Bitcoin and Blockchain
Welcome to our first lesson on cryptocurrencies.
You’re prepared to launch and operate an online sportsbook now, but the next piece of the puzzle is handling money. With local clients, you can deal with cash, but what about everyone else?
Well, we recommend using cryptocurrencies, such as Bitcoin (BTC).
With a market cap of $165,000,000,000+ - Bitcoin is the #1 cryptocurrency in the world.
Bitcoin’s proof of concept was initially published in 2009 by Satoshi Nakamoto. To this day, no one knows who Nakamoto actually is, but his project has grown exponentially in the last decade.
What Is Bitcoin?
Bitcoin is a decentralized peer-to-peer payment network. Basically, Bitcoin is a way for someone to pay someone else without any middleman. The digital money is controlled by its users.
What Is a Blockchain?
A blockchain is a shared public ledger (decentralized). Bitcoin relies on a blockchain to maintain a ledger of all confirmed transactions. The blockchain also calculates a wallet’s spendable balance.
Blockchain technology was invented by two researchers (Stuart Haber and W. Scott Stornetta) back in 1991, as a system to prevent document timestamps from being tampered with.
How Does Bitcoin Work?
When you want to send money using Bitcoin, you enter a wallet address where you want to send the BTC. When you perform this action, the transaction is added to the network.
Bitcoin transactions aren’t instant. The time it takes to confirm transactions varies, but in June 2020 the average transaction time was 9.8 minutes. Transactions need to be confirmed through mining.
Mining is used by Bitcoin to confirm pending transactions. Transactions are packed in a “block” and miners confirm the transactions to prevent double spending before adding them to the blockchain.
In return for providing the computing power, miners are rewarded with Bitcoins for confirming new transactions and adding them to the blockchain. There are more than 250,000 daily transactions added to the blockchain, so it requires a lot of computing power (electricity).
Last year it was estimated that Bitcoin’s energy consumption was the same as Switzerland.
That’s a primer of Bitcoin and the blockchain.
There are countless research papers available online to further your studies if you’re interested, but bookmakers definitely don't need to worry too much about the technical aspects of BTC.
Why Do Bookies Use Bitcoin?
There are several reasons why BTC is widely used among online bookies.
If you’re unable to pay a player cash, the next best method is Bitcoin. Receiving deposits and paying out clients using BTC is great for the player and you. Here are some of the reasons why:
• Anonymous: You can open wallet/exchange accounts with no personal information, which will allow you to transact in Bitcoin anonymously, which is necessary in some countries.
• Low Fees / Speed: While transactions take an average of 10 minutes, the average fee is only $2.44. Transaction costs are often a big part of a bookie’s budget, but that’s no longer the case with cryptocurrencies. Credit card processing is way more expensive.
• Popular With Bettors: Why not offer what players want to use? A lot of online gamblers in the US only use cryptocurrencies because it’s the most convenient banking method.
Essentially, you can think of Bitcoin as a digital money that’s inexpensive to send/receive.
You may have heard of the risks of using cryptocurrencies or how volatile they are, but we discuss ways to mitigate these risks. It’s essential to understand cryptocurrencies as a bookmaker.
It’s not necessary to understand all of the technical details of BTC. What’s important is being able to send/receive cryptocurrencies safely, securely, anonymously and at low fees.