The Bitcoin revolution
CoinGaming CEO Tim Heath on the opportunities and challenges posed to the gaming industry by the rising popularity of Bitcoin
The betting and gaming sector should be no stranger to the type of technological disruption which can turn an industry on its head.
Over the past couple of decades, we’ve seen gaming move online and create a new multi-billion-pound/euro industry as a result. We’ve seen the advent of mobile gaming, with gaming content moving from Flash to HTML5, which has grown to become the primary channel for many operators. We’ve also seen how new variants of classic mechanisms — like sports betting’s ‘cash-out’ feature — have completely transformed the way people bet.
Yet surprisingly there has been a distinct lack of innovation around a very business critical yet mundane area: payments.
At every step of this journey, those firms which adapted to the new market realities were the ones which succeeded. Those which resisted change, or failed to adequately prepare and adapt, were left behind.
With that mind, there should not be a single person working in the gaming industry who is not looking at how the remarkable rise of Bitcoin might transform the industry. I would go as far as to say it will be the most transformative disruption gaming has seen for a generation.
Why Bitcoin matters
Bitcoin has been gradually gaining mainstream acceptance over recent months. Its price movements are reported on the financial pages of well respected newspapers and economists are discussing the nature of its rise.
Perhaps even more importantly, a growing number of people are using the currency for a range of everyday payments. There is an increasing acceptance and normalisation of Bitcoin as an every-day currency, as ordinary people can now use it for everything from making an online purchase to placing a bet.
Operators have been speaking for some time about the importance of connecting with the ever elusive millennial demographic. The rise of mobile-first gaming has certainly helped in this respect, and Bitcoin offers a further opportunity to engage with this digital generation.
These millennials have tended to be the early adopters of Bitcoin and just happen to be the most sought-after marketing segment. As well as growing up with digital technology, many are already engaged with the idea of virtual currencies through playing social games on mobile devices. The segment is more adaptable and likely to embrace change compared to its elders, and has shown a particular willingness to adopt new technology.
Ecommerce and other digital sectors are already making moves to update their existing infrastructure and make it Bitcoin-friendly. PayPal now accepts Bitcoin and a number of others including VISA and MasterCard have dipped their toes into the water when it comes to the digital currency.
On the online gaming side, we are starting to see the emergence of operators with a focus on Bitcoin, including our flagship bitcasino.io casino. A number of operators across the verticals are now looking into further Bitcoin integrations.
For all the digital progress the gaming sector has made in recent years, particularly on the mobile channel, payments continue to prove a frustrating bottleneck in the user experience for many players.
While operators now offer a range of payment options for players, many of these come with a fee, a host of cumbersome security protocols and minimum deposit limits. This delay is even more pronounced when it comes to withdrawals. How many players have churned out of the frustration of having to wait three to five working days to get their hands on their winnings?
Benefits of Bitcoin
We offer customers an average withdrawal time of just 2.5 minutes, and have pledged to replicate this on our recently launched sportsbook, sportsbet.io. It won’t take long until this becomes the minimum expectation from customers looking to play on an online casino or sportsbook.
Bitcoin brings the on-demand, instant satisfaction that users are demanding to the payments sphere, in a secure, discreet and swift manner. Bitcoin deposits are either free or carry low fees, and most importantly the currency allows operators to offer the type of payments flexibility simply not available with traditional methods.
Which other payment processor allows micro-deposits of as little as €0.01?
Bitcoin can completely transform and modernise the existing payment infrastructure of gaming models. Globally there are hundreds of millions of potential customers locked out of the online gaming experience as a result of lacking the traditional banking options many take for granted. At the same time, this demographic is accessing the internet on a daily basis and wishes to buy goods and services through the channel. Bitcoin is currently the best option for servicing these users with simple and accessible banking.
Security is perhaps the biggest concern most people have with Bitcoin. However, it is quite possibly its strongest suit.
Bitcoin embraces a new vision of the internet which respects privacy and looks to decentralise infrastructure in such a way that ensures users are not left vulnerable to the type of data hacks which have hit the headlines in recent months.
The gaming sector has also fallen prey to DDoS attacks, which are becoming increasingly prevalent, so any innovation which can bolster security must be welcomed.
There have also been some doubts raised over KYC and AML procedures when it comes to Bitcoin, and concern over the anonymous nature of the cryptocurrency.
However, this need not be a concern as long as operators and suppliers act responsibly. For example, at CoinGaming we have stronger KYC and AML analytical tools to trace the origin of money than fiat casinos which accept credit card deposits. We take a digital fingerprint of a user’s device as well as IP information every time they connect to our site and undertake any activity, which allows us to be confident that it is the same device which is accessing our site each time.
There are other basic steps which can be taken to ensure KYC / AML compliance. Any user who deposits Bitcoins and subsequently does not have any game play before withdrawing funds in the next 24 hours can be immediately flagged up for extended due diligence.
It is a myth that Bitcoin is anonymous. Every transaction is recorded in a public ledger, the blockchain. While the identifiers used in these ledgers are not intrinsically tied to real world identities, we are still able to assess the history of actions that any users coming to our service have had — including identifying customers dealing in illicit activity.
As with traditional currencies, it is important to remain vigilant, but there is no inherent reason why a Bitcoin casino or sportsbook should be weak on KYC and AML compliance.
Innovate to differentiate
There are still a number of challenges to overcome. Some suppliers still require games to be played in a traditional currency, however our solution is to simply convert the player’s Bitcoins into that currency at the point of transaction and credit winnings, using the same exchange rate. However, we are already observing a growing number of suppliers that allow their games to be played in Bitcoin without the need for conversion at time of transaction. The online gaming space is quickly developing an infrastructure which will allow for fuller Bitcoin integration.
Indeed, the remarkable rise of Bitcoin over recent months and years threatens an era-defining disruption not only in online gaming but across a whole host of industries. Those which will succeed in the gaming space in the long term will need a Bitcoin presence, and those which fail to acknowledge this will quickly be left behind.
Everyone in the gaming industry loves to discuss the importance of innovation and differentiation. Much of this has focused on the areas of product or marketing. The traditionally unglamorous world of payment services is rarely considered an area where an operator can stand apart from competitors.
Yet Bitcoin offers precisely that opportunity. The payment journey is central to the user experience for online gamers. Too often the player payment process is a source of frustration, but Bitcoin radically changes this and opens up new markets and new revenue streams.
Any operator who wants to remain relevant and ahead of the curve in the coming years will need to consider using Bitcoin as a central part of its operation.
Ps: a little video about the top 5 benefits to use bitcoin for sportsbetting :)
Tim Heath has more than 10 years of management experience in online gaming and is the CEO of Coingaming.io, a leading platform provider specialising in the provisioning of bitcoin cryptocurrency solutions for the i-gaming sector. The firm provides the gaming platform for the Bitcoin casino bitcasino.io and the Bitcoin sportsbook sportsbet.io.