A few days ago, the Dutch Gaming Regulatory Authority issued a statement explaining that cryptocurrencies can not be considered a game under current Dutch rules and therefore are not under their jurisdiction. The statement from Dutch regulators arrives at a moment where the universe of gambling mingles with the world of virtual currencies in many different forms and seems to feed each other. This is how many online games have the possibility of exchanging prizes or real money for Bitcoins. The warnings of experts in the world of traditional finance seem to have no effect on cryptocurrencies adepts.
Anyone who is betting and promoting investments in virtual currencies explains that this market is experiencing a very large expansion of its principles, since more than a dozen of cryptocurrencies are capitalized in a market of more than one billion dollars, while the limit total market for the whole of the space, amounts to more than 100 billion dollars. In the shadow of virtual currencies are emerging companies dedicated to making investments more profitable. Investors do not take into account the issues of economists or the threats of governments to close trading. This is because numbers speak for themselves, and when Bitcoin was trading at 30 cents in 2011, no one imagined the highs reached at more than US$ 20.000. Who could think of the volatility and risks when, who invested 100 in Bitcoin in 2011, now has 5 million?
But despite these figures and the large numbers of people who are investing in virtual currencies, some experts say that investor enthusiasm is promoting a risk market that is very small compared to other investment segments. They even explain that the so-called Initial Coin Offering (ICO), the initial offer of currencies, can be a scam since many are anonymous. Added to this, they say that the biggest problem with ICOs is security. One of the more recent cases was the DAO, where more than 150 million dollars were stolen, and for what its detractors claim, the danger of virtual currencies is not depreciable.
However, some of the biggest gaming operators and online casinos are looking at the opportunities that Bitcoin and other virtual currencies present to them, but most gambling entrepreneurs still prefer traditional transaction methods. The reality is that many entrepreneurs in the area of igambling are still knowing Bitcoin as a payment system and only think of it as a transitory solution. Despite Bitcoin's quote changes last week, many online gambling businessmen seem to want to take virtual currencies much more seriously and put themselves at the forefront of their competitors. Deciding to do business with cryptocurrencies has advantages for operators, such as that users do not have to use bank accounts to bet and get rid of regulatory authorities.
There are already online gambling markets that are accepting virtual currencies in their transactions, such as Malta, where internet gaming is the parent industry, as well as the Isle of Man or Guernsey, societies in which Bitcoin is generating a lot of controversy, as there are benefits on using it because it is not taxed as it is not considered money by governments, but it is totally transparent to its users. The most notable example is the United States, where it is not possible to send money overseas in games such as online poker, but it is very easy to accept payments in convertible criptocurrencies and the government can not intervene.
Government officials do not like that this mass of money does not involve tax payments, so it would not be strange for them to set their eyes on the ICOs or directly decree them illegal, as China, North Korea have done and, then, South Korea. In Brazil, last January 12, the Securities and Exchange Commission (CVM) banned managers and fund managers from investing in virtual currencies, through a letter issued by the local authority that establishes that cryptocurrencies such as Bitcoin, litecoin and Ethereum, can not be qualified as financial assets, and their direct acquisition with regulated investment funds is not permitted.
The Pandora's box of cryptocurrencies is open and it feeds online gaming, as well as other companies and people who see it as a game where, if they lose, they lose little and if they win, they hit the lottery. Governments and regulatory authorities seem to be in a sort of spiral where at one point they want to ban them by waving the banner of money laundering and terrorist financing, and in another they seem to be curious to perceive its benefits and to take a portion of the money that is played on this virtual roulette. They have two possible paths; to forbid the use of virtual currencies or, in the face of the inevitable, to accept a regulation.
How it works
To give a very easy to understand example, imagine a box where you can move the pieces inside, but you can not remove or put any, and need a password to be able to move them. In this way the number of virtual coins will always be the same, but not their possession; is a currency that, unlike the euro or the dollar, has a limited issuance.
The Bitcoin network is based on a system called "peer to peer" or person to person, which allows breaking the need for a third party in the transaction. Users use a mobile or computer application that provides a personal purse and allows you to send and receive this virtual currency. As for its system, the community works through a public accounting called "Blockchain" or block of chains, which contains each and every one of the transactions carried out that allows to see the veracity of them. Its authenticity is guaranteed by digital passwords corresponding to the sending directions, allowing users to verify from their own virtual directions that their operations are done correctly.
FABIAN BATAGLIAFabián Bataglia. Journalist specializing in the gambling industry; graduated in Social Communication at the CAECE University of Buenos Aires and professor of Journalism and Communication at this university. Specialist in information production and digital communication; currently works in Diario del Juego of Buenos Aires, Argentina.