Mar 2, 2020, 4:34 pm436 pts
Cryptocurrency and regulations get along as well as cats and dogs, as we have seen in recent years. Ever since cryptocurrencies reached the mainstream, we have witnessed governments trying to implement regulations on trading with the new tokens, whereas die-hard users are fighting tooth and nail to prevent that from happening. It has been an interesting affair, to say the least. Partially because no two governments have come out with the same solution, that is if they choose to take any action at all.
Needless to say, cryptocurrencies have introduced new ideas and philosophies to what some would consider an outdated banking system. The development of blockchain technology has made waves and affects many different industries, including the online gambling scene.
While slow to take hold at first, cryptos have found their place among the hearts of online bettors and their presence is expanding with every passing year. In 2020, you have dozens of top-tier gambling platforms that accept Bitcoin and altcoins as legitimate banking methods, while some online casinos have sprung up with the goal of establishing a wholly crypto-backed betting space.
With online gambling already being a touchy subject, adding cryptocurrencies into the mix was only bound to make the situation more volatile. As mentioned on www.casinoguardian.co.uk, many players are worried that betting on cryptocurrencies may become illegal. So this begs the question of what effect would regulations have on crypto gambling and how this will be taken by users?
How are cryptocurrencies used for online gambing?
Before we get into the consequences of regulation of betting with cryptocurrency in UK, we first have to consider what role cryptos play in the gambling scene. Currently, Bitcoin and altcoins are used as an alternative to fiat currency, with the blockchain used to facilitate deposits and withdrawals. There are two approaches to betting with cryptocurrency. One sees the customer make a deposit with a particular token, which is then exchanged to fiat currency in their casino balance. If the platform supports withdrawals via crypto, these will follow the reverse process, with fiat currency exchanged for the respective cryptocurrency. In the other method, customers deposit with a cryptocurrency and directly bet with it.
The majority of gambling platforms adhere to the first approach, but many are turning to the second one, as well. There is a clear distinction between betting websites which use the blockchain as a means of transaction and those who offer proper crypto gambling. Voted as a top online casino in 2018, BitStarz is a great example of a gambling platform that fully integrates cryptocurrencies in its business model. Its popularity indicates that customers are indeed taking crypto betting seriously and looking for new options.
What factors prompt the introduction of regulations on crypto gambling?
With a brief rundown on the practical use of cryptos out of the way, it's time to take a look at the reasons behind the call for regulations. While many would believe that betting cryptos is like gambling with a foreign currency, that's hardly the same. Cryptocurrencies are much different than traditional money in the sense that they are not controlled by any singular entity and the blockchain affords anonymity like no other payment method. With no central authority and completely disconnected from the traditional banking systems, cryptocurrencies are unique.
All of this is great for customers, but also leaves room for not-so-savory individuals to take advantage of this, as well. It is no secret that criminals have benefited greatly from the identity protection features of the blockchain. Ever since it was revealed that transactions on the Silk Road were conducted over Bitcoin, cryptocurrencies suffered a PR nightmare. After all, only criminals need complete anonymity. You have nothing to hide, right? Not only that, but the inherent anonymity of cryptocurrencies allows for some degree of money laundering to take place.
These are criminal acts that governments are trying to prevent and manage, but it can only do so much in the digital space without introducing regulations, such as KYC verifications. Like all regulations, these are also meant to deal with a problem that cannot be solved within the community that allows, maintains and even benefits from it.
Why the fear of regulations?
So if regulations are for the greater good, why are so many people afraid of them? As we mentioned cryptocurrencies are unique and in more ways than one. They also come with their own ideology, of sorts. When Bitcoin came out more than a decade ago, it followed the design of its creator Satoshi Nakamoto, who intended it to be a decentralized and private system, backed by its user base. As it happened, the cryptocurrencies to come took those tenants to heart, as did a good portion of the community.
Crypto-purists despise control of any kind and the idea of regulation is naturally abhorrent in their view. Even when DAO hack of the Ethereum platform caused the loss of millions, a good portion of the community was against the idea of a rollback, standing by the ‘Code is Law' principle. As a result, this user base split into two and we now have Ethereum and Ethereum Classic, the latter being an unchanged version of the original. This shows how committed some crypto fans are to the founding ideals behind the blockchain.
However, these arguments and the ones against regulations come from an ideological stance, rather than a pragmatic approach. As such, they should be taken with a grain of salt and a large one at that. Anarcho-capitalism is fun and all, but common sense dictates that we should not allow criminals to run their business unimpeded.
In all honesty, the regulations that crypto gambling expects to see will be no different than those the online gambling scene has been following for years. But now, we have the benefit of hindsight to know what worked and what failed. The new regulations will likely impede those in the wrong since legitimate platforms already follow similar guidelines. Therefore, it is foolish to assume that a few novel laws will bring the apocalypse upon the crypto gambling scene by themselves.
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