PromotionsMost online casinos, as well as crypto casinos, offer bonuses and promotions. Deposit bonuses are very common among bitcoin casinos as well as popular fiat casinos. Something you won’t see in Las Vegas.
Loyalty PointsLoyal players get rewarded. You will find casinos where you can gather loyalty points thus being rewarded for playing on that specific casino.
Lots of gamesThere is no question about it. An online casino will have a wider range of different games then a physical casino.
ComfortThe comfort of playing not only when you want but where you want to to make online casinos a lot more comfortable than conventional casinos. You can play in the kitchen, sofa or why not the bed?
Play where you wantBesides choosing the place to play at in your house, most online casinos offer a mobile version of their site. This means that you can play not only when you want but where you want. At home, work, on the bus or wherever it suits you.
What are the disadvantages of playing casino with bitcoins?Like with all things in life there are pros and cons even when playing casino with bitcoins. So let’s take a look at the biggest disadvantages with playing with bitcoins and later see if there is something we can do about it.
Not all Bitcoin casinos have a licenseNot all online casinos accept bitcoin as a paymentBitcoin is volatileA withdrawal can take a long timeNot all casinos offer fair gaming
Problem: Not all Bitcoin casinos have a licenseUnlike a regular online casino, a bitcoin casino can operate without a having a casino license issued by a certain jurisdiction. These licenses cost quite a lot and are a way for the casino to save money. However, a license is a badge of trust and gives the player an extra layer of security. Especially towards the casino if there is some kind of issue.
Solution: There are bitcoin casinos that have casino licenses. Check them out here:
Problem: Not all online casinos accept bitcoin as a paymentWhen comparing with other online gaming platforms, the ones accepting cryptocurrencies are fewer. So if you have a favorite casino that doesn’t accept bitcoin you might have to play with fiat currencies or change casino.
Solution: Choose a casino that offers deposits with bitcoin. A while back there were very few casinos that accepted crypto payments. Today there are many. Maybe too many if we are honest. Check out our list of casinos that we have verified. You will be able to choose from reliable sites that both offers crypto payments only and are hybrid casinos.
Problem: Bitcoin is volatileSince bitcoin is a fairly new currency, it is still very volatile. Some might not find the volatility a good match with gambling. If you lose and the price of bitcoin goes up you have lost (at least counting value) even more.
Solution: Although it doesn’t exist a way of controlling the volatile nature of bitcoins it is fair to assume that the more time that passes, the less volatile the currency becomes.
Problem: A withdrawal can take a long timeThe fact is that a withdrawal from a bitcoin casino is, in general, faster than any other online gambling site. But some sites might hold the transaction to verify that bonus requirements are met, or it might take a long time since a player has not been willing to pay the fee for the transaction.
Solution: Read and understand the conditions of the bitcoin casino bonus and pay the recommended fee (that still isn’t higher than other fees).
Problem: Not all casinos offer fair gamingBitcoin Casinos as an industry is new, and there aren’t too many established sites yet. Not all of BTC casinos will have a license or offer provably fair games.
Solution: Avoid casinos without a license and look for more established players in the game (pun not intended). You will find a list of provably fair and licensed bitcoin casinos here.
Check out the answers on: What are the benefits of playing casino with bitcoins? Where we list the benefits of playing on an online casino and a crypto casino:
Gambling with bitcoin is legal in most jurisdictions where regular fiat gambling is legal. So if you live in a country where gambling is legal and bitcoin as well then bitcoin gambling is legal. In other words, there are no separate laws or regulations when it comes to gambling with bitcoins yet.
The anonymity of a person gambling with bitcoin depends on the user. Although Bitcoin as a system is anonymous, it is important to know that there are methods that could be deployed in order to locate a user. Since all transactions are kept on the bitcoin ledger, there is always a risk of not being 100% anonymous. The same holds true with bitcoin gambling. Bitcoin gambling ads an extra layer of security a page often requires you to register an account in your name. Not always but sometimes. This, on the one hand, doesn’t make gambling with bitcoin anonymous.On the other hand, if a casino doesn’t require you to create an account, this makes it anonymous. The problem is that since all transaction that your wallet has done are saved on the blockchain, there are methods that possibly could link a transaction to your bitcoin wallet.
So to answer the question if gambling with bitcoins is 100% anonymous the answer is no. However, it can be very anonymous especially when comparing with other methods.
Yes, there are quite a lot of US friendly bitcoin casinos. In fact, we have a separate part of this FAQ solely for the topic of casinos that American players can play.
Yes, you can play bitcoin casino on your phone. You can play directly in the web browser or through an app. Just as with regular fiat currency casinos a lot of bitcoin casinos do offer casino apps. Just make sure to check that the casino is probably fair before you start playing on it.We wouldn’t discard sites that don’t offer a casino app since most bitcoin gambling sites have a responsive design. This means that they adjust to the size of your screen which makes them very easy to play on the phone. A lot of players find these mobile adapted websites preferable to downloading a casino app.
Gambling is supposed to be a fun pastime and not a mean to generate income. Responsible gambling is a broad concept that is created to promote just that and create a safe environment for players. The goal is to protect players from the negatives of gambling. This is done by trying to protect vulnerable gamblers and underage gambling. Gambling sites often also work with ethical and marketing and creating a secure online environment. Other ways of being a responsible gambling site which Bitcoin casinos enhance to create are information privacy and a secure payment system.
An HYIP is a High Yield Investment Program that unfortunately has been quite popular among bitcoin users. It is a Ponzi Scheme which means that early adopters can make money on the ones coming in after. The early users are getting paid by the later users’ investments and not by profits. This is known as a Ponzi Scheme or ”The greater fool”- theory. As long as new investors come in the old one gets paid and it works. However sooner or later this type of investment always goes bust. Our recommendation is to avoid these strongly.
In general, the bitcoin bets are not registered on the blockchain. When you deposit money to a bitcoin casino, it is transferred from your wallet to the wallet of the casino. When you play on the casino, the bitcoins are not on the blockchain. Instead, they are recorded on the casino software. When you decide to withdraw them the withdrawal is registered on the blockchain.
A wagering requirement or rollover is a requirement that a casino imposes on a player. It requires a player to wager a certain amount of money before they withdraw the funds. When playing on a bitcoin casino, these are often lower or does not exist. The exception being when you are claiming a casino bonus. The reason for wagering requirements is to avoid giving away free money and to avoid fraud.
In most cases, there is no need to download special software to play on. Most casinos, both bitcoin and fiat currency casinos, offer great web-browser based gambling. However, there are some players that prefer to download an app to their phone or software to their computer. In the case where a casino offers this software, you can download and play bitcoin casino through it. But it’s almost never a requirement.
Although it is technically possible for players to play from wherever they want there can be some restrictions. There can be restrictions from the casino site or the legislation you are playing from.So before you start to gamble on a site, it can be a good idea to ask these two questions:
Does this particular casino accept players from my jurisdiction (country)?If the answer is yes, then there is no problem. If the answer is no, we do not recommend to play.
Since Bitcoin as a payment system won’t block any transaction, there are ways for you to play even though it is not legal or the casino does not accept players from your jurisdiction. Remember that this is done on your own risk.Unlike credit cards or bank transfers, Bitcoin won’t block the transaction if gambling is not legal in your country. Since Bitcoin does not track where you as a user is located and is in its nature anonymous, it won’t be tracked where you are depositing from. Put simply; you do not need to worry about your payment being blocked.To play casino bitcoins when it is illegal in your country, it is better to avoid casinos that require you to register an account. A lot of pure bitcoin casinos only offers registration using an email. If you then use a VPN service you can change your IP to another country. This makes it extremely hard if almost not impossible to track who you are or at least where you are playing from. But remember you do this on your own risk.
Since Bitcoin is a global payment system and currency most bitcoin casinos accept players from all over the globe. However, there are sites that specially cater US players although other nationalities can play there as well. In this category, we would recommend: bitcoincasino.us
We have not yet stumbled upon a serious crypto casino that doesn’t offer bitcoin deposits. Bitcoin is the largest and most popular cryptocurrency which makes it a quite obvious candidate among players. The crypto casinos know this so you can rest assured that as long as it is a serious casino, they will accept bitcoins.
Besides Bitcoin, there are a lot of other crypto casinos that you can use when gambling online. Some other cryptocurrencies that are popular are:EthereumLitecoinDodge coinDashMoneroBitcoin cashNeogasStraitsPeercoin
There are more options and as new cryptocurrencies are introduced the popular ones will be accessible to play with sooner or later. If you want to try to play with another cryptocurrency or wish to have the option in the future, we can recommend you check out crypto-games.net. They offer a wide variety of cryptos to play with.
How to open a bitcoin casino account is of course highly dependable on which site you choose to play on. In general, there are two different types of bitcoin casinos:The ones where you open an accountThe ones where you don’t have to have an account
The casinos where you need to open an account on you will need to enter your personal details. Just follow the instructions on the casino and fill in your details. For obvious reasons, you will not be anonymous at all on this account. However, there are casinos where you need to open an account on but only enter an e-mail address and password. Here you are almost just as anonymous as on the ones where no account is needed.
The casino sites where you don’t need to open a bitcoin casino account on you just go to the site and play. You will get an anonymous URL automatically when you go to the site so when you have deposited, want to play and withdraw you can access your account. Just remember to save the URL and to never give the details out to anyone.
The process of depositing to a bitcoin casino is both easy, convenient and fast. In order to make a deposit, you need both a wallet and bitcoins on it. Read how to buy bitcoins here. We will sum it up here:Open a walletGo to the exchange and buy bitcoins
When you have set up your wallet and bought your bitcoins, you are ready to go.
Check out the verified casinos on casino bitcoin hereChoose a casino to play on (Do you want to play on a hybrid casino or 100% crypto casino?)Click on the link and create an account (if needed)Make your deposit
The deposit is very similar to when you make a deposit using an e-wallet like PayPal, Skrill or Neteller and simpler than a bank transfer.
Most casinos will generate a code or a string. Copy it and paste it into your bitcoin wallet. Choose the amount you want to deposit and send the money. Remember that the fee might affect how fast your transaction is done. Most wallets have a suggested fee that will push your deposit through fast.
Now go to your bitcoin casino account and start playing! If you chose a pure crypto casino, your account will be credited with your bitcoin or other cryptocurrencies. If it is a casino where you only can make deposits with bitcoin but not play with them, they will be exchanged to a fiat currency.
Whether there is a minimum deposit depends on the casino site but a common number is 0,0001 BTC, but some might have as little as one Satoshi (0.00000001 bitcoin) or as high as one mBTC (0,001 bitcoin). To be sure ask the support on the casino you have chosen or check out the terms and conditions. Remember that there might be a minimum deposit to make the deposit and another one to for example claim a casino bonus.
Most casinos don’t have a maximum amount of bitcoins or any other upper limit you need to worry about.
If depositing to a bitcoin casino is easy it is even easier to make a withdrawal. Simply go to ”withdrawal” in your account and choose the amount you wish to withdraw. Then you need to enter your open key to your wallet. The best and safest way is to open your wallet and copy the key directly. This way you avoid entering the wrong code. Go to the casino and enter the wallet key and choose the fee. And that is it! Your withdrawal is done! To sum up how to make a withdrawal.Go to your Bitcoin casino account and choose ”Withdrawal.”Open your Bitcoin Wallet and copy your public address/ key/bitcoin wallet addressPaste the address in the casino account, choose amount and feeAnd you are done!
As a rule of thumb a deposit and cash, out to a bitcoin casino should not take longer than the average bitcoin transaction time of 10 minutes. This means that it can take shorter and it can take longer. There are several factors that can affect the deposit time and withdrawal.Since a deposit is just a transfer from your wallet to the casinos’ wallet, the same rules apply as for any other bitcoin transfer. The deposit time can be affected by the following:
How much are you transferring (the larger the amount, the longer it can take to verify)The amount of fee are you willing to pay ( the higher the fee, the faster the transfer will go)
The withdrawal time is also a just a bitcoin transfer but this time from the casino to your wallet. It can be affected by the following.
The amount of your transactionThe fee you are willing to payIf you play on a casino that requires that you are verified, you need to verify your account before the withdrawalIf you have claimed a bonus and met the wagering requirements
The withdrawal per se is just as quick as a regular transaction on the Bitcoin network, however, the casino might want to verify your account or that the terms and conditions are met before your withdrawal. This is standard procedure on all online gambling casinos whether they be fiat or crypto-based sites.
You don’t need a credit card or bank account to gamble on a bitcoin casino. All you need is a bitcoin wallet to make your deposit. However, you might need a credit card or bank account to buy bitcoins on the exchange, to begin with.
One of the benefits with casinos online are the bonuses. Bitcoin casinos often do offer bitcoin casino bonuses. Check out all the casinos and there bonuses here. Remember if you do a deposit with bitcoin and play with bitcoin (or any other cryptocurrency) then your bonus will be in bitcoin. But, if the casino exchanges your deposit to a fiat currency, the bonus will be in the fiat currency.There are many different Bitcoin casino bonuses. Here is a list of the most common ones.
Bitcoin deposit bonusBitcoin free spinsBitcoin faucetFree Bitcoins
Bitcoin deposit bonusA Bitcoin deposit bonus is what it sounds like, a bonus you will receive once you have deposited. For example, if it is 100%, it doubles the amount that you deposit. Pretty straightforward.
Bitcoin free spinsIf the casino offers free spins when you do a deposit, you get free rounds. These are more uncommon when it comes to bitcoin casinos since the pure games are often not slots. But on casinos that also have fiat, this is a more common bonus.
Bitcoin FaucetWe will take a closer look at how the Bitcoin Faucet works later on, but there are sites where you can play and be rewarded through a faucet. This is a great alternative to free spins that is much easier to implement for crypto casinos.
Free BitcoinsSometimes there is an opportunity to get some free bitcoins with no counter-performance. Honestly, you never get a whole bitcoin with no wagering requirements for free. But still, Even if you get a couple of Satoshi, it can still turn into a bitcoin.
We already touched on what a bitcoin deposit bonus is. But many wonders how it works so it’s worth to take a closer look. A deposit bonus is often percentage based on a limit. For example100% up to 1 BTC
That doubles your deposit up to one bitcoin. When you make your deposit the site often gives your bonus automatically, or you just check a box to receive it. Some sites might have a bonus code, but then it is often stated pretty clear on the site. When you have made your deposit, the bonus is credited at once. But since it is not a free gift, it often comes with wagering requirements.
A wagering requirement is a way for the casino to protect themselves from fraudulent players and bonus abusers. Unfortunately, that means that you as a player need to wager, roll over or play through the requirements. The rollover requirements can be any number of wagers, but 10-40 are common. Before these are met, you can’t withdraw your cryptocurrency just like on a regular casino. Remember that the lower the requirements, the easier it is to clear your bonus.
Before you claim a bonus make sure that the casino offers a bitcoin bonus. After that, there are three ways to claim a bitcoin casino bonus. It depends on how the casino has chosen to structure the bonus.It is credited automatically when you depositIt will be credited if you tick a bonus check-boxIt will be credited when you enter a bonus code
Each site can choose to use one, two or all three solutions to claim a bonus. This is, of course, deposit bonuses. If you want a free bonus, these are often credited when you open a game or directly when you have created an account.
Yes, there are ways for you to play bitcoin casino for free. You can either look for free spins, free bitcoins or a bitcoin faucet.
There are casinos that offer free bitcoins, at least sometimes. They can be a way to attract new players or a reward for existing players. Although you never get a whole bitcoin, it is not uncommon to receive smaller amounts like satoshis.
Some sites offer bitcoin casino faucets. For those that does now a bitcoin faucet is a way to get free bitcoins in exchange for a counter-performance. They have been around from 2010 and have become very popular. A bitcoin casino faucet is basically a bonus or reward for players. They help to attract players to a casino and activate them.The idea with the bitcoin casino faucet is that it creates a win-win situation. From the casinos’ point of view you get to know their brand, games, and services. From your point of view, you get a free bonus. Some of them have wagering requirements some don’t. Just remember to check out the terms and conditions before you withdraw.
Since most bitcoin casinos have a small house edge, are probably fair and immediate withdrawals you can derive a lot of value from a bitcoin casino faucet. Just stick to the rules!
Most of the bitcoin casino games are games that you would find in a regular casino. There are slots, blackjack, roulette and video poker. Although they might look a bit different when you are gambling with bitcoins the games are the same.Then we have games that are more specialized for bitcoin casinos, or at least very popular among the Bitcoin community. One is Plinko that is a game where a ball is dropped down a pyramid and ends up in a basket. The other one is Bitcoin Dice.
Bitcoin Dice is probably the most popular game among the Bitcoin crowd. It is a fun fast paced game that is quite similar to craps. The main difference might be that you can adjust for risk and reward. The most popular type of bet is probably the hi (high) or lo (low) where you bet whether the dice will be higher or lower than an amount.
Can I play slots from providers like NetEnt, Microgaming or any other software provider that is found on regular fiat casinos?
At the moment none of the major casino software providers offer any special bitcoin games or games where you can play with BTC. But if you play on a casino where your deposit is exchanged to a fiat currency, then you will be able to play these games. Of course, assuming that the casino offers these games.Is the provably fair protocol implementation the same for all BTC casinos and Bitcoin casino games?Depending on what site and game you play on the provably fair protocol can differ. There are different ways to implement the protocol. However, the core principle is often the same.
Just as with all business, there is no uniform answer to that question. Instead, it depends on what site you play on. There are casino sites that are very secure, safe and fair and there are sites that are not. That is why we have created this site so that you easily can choose among trusted, high-quality sites that are fair and safe. In our reviews, we try to convey the pros and cons of a site, and you can rest assured that we have tested the sites ourselves.This process of testing has discarded a lot of sites not deemed worthy. However, this does not mean that there can’t be disputes or problems. It only means that the sites are serious players that put a lot of effort into securing their sites.
The house edge on different bitcoin casino sites can vary. One of the biggest benefits with a bitcoin casino in contrast to a regular online casino is that in general, the edge is a lot lower. Even though online casinos often have pretty small edges a crypto casino has even lower not to mention Las Vegas casinos.A common house edge for different bitcoin casino games:Craps - 0.2%Video Poker - 0.25%Blackjack - 0.4%Dice - 0.75%Roulette - 1%Keno - 1%Slots - 1%
Provably fair is a mathematical protocol which allows checking the fairness of a casino game. In other words, it is a practice where a player can see that a game is mathematically fair and not manipulated. The casino or software can’t change an outcome which lets to that the result is randomly generated. Since the beginning of gambling, both players and the house have tried to cheat. Counting cards, manipulated roulette wheels and other devious methods have been used. With the birth of online gambling, it became harder for players to cheat but not for the house. Now online gambling is regulated, and games are tested, but in the end, the player has to trust the casino, game provider or at least the regulators. With at provably fair protocol, this is done impartially by mathematics.
In short, provably fair gambling is based on math and cryptography. When gambling the system is structured in a way that the casino doesn’t know the outcome since it is generated by the player, randomly. This way neither the player or the casino can manipulate it.Depending on what bitcoin casino you play on it may look a bit different but in general it looks something like this.
The deck is shuffled by the casinoThe player is dealt a card (Technically a hash which is a cryptographic representation of the shuffles value)At the same time, the player generates (manually or automatically) a seed for the hash. Since it is random, the casino can’t know it in advance.The seed changes the hash, that is changing the value of the shuffle, which triggers that a random card is dealt.The player receives the randomly generated card.
This is in short how the provable fairness gambling system work. As you can see neither the casino that generates the hash nor the player that generates the seed can’t know in advance the outcome. The best part is that you can check that the provable fairness works. Either by checking the script yourself, by using a service some casinos provide or use a third party like https://dicesites.com/provably-fair.
You can check every dice and card draw on many bitcoin casino sites ensuring for yourself that the protocol work. However, this can be a bit time consuming it is assuring that you know that if you suspect something you always can fall back on that. Most serious casinos won’t afford to try to manipulate the results especially since bitcoin casinos are much more transparent than regular online casinos.
To check the fairness protocol for a particular draw or roll, you need the original hash from the casino. This hash should confirm the order of the cards if it is a card game. If you add the seed, you can see the outcome which should produce the same result as when you played. If this happens, it was proven to be fair or in other words random.
This system assures that the game is random. Nothing more, nothing less. What the edge is, if the casino is serious and pays out its players or is not trying to cheat you in any other way is not guaranteed. To see the best bitcoin casinos click here.
The easiest way to see if a casino is provably fair is to check out our reviews. If that is not enough, you can use external services or check out the script (if you have the technical knowledge) yourself. We suggest you check out the question above for a deeper dive into how to check if a casino is provably fair.
If a casino uses a provably fair protocol, it is not possible to cheat a player. But that assumes that two things:That the casino uses a provably fair protocol.That the casino is not trying to cheat you in any other way.
Even though the randomness of the game can be assured by the provably fair protocol, it is not a guarantee that the casino does not try to cheat you in any other way. The house edge can be high; the casino might try to steal your money and winnings, the software disconnects and other tricks have been claimed by players. That is why you should only play on validated, tested bitcoin casinos found here.
The provably fair system can be used by a regular online casino since the system is not limited to the bitcoin currency.
Although there are a lot of regulated Bitcoin casinos far from everyone are regulated and/or licensed. A regular online casino needs to have a license from the country from where it is operating. The same holds true for a Bitcoin casino. But since bitcoin casinos are much more anonymous, some have chosen not to be regulated. This, of course, creates a larger risk for the player.The good thing with a casino license is that it adds another layer to the security. The bad thing is that this can be at the cost of the anonymity a player might want. A casino license might require a casino to verify it’s customers or to ban players from certain countries. Although this is not required by all licenses, there are some that have these kinds of conditions.
Then we also have regulated bitcoin casinos with licenses from countries that don’t have any requirements at all. The casino basically pays a fee and gets a license. The problem with these is that they can be just as bad as a casino with no license at all.
If a bitcoin casino has a license, it adds some kind of extra security to the site. But don’t stare yourself blind at that. There are casinos without licenses that are legit, and there are casinos with licenses that are fraudulent.
With that said we do recommend playing on Licensed and regulated Bitcoin casinos.
Like we pointed out in the question ”Is it possible for a provably fair Bitcoin gambling site to cheat players?” provably fair only means that the games are not corrupted by the software or casino. It does not guarantee that the casino is an honest casino. They still can refuse withdrawals, block your account, disconnect you or cheat you in other ways. So a casino license is like an extra layer of security for a pleasant, safe and reliable casino experience.
The idea behind Bitcoin is anonymity, and this is the foundation of a lot (not all) bitcoin casinos. Most casinos do not report any winnings to any government. However, it might be a good idea to check the terms and conditions on the site to be sure.
To be anonymous while playing bitcoin casino you need to remember that it is (at least in theory) to track your transactions. However, there is a reason why Bitcoin is used by criminals, and there are several ways to increase your anonymity so that you won’t be detected. Read our answer to the question: Is Bitcoin anonymous?
The United States is known around the world for their laws against online gambling. Most states do not stipulate that betting and gambling with cryptocurrency is illegal. Further, federal legislation has not forbidden gambling for players placing bets. However, an online casino is not allowed to accept any bets on the territory of the United States. This loophole is used by online casinos as they register outside of the United States.In general, this makes it possible and legal for players to play on a bitcoin casino. However, since the UIEGA forbids banks and credit card companies to facilitate transactions to companies in the online gambling business regular, fiat based casinos are illegal. Or at least there is no possibility to transfer funds.
But each state has their own laws and regulations. Let’s take a closer look in which states you safely can gamble and in which you should be careful.
We can divide all the states into three categories: Legal, illegal and not unlawfulLegal - Delaware, New Jersey, and NevadaIllegal - WashingtonNot Unlawful - All other States
If you live in Delaware, New Jersey, and Nevada, you are allowed to gamble in general. This, of course, includes gambling online with bitcoins. So as long as you use bitcoins or any other cryptocurrency you should be fine.
In Washington, it is illegal to gamble, and this includes online casinos and bitcoin casinos. So residents can’t play on a site even though it is based offshore.
Most other states do not consider it to be unlawful which is a grey area. It means that it is neither legalized nor forbidden. At this moment no one has been prosecuted for gambling with bitcoin online. The UIEGA is targeting banks and credit card companies and not individual players. With that said it is always a good idea to be careful. Remember that U.S. based exchanges and wallets need to pass Know-Your-Customer procedures which often requires verification. This can be State-issued ID and utility bills. If you use such a wallet to deposit to a bitcoin casino, it can be traced to you. A way around this that other players use a wallet based outside of the U.S. wallets, VPNs and sending bitcoin to the casino using middlemen (other wallets) not based in the U.S.
Singed in 2006 UIEGA is The Unlawful Internet Gambling Enforcement Act that stipulates which rules and regulations banks and credit card companies have in regards to facilitating transactions to gambling companies.