Could Bitcoin Revolutionize Online Poker?

Monday, May 30, 2011

In the aftermath of Black Friday there have been whispers about funding online poker with Bitcoin, the scrappy digital currency that's being touted as everything from a toppler of governments to the greatest hope for human liberty in the history of forever. Slate Magazine recently pointed out the online poker connection:

The most immediate risk, though, seems to be that Bitcoins will facilitate transactions for criminals, online poker players, tax-evaders, pornographers, drug dealers, and other unsavory types tired of carrying around a Vermeer.

What they didn't point out is that people have been playing online poker with Bitcoins since last year over on Betcoin, the world's first BTC-driven poker site. Not normal people, granted, but still. People! Poker. Bitcoin.

Betcoin.

Betcoin is experimental online poker for the Bitcoin hipster enthusiast. You deposit with Bitcoins. Play with Bitcoins. Cash out with Bitcoins. Do inexpert chip tricks with Bitcoins (no, thankfully not). Like in the old joke, it's Bitcoins all the way down. But make no mistake: Betcoin is real-money poker, albeit at one remove from real money poker as most players know it.

  • No player information is collected. Choose a handle and a password and provide an optional email address.
  • No banks or payment processors are involved. Deposits and cashouts are done natively with Bitcoin.
  • No financial records are leaked. Bitcoin transfers are anonymous and decentralized.

Now before you rush off to Mt. Gox or one of the other Bitcoin exchanges to trade in those increasingly leveraged dollars and Euros for ideologically pure Bitcoins, a word to the wise: Betcoin is no-frills browser-based poker, and Bitcoin cryptocurrency, rather than cutting-edge software or juicy promotions, is the star of the show.

If you're looking for state of the art online poker alienware (20x multitabling, local hand history generation, support for Rush, etc.), Betcoin is sure to disappoint. It won't fill the barren hole left by Full Tilt, Poker Stars, or the other sites that have left the U.S. market. As of this writing, Betcoin is still a proof of concept. But it's a monster proof of concept, and win or lose, it demonstrates that a technology like Bitcoin could solve the Great Online Poker Cashflow Problem once and for all.

Did I say the Great Online Poker Cashflow Problem? Sorry, I meant Bitcoin could revolutionize online gaming as we know it. Bitcoin could evolve into the real-money transfer medium of choice for an entire industry of gamers and games, including games that weren't traditionally monetizable. Ever dreamt of playing Civilization or Modern Warfare for $20 a game? Bitcoin could make it happen. Ever yearned for large-scale gaming economies like the one featured in the Apprentice Adept series? Bitcoin could make that happen.

But back to online poker. Let's say you wanted to deposit $100 (or equivalent) at your friendly international poker site. Here's how it could work, under a hypothetical Bitcoin regime:

  1. Purchase $100 worth of Bitcoins from one of the exchanges.
  2. Request a unique Bitcoin receiver address from the poker site (via the Cashier window).
  3. Send the Bitcoins to the indicated receiver address.
  4. The poker site software receives the Bitcoin deposit.
  5. The Bitcoins are automatically converted back to the originating currency.
  6. $100 is deposited into the player's account.

Bitcoin would essentially be a transfer mechanism to flow real-money dollars into and out of the poker economy. Players would never send money directly to a poker site, and poker sites would never sending money directly to players: everything would be handled through those funky-anonymous Bitcoin receiver addresses.

Now apply that same concept to every industry vertical and every walk of life. Bitcoin promises to usher in a new era of "freecommerce" in which you'd be able to send money to any person or business in the world directly, without need for Mastercard, Western Union, or other middlemen. And with disruptive technologies like Paypal and Square hitting the scene and enjoying runaway success, it seems clear that online poker players, gamers, and the world are ready for some sort of enabling Promethean tech like Bitcoin.

But is Bitcoin ready for the world?

  • The volatility of Bitcoin currency could discourage its adoption, certainly by poker players, who deal with enough in-game volatility without having to worry about massive fluctuations in base currency.
  • The Bitcoin infrastructure is vulnerable to government intervention even if the core technology is not. It's hard to call a currency "government-proof" or "ruggedized" when its major exchanges live on the .COM domain and when those exchanges depend on regulated e-banking sites like Dwolla.
  • Bitcoin lacks a clean nominal unit of exchange. The Bitcoin economy can grow indefinitely, but the number of Bitcoins is hard-coded at 21 million. If Bitcoin ever achieves scale, those 21 million Bitcoins (less than half of which have been discovered) must stretch to represent billions if not trillions of dollars of "value", pushing us down into messy microtransactions for fractions of a BTC. While this isn't a big deal mathematically, it's another psychological speedbump to adoption.
  • It's unlikely that existing poker sites will move to support Bitcoin en masse anytime soon, especially given the actions of Black Friday. There are logistical, legal, political, and development hurdles to overcome, even assuming that widespread Bitcoin adoption is feasible for online poker in the first place.
  • It's not proven that Bitcoin can scale. It works as a niche currency for technophiles, but everything is fast for small N. If Bitcoin ever went mainstream, Bitcoin's broadcast-every-transaction-to-everybody infrastructure may turn out to be a bottleneck.

Bitcoin isn't the first anonymous cryptocurrency to come down the pike, after all, and it won't be the last. So while the geek in me is excited by Bitcoin and wants it to succeed, the jaded pessimist in me thinks that people tend to do what's easy, and mainstream currencies will always be just a little bit easier than Bitcoin, especially once the governments and financial institutions of the world get a dose of Jason Calicanis:

Bitcoin is a P2P currency that could topple governments, destabilize economies, and create uncontrollable global bazaars for contraband.

While I'm not willing to bet against Bitcoin just yet, I won't actually be betting with Bitcoins anytime soon, either. Like a rogue API call on an errant worker thread in a non-service-patched version of Windows, Bitcoin is operating squarely in Undefined Territory. So sit back, visit the Bitcoin Faucet for some free Bitcoins, read up on the wild and wooly world of Bitcoin currency mining, and keep your fingers crossed that Bitcoin manages to carve out a modest future for itself as a legit payment solution. And maybe then we can start talking about revolutionizing human liberty...starting of course with those $20 heads-up Civilization matches.

Tags: poker legislation, Bitcoin, Black Friday, online poker, poker

24 comment(s)

Nice posting but to me the interesting question is why the poker sites didn't invent Bitcoin? WTF? If a virtual currency had been introduced early enough in the online poker "lifecycle", UIGEA, Black Friday, none of that mess would've happened. Seems like the only "innovation" the sites did was "innovating" the stuff that would line their pockets tomorrow. As stewards of the game they've been DISgraceful.

Great post, as usual!

Nice post! Very well balanced.

It's hard to call a currency "government-proof" or "ruggedized" when its major exchanges live on the .COM domain and when those exchanges depend on regulated e-banking sites like Dwolla."like Dwolla.

Are you familiar with namecoin too? I can envisage a time where poker sites operate on namecoin's .bit or even .onion sites, with bitcoin being used by them as you have described. They should be sufficiently difficult to shut down, if it ever comes to that.

It's an exciting time.

Nice to see you posting - I think Bitcoin is a game changer.

Can t wait to see what Bitcoin does for video game competitions. You can already join different an "professional" circuits for games like TF2. If I understand Bitcoin correctly, this would mean any player could set up a $5 GoW tourney and invite his friends. Video games are about to get a lot more interesting =)

If this does go viral and the number of them does stay limited it looks like a huge investment opportunity to me :)

Between bitcoins and algrithms that allow card dealing among peers without a third party (see http://en.wikipedia.org/wiki/Mental_poker#Shuffling_cards_using_commutative_encryption) the need for any commercial poker sites will become moot. Poker could be played via social networking sites and things like rake and holding accounts would be gone. Poker companies make a pile from having all your cash 'resting' in their accounts, hundreds of millions between the big 3 (plus, of course, the risk of them never letting you cash out of said accounts, are you listening FT!). Secure funds transfer, cryptographically secure shuffling and dealing and a social network based reputation system will allow a real poker community to evolve with out all the parasitic commercial poker sites. If they survive it will be because they provide valuable service outside of the actual game play etc.

Bitcoin is fascinating but doomed. See what Adam Cohen said on Quora (http://www.quora.com/Is-the-cryptocurrency-Bitcoin-a-good-idea/answer/Adam-Cohen-2) and then notice the EFF stopped accepting donations in BTC.

+1 for Adam Cohen's comments.

Interesting article. I presented bitcoin to the online gaming community during a KPMG conference in Gibraltar, which is the center for most of the world's online poker companies. Bitcoin is indeed the digital representation of the casino chip! Since online gambling is legal in most places outside the US and other payment methods work fine, executives did not see the pressing need for bitcoin; however, bitcoin is ideal in jurisdictions that target the payment method.

http://themonetaryfuture.blogspot.com/2011/03/monetising-game-play-on-social-network.html

Can wait to see what Bitcoin for video game competitions. And can reach different "professional" games like TF2 circuits. If I understand Bitcoin mean a player could create a $ 5 GoW tournament and invite their friends. Video games are about to be much more interesting =)

The big underlying issue is only lightly touched upon in this article: money laundering.

Gambling of all kinds, including poker (and perhaps large portions of the financial services industry) provide excellent means to move money from one location to another while making it difficult to trace. An anonymous, untraceable method of transferring value such as Bitcoin will always be at odds with the law enforcers.

Currency fluctuations and perceptions of insecurity may be the biggest hurdles to Bitcoin taking over the online gaming world but none of this would be an issue if online poker weren't in the middle of the US government's battle against the proceeds of crime.

Maybe one day we'll see www.poker.gov.

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I believe that bitcoins are going to change the world. I recommend that everyone read up about them. If you are interested in buying/selling bitcoins, I personally use and recommend http://www.tradehill.com - they have lower fees than the main exchange (mtgox), and their website seems more professional IMHO.

Also, I have a code that will get you 10% off trading fees there for life: TH-R1168

Enjoy!

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Try to image a totally decentralized poker without any fee :) https://bitcointalk.org/index.php?topic=1487.0

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クリントン米国務長官は4日、ミャンマーの国会補選実施などの民主化努力を評価し、同国に対する金融サービス投資禁止や政府高官の渡米禁止など一部制裁の緩和措置を取る用意があると発表した。また、駐ミャンマー米大使を近く指名すると明らかにした。  民主化運動指導者アウンサンスーチー氏と同氏率いる国民民主連盟(NLD)が補選で圧勝したことを受け、制裁緩和に着手する姿勢を示すことで、一層の民主化を促すのが狙い。ただ、緩和の対象を限定し、全政治犯釈放や北朝鮮との軍事協力停止を含めた改革を推進するよう圧力を維持する方針も示した。

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