Disclaimer: Opinions expressed in this article do not constitute investment advice from Bitcoin Reserve.
Out of every market currently penetrated by bitcoin usage, gambling remains one of the largest. Now, that ubiquity is revolutionizing the gambling industry and, in turn, looking to drive bitcoin adoption.
In 2012, one of the first bitcoin-based gambling websites emerged: the aptly named, SatoshiDice. Devised by ShapeShift founder Erik Voorhees, the pioneering SatoshiDice was, and still is, one of the most popular bitcoin betting games ever created—at one point accounting for an estimated 25-50% of all bitcoin transactions.
It also stood as one for the first major bitcoin-based acquisitions. Voorhees sold SatoshiDice in 2013 for 126,315 BTC—worth $11.47 million at the time (approximately $1.1 billion at the time of writing).
Later, between 2014 and 2017, gambling sites accepted the equivalent of $4.5 billion in total bitcoin wagers.
Since then, bitcoin-based betting has continued to find tremendous acceptance within the gambling sector—both on-chain and off-chain.
Betting on bitcoin
Following the early days of SatoshiDice, an entire subcategory of blockchain-powered casinos spawned, and bitcoin-betting has become an industry in its own right. However, bitcoin's usage in gambling isn't confined to this burgeoning market. The traditional off-chain gambling sector has embraced the asset too.
These include both casinos in the meatspace as well as the standard web casinos. These conventional establishments typically harness a third-party payments processor to convert bitcoin to the local fiat currency.
But bitcoin isn't just finding acceptance and adoption; it's entirely disrupting the online gambling industry.
The emergence of bitcoin completely overhauled the online betting experience. Far from the shady centralized model where players flittered from game to game anguishing over which one may be rigged, the bitcoin blockchain's trustless design introduced transparency, security, and, most importantly, decentralization—removing the single point of failure of traditional gambling hubs.
Though, by far, the most innovative addition brought about by bitcoin was provably fair gambling. When it comes to conventional online betting, it all comes down to trust. Players have to hope that results displayed by service providers are indeed fair. This need for faith is negated via the provably fair method—a publishable algorithm that players can analyze to prove everything is above board.
But while many blockchain-powered casinos owe their marketability to the novel tech underlining them, it's the characteristics of bitcoin that has kept the punters coming.
First and foremost, transactions carried out via bitcoin are much more secure than methods employed by traditional gambling sites. Instead of consigning the operator with payment details, the only trust users need to keep is in the bitcoin network.
Furthermore, the traditional withdrawal methods of online gambling sites, such as cashier checks or debit cards, could take anywhere from days to weeks. By contrast, bitcoin withdrawals are virtually instantaneous.
Ironically, the same utility and convenience responsible for revamping the online gambling industry may well bolster bitcoin adoption.
How gambling could bootstrap bitcoin
At current estimates, the online gambling industry is worth around $59 billion.
However, with a compound annual growth rate (CAGR) placed at around 12%, the industry is on a trajectory to grow by over $100 billion within the next four years—and it's no wonder. Online gambling is offering a formidable competition to Las Vegas casinos in the meatspace. And, thanks to the aforementioned benefits of digital currency, the majority of emergent platforms are launching with bitcoin in mind.
Bitcoin capturing the online gambling market could feasibly enable the asset to gather colossal momentum.
Last week we published a research piece examining the potential of bitcoin's value potential based on its capturable markets. At present, estimates put the crypto gambling scene at a $2.5 billion industry. Compared to the estimated $59 billion for the gambling sector as a whole, this makes it one of the cryptocurrency's most penetrated markets at approximately 4.2%.
Should bitcoin usage in gambling continue to expand along with the industry, bitcoin adoption could likewise increase.
Gambling represents a somewhat grey market, and therefore some may feel, perhaps, it's not the most appropriate propellent for bitcoin growth. However, it's important to maintain perspective.
After all, the discovery of gold in California, and the ensuing rush of 1849, drove hordes of gamblers to San Francisco's infamous gambling dens. Arguably, the discovery of new pockets of gold propelled the United States' early gambling markets. In turn, the bustling gambling dens played a significant role in gold's price discovery. As they say, history never repeats itself, but it often rhymes.