Bitcoin in the iGaming Environment


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Bitcoin in the iGaming Environment

  1. 1. Bitcoin in the iGamingEnvironmentJon MatonisBitcoin Foundation
  2. 2. Overview Payments As Competitive Advantage Customer Service Challenges in iGaming The Story of Bitcoin Bitcoin Applied in iGaming Environment Regulation of Bitcoin Leading Bitcoin Gambling Sites Questions2
  3. 3. Payments As Competitive Advantage Established brands see no reason to change Smaller firms will drive innovation Provide the superior gaming experience Disrupt the status quo Use a global currency with 24x7 marketplace Take global market share from competitors3
  4. 4. Payments As Competitive Advantage Bitcoin is the ideal digital casino chip Immediate Irreversible Private Bitcoin has the ideal virtual currency attributes Nonpolitical unit of account Two-way convertibility Independent floating exchange rate4
  5. 5. Customer Service Challenges in iGaming Real-time payments in both directions Payment solutions that cover all countries Minimal fees for funds transfer Maintain client privacy beyond gaming environment5
  6. 6. The Story of Bitcoin Bitcoin is a decentralised electronic cash system usingpeer-to-peer networking to enable irreversible paymentsbetween parties without relying on intermediaries. Bitcoin is a reaction to 3 separate developments Centralised monetary authority Diminishing financial privacy Dominant legacy infrastructure6
  7. 7. The Story of Bitcoin Does the Cashless Society have to mean that we lose all ofthe privacy attributes of physical cash? Anonymous Untraceable Bearer Nature We have arrived at the historic crossroads! User-defined privacy – or – Identity-based money7
  8. 8. The Story of Bitcoin What public key cryptography enables E-Money is not regular payments going online Concept of digital bearer instruments If you can click “forgot password” and have balances restored,then it’s not a digital bearer instrument Centralised issuing mint schemes DigiCash (1990-1998) eCache (1999-2008) Voucher-Safe (2010-present)8
  9. 9. The Story of Bitcoin Launched in January 2009 by Satoshi Nakamoto Open source built on cryptographic primitives Elliptic Curve DSA and keypairs RPOW (reusable proof of work) SHA-256 Hash (incorporating distributed block chain) Solved the double spend problem without centralisation Dual role of payment system and unit of account9
  10. 10. The Story of Bitcoin10
  11. 11. The Story of Bitcoin11
  12. 12. The Story of Bitcoin Exchange Rate ~ 106.00 USD Size of Economy $1.2 billion Total Bitcoin Mined 11,271,950 Maximum Potential Bitcoin 21,000,000 Total Block Count 240,877 Average Blocks per Hour 6.0 Network Computational Power >100kGhash/s12
  13. 13. The Story of Bitcoin13
  14. 14. Bitcoin Applied in iGaming Environment Identity-based licensing drives decision Gamer identification is technically feasible Gamer identification is not technically feasible Risk management strategy Bitcoin (BTC) only games Bitcoin (BTC) converts to national currencies Implications for managing currency risk14
  15. 15. Bitcoin Applied in iGaming Environment (Gamers) Full Client Wallet Installs locally Downloads entire block chain User maintains private keys Lightweight Client Wallet Involves some level of trust in the server Downloads block headers only using Simple PaymentVerification User maintains private keys Browser-based Client Wallet Access via the browser Service provider downloads block chain Hosting server may or may not maintain private keys15
  16. 16. Bitcoin Applied in iGaming Environment (Operators) Extend acceptance to countries not reached by Visa,MasterCard, and PayPal (60+) Provide payment method for the unbanked No disallowed merchant categories codes (MCCs) Not subject to payments embargo Eliminate chargeback and fraud risk Processing fees approaching zero Near immediacy of settlement Flexible merchant wallet solutions16
  17. 17. Bitcoin Applied in iGaming Environment WinPoker Becomes First Major Gambling Operator ToAdopt Bitcoin (Forbes, March 2013) Operates on the leading iPoker network Bitcoin is transfer method, not gaming currency17
  18. 18. Regulation of Bitcoin Decentralised nature inhibits third party shutdown Exchanges will be a focal point of government scrutiny Pressure on larger merchants Not regulated as legal tender (similar to air guitars) Only four jurisdictions have any official comment USA Australia Norway France ECB18
  19. 19. Regulation of Bitcoin United States (trading) Virtual currency exchanges defined by U.S. FinCEN Subject to AML/KYC guidelines Licensed as Money Services Business (federal) Licensed as Money Transmitters (states) United States (gaming) Virtual money gambling vs. real money gambling Definition hinges on closed gaming environment19
  20. 20. Leading Bitcoin Gambling Sites Satoshi Dice (now blocks U.S. players) bitZino Seals With Clubs20
  21. 21. SatoshiDice21
  22. 22. bitZino22
  23. 23. Seals With Clubs23
  24. 24. Thank You“Digital cash is to legal tenderas BitTorrents are to copyrights”24
  25. 25. Twitter: jonmatonisEmail: matonis@hushmail.com25Questions?