Gambling Industry Could be Bitcoin's Salvation

Published July 30, 2014 by Lee R

Gambling Industry Could be Bitcoin's Salvation

Despite recent scandals and bans, Bitcoin investors are hanging their hats on the use of Bitcoins as payment for online gambling.

As virtual currency Bitcoin continues to struggle for credibility, investors harbor hope that Bitcoin use can take hold most prominently in the online gambling sector.

Niche Still Sought

Recent blows to Bitcoin credibility include a scandal, a ban from a major e-commerce company, and the blocking by a US court of the sale of a major Bitcoin trading site. Nonetheless, Bitcoin supporters, investors, and entrepreneurs continue to find a financial niche for Bitcoin. Online gambling may well be that niche.

Mt. Gox Scandal

Mt Gox is the Bitcoin trading site which imploded in scandal. Created in 2009, Bitcoin values peaked in December 2013 at $1,151. Scandal erupted last February when Mt. Gox, a website relying heavily on Bitcoins to sell “Magic: The Gathering” cards, announced a shut down in all trading as a result of their Bitcoin trading mechanism being hacked.

This development saw a drop in Bitcoin overall value by over 50% to $534. Bitcoins have fluctuated post Mt Gox, plummeting to a low of $360 in April, but overall values have remained stable, with Bitcoin values at approximately $598 today.

Auction for Separation

The connection between the Bitcoin trading site and Mt. Gox is also potentially troublesome, as is owned by Mt. Gox ex-CEO Mark Karpeles. An auction of the Bitcoins domain name was scheduled at Heritage Auctions for Thursday, but has now been delayed y by court order.

Concurrent Lawsuit

The court ordered block stems directly from a concurrently existing lawsuit involving Mt. Gox and another former partner company, CoinLab. In the suit, CoinLab claims they are still owed money by Mt. Gox, proceeds which Mt. Gox can avoid forking over with the sale of the Bitcoin site domain name and other related assets.

US federal judge Marsha Pechman's approval of those terms of settlement resulted procedurally in a 14 day auction delay.

In terms of the hit to Bitcoin popularity, the Mt. Gox scandal was compounded by a Bitcoin usage ban imposed by payment service industry leader Neteller, a global digital currency leader.

Keys to Hope for Bitcoin

However, the Isle of Man continues to move forward with plans for full and cohesive regulation of Bitcoin usage, while other gambling operators are embracing the digital currency more and more, through such innovations as Bitcoin-dedicated poker rooms.

Bitcoin Investor Outlook

If Bitcoin takes hold in the online gambling market, then general reliance on Bitcoin conversion as a medium of currency could prove beneficial to Bitcoin investors. However, expecting Bitcoin to replace digital transactions may be overly speculative, because there is as of now no way to secure the value of the virtual currency that Bitcoin remains.

See also

The Impressive Growth In Online Gambling With Bitcoins

Gambling Industry is Thriving

Viva La Gambling!

Bitcoin and Online Gambling: Natural Partners

The Future of Unified Gambling Legislation

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