Online gambling with cryptocurrencies is becoming increasingly popular. While conventional investors like Warren Buffett may continue their hate affair with the leading cryptocurrency bitcoin labeling it as a ‘gambling device,’ the fact is over 50 percent of active gamblers trade in cryptocurrencies.
To those using bitcoins or cryptocurrencies for online gambling, the benefits or advantages of digital tokens over fiat currencies are not hidden. Anonymity, decentralized ledgers, fast and cost-effective transaction processing, no paperwork or negligible regulatory hurdle are amongst the many other factors that have propelled online betting sites which accept digital currencies, allowing them to capture an increasingly significant share of the multi-billion dollar online gambling industry. Also, that explains why one would prefer to use them in the first place.
However, on the flipside, it’s always better to play by the rule – “Not all that glitters is Gold.”
Online gambling with cryptocurrencies is risky; so is gambling anyway. Assessing the risk factor involved in online gambling, on the whole, is futile. If we are to put up a meaningful discussion about why online gambling with cryptocurrencies is riskier and also less profitable when compared with fiat currencies, one should objectively figure out the disadvantages with crypto-gambling that make users more vulnerable.
Here’s what should qualify as ‘significant disadvantages’ of gambling online using cryptocurrencies:
1. Consumer Protection – Most online gambling websites that accept cryptocurrencies are not affiliated to any gambling authority, and therefore, they are high risk in the event of a dispute. When there is a dispute, the outcome is entirely at the discretion of the gambling site.
It doesn’t necessarily mean that all websites that accept fiat currencies are complying with a regulatory framework and are ideal. However, with fiat currencies, users enjoy a higher level of security for the fact that the funds can be traced making it increasingly difficult for Ponzi schemes to scam customers online.
At Casino.buzz we always recommended that before signing up or getting started with any online gambling website one must check their affiliation and license. If the license information is not displayed publicly and cannot be verified, it’s a red flag.
Last week, a DApp gambling platform on the Tron Network disappeared, and now the players are left with worthless tokens. DooTron, based on the Tron Network disappeared when over 59 million DOO tokens owned by 1,204 investors were still in circulation.
2. Market Volatility – The ultra-dynamic crypto market is highly volatile; the prices of cryptocurrencies can fluctuate dramatically. Therefore, with fluctuating prices, any investment made in digital tokens with a purpose to reinvest is comparatively risky.
The extreme market volatility is specific to crypto-gambling as the element of risk associated with market volatility is negligible with fiat currencies. Moreover, the argument that market volatility works both ways doesn’t negate the risk factor.
3. Transparency – Anonymous people control the entire gambling infrastructure of most online gambling websites that are powered by cryptocurrencies. It is highly unlikely that such websites have any credible external audit reports.
While also putting all online gambling websites in one basket would be an atrocious manipulation of facts, the fact remains that most online gambling websites accepting cryptocurrencies do not meet even the most basic standards to qualify as transparent platforms.
As such, it is always recommended that one must check the gaming software providers and the affiliation of the platform with those providers.
4. Transactions Are Irreversible – Cryptocurrency transactions are irreversible. A slight clerical error with the recipient address may translate to significant and irreparable loss. As the process is not monitored or controlled by any central authority, there is a negligible chance to recover the funds. While this may not be a common issue, yet fiat transactions fare better when it comes to recovering funds in the event of misplaced payments due to clerical errors.