Unless you spent 2017 living under a rock, you’ve probably heard all about Bitcoin by now.
Part currency, part investment vehicle, Bitcoin is the latest tech trend to move beyond niche status and into the mainstream. Financial experts everywhere are debating the merits of cryptocurrencies like Bitcoin, while eager users continue to buy it, sell it, and spend it.
But while the rest of the world is finally waking up and taking notice, the online poker community has long recognized the power and potential of Bitcoin.
One of the earliest vehicles for Bitcoin adoption was the iGaming industry, which benefited immensely from cryptocurrency’s fundamental concept. With anonymous exchanges between customer and provider, zero third-party oversight from banks and financial institutions, nearly instantaneous transactions, and the removal of fees tacked on to deposits; Bitcoin has transformed how online poker is played.
If you’re an online poker player looking to convert your bankroll to Bitcoin or simply use the stuff to make your hobby a little easier, this page was written with you in mind. I’ve recently taken the plunge myself – setting up a virtual wallet, exchanging fiat currency for Bitcoin, and depositing to my favorite online poker sites – and I’ve been thoroughly impressed with the process every step of the way.
On that note, I’ve assembled this step-by-step guide to playing online poker with Bitcoin as a way of paying it forward. You’ll learn about the basics of Bitcoin and cryptocurrency, the ways online poker sites and their players can benefit from adoption, and how to fund your account. From there, my hope is that readers enjoy the same experience I did, meaning no hassles from banks blocking transactions, no fees tacked onto deposits, and most importantly, the excitement that comes with hopping aboard the Bitcoin bandwagon.
Step 1 – Take a Crash Course in Cryptocurrency
Before embarking on your Bitcoin journey, you should take some time to research exactly what cryptocurrency really is.
To make a long story a bit shorter, Bitcoin was invented in 2008 by a mysterious figure known only as “Satoshi Nakamoto.” Widely believed to be a pseudonym used to protect the inventor’s identity, Nakamoto published a white paper entitled “Bitcoin: A Peer to Peer Electronic Cash System.”
The purpose of this white paper was to provide a proof, in mathematical terms, of an idea put forth ten years earlier by computer engineer Wei Dai. As envisioned by Dai, the age-old art of cryptography – or encoding messages – could be used as the basis for a new form of currency and commerce.
In the white paper, now spoken of in reverential tones by Bitcoin adherents, Nakamoto outlined his vision for a decentralized system of currency designed for the digital age. Using a game-changing technology known as the “blockchain,” Bitcoin allows users to exchange digital currency on a peer-to-peer basis, removing the role of third-party facilitators like banks and credit card companies altogether.
Here’s how Nakamoto himself described the setup in the original white paper:
“A purely peer to peer version of electronic cash would allow online payments to be sent directly from one party to another without going through a financial institution.”
In the most basic terms, Bitcoin was designed to work like cash when buying and selling over the internet. In the physical world, people are free to engage in commerce directly by exchanging cash with one another. But in the online realm, money had to be transferred electronically through platforms like PayPal or Venmo, entities which are traditionally known as “trusted third parties.” By inventing Bitcoin, Nakamoto set out to create the internet’s version of cold, hard cash.
Without diving too deep into the technical jargon, a Bitcoin is simply the byproduct of encoded transactions posted to the blockchain.
If that’s still confusing, just think about it like this: whenever a Bitcoin is exchanged as part of a transaction, information about the buyer, seller, and the amount is encoded to ensure strict privacy. To confirm the terms of each transaction, folks known as Bitcoin “miners” use high-powered supercomputers to decrypt the code. A decrypted line of code is added to the blockchain – the running, anonymous ledger of every Bitcoin transaction ever conducted – approximately six times each hour.
And for each block of transactions that a miner decodes and confirms, a minuscule amount of additional Bitcoin is created and added to the economy.
All told, the blockchain is capable of producing 21 million Bitcoin before that finite supply is exhausted.
Unlike traditional fiat currencies like the US dollar or British pound, which are ostensibly backed by a government’s reserve of gold and produced on an infinite scale, Bitcoin derives its value from this self-enforced scarcity. Only 21 million Bitcoin can possibly be produced, creating a limited supply that ensures users have the incentive to buy and sell.
Initially, a single Bitcoin was valued in cents, and then dollars, before an explosive increase in value over the last year. As you may have noticed by now, Bitcoin’s soaring value – which reached a peak of $20,000 in late 2017 before settling at around $14,000 – has garnered mainstream media coverage. Accordingly, casual users who are interested in Bitcoin’s investment potential have bought in, amassing reserves and waiting for the price to climb before cashing out.
The fate of Bitcoin remains unclear, as Nakamoto never intended his creation to serve as a speculative investment. The entire purpose of Bitcoin and other cryptocurrencies is to make online commerce easy, efficient, and anonymous – not to generate profits measured in the very fiat currency Nakamoto hoped to replace.
For that reason, the online poker community represents a bastion of Bitcoin’s fundamental goals. Players exchange their fiat currency for Bitcoin, use it to bypass intrusion from banks and other third parties, and shield their identity from prying eyes.
That’s exactly what Bitcoin was designed to do, and now that you know the score, you can get in on the fun.
Step 2 – Set Up Your Virtual Wallet
Before you can use Bitcoin, you need to obtain some for yourself.
The easiest way to convert your fiat currency into Bitcoin is through a cryptocurrency exchange. Sites like Coinbase, Poloniex, and Bitstamp are among the most popular exchanges out there today, and they strive to make the process as simple and straightforward as possible.
As the name suggests, an exchange is nothing more than a platform for people to buy and sell Bitcoin. A seller out there lists their lot, so to speak, and as the buyer, you list the amount you’re looking to buy. Once a match is made, your dollars are sent to the seller in exchange for their equivalent value in Bitcoin.
As of this very moment, the exchange rate comes to USD $1 > $15,000 BTC, which should help make the math easier for the sake of explanation.
Let’s imagine you’re looking to start out with a $1,000 bankroll on your favorite online poker site. After firing up a cryptocurrency exchange site, you purchase $1,000 worth of Bitcoin from a seller, which comes to 0.07 BTC.
Now that you have some Bitcoin to work with, you’ll need somewhere to store it securely, and that’s where a Bitcoin wallet comes in handy.
Think of a Bitcoin wallet as just another digital representation of your financial reserves. After establishing your own Bitcoin wallet, you’ll be assigned a “private key,” which is yet another long line of encoded text that serves as your wallet’s private password.
A private key consists of 256-bit encryption, and appears as follows in text form:
You’ll find dozens of virtual wallets out there today, either as a software download or straight through the web. The list below highlights several of the most commonly used Bitcoin wallets:
|WALLET||SOFTWARE OR ONLINE|
|Armory||Software and Web|
|Copay||Software and Web|
|Hive||Software and Web|
With your Bitcoin now safely tucked away in your virtual wallet and protected by your private key, you’re free to spend it or acquire more at your leisure.
Step 3 – Identify Bitcoin-Friendly Online Poker Rooms
This step is probably the easiest of the bunch, because so many online poker rooms are clamoring to add Bitcoin capability.
Ever since the US government authorized the Unlawful Internet Gambling Enforcement Act (UIGEA) of 2006, which banned companies from conducting online gambling-related business, poker sites and players alike have struggled to escape the long arm of the law. If you’ve ever had your credit card transaction declined when trying to make a deposit, you know exactly what I’m talking about.
For a while there, it became quite difficult to conduct online poker transactions using traditional means. Players were forced to purchase gift cards or use services like Neteller to bypass the prying eyes of banks and financial institutions.
With the advent of Bitcoin, online poker rooms finally had a way to conduct deposits and withdrawals without the banks getting in the way. These transactions are guaranteed to go through, and even better, the lack of bank involvement means no fees charged to pay off the middleman.
With 2018 now upon us, almost every major online poker platform has added Bitcoin functionality. Whether you prefer Bovada, America’s Card Room (ACR), or the 888 Poker network, Bitcoin has become the preferred deposit method offered by operators.
Once you’ve decided on the best online poker room for you, depositing with Bitcoin involves the same basic process you’ve been using all along.
Step 4 – Deposit Funds from Your Bitcoin Wallet
After registering your online poker account, head for the Cashier or Banking section of the site to initiate a deposit.
You’ll see the usual tabs for debit and credit card deposits, along with wire transfers and other outdated methods. But along with those, you’ll also find the familiar Bitcoin logo, so go ahead and click there to begin.
Next, the site will provide you with a one-time-use private key that provides access to its own virtual wallet. Armed with this long string of encoded text, you’ll head back to your Bitcoin wallet and set up the terms of a transaction. The private key provided by the site establishes them as the “buyer” of your Bitcoin, but rather than send money back to your virtual wallet, the site simply adds the funds to your poker account.
From there, the entire transaction is encoded once more, before a Bitcoin miner working somewhere in the world decodes the text and adds the newly confirmed transaction to the blockchain. This process can take a few minutes, as confirming any Bitcoin transaction requires the use of supercomputer processors, so don’t expect to start running bluffs and busting opponents instantly.
Even so, a few minutes later, your online poker account will be credited with $1,000 in U.S. dollars (or your site’s preferred mode of fiat currency).
At this point, you’re fully loaded and ready to play as you normally would.
Step 5 – Withdraw Funds to Your Bitcoin Wallet
After you’ve terrorized the tournament tables and crushed the cash games, your bankroll has ballooned to $5,000. At this point, you’d like to enjoy the fruits of your labor on the felt, so you decide to initiate a withdrawal.
For longtime online poker players, this step of the process once proved to be the most difficult. Poker rooms were more than happy to take your deposit, but paying cash-out requests wasn’t always as easy, namely because banks and other financial institutions remain hesitant to cash checks issued by iGaming companies.
This is why Bovada, ACR, 888 Poker, and all the rest were forced to doctor their withdrawal checks. Rather than pay players out directly, these sites concealed cash-outs as payments for “freelance services rendered” and other disguises designed to trick the banks.
Suffice it to say, all of this spy craft and subterfuge isn’t conducive to running a successful business. Indeed, many casual players were put off by the “less than legal” means used to move money to and from an online poker room.
And that’s where Bitcoin comes into play.
When you initiate a withdrawal request using Bitcoin, the process is just as quick and easy as it was when you first deposited. Just head back to the Cashier or Banking page, locate the Bitcoin tab, and click through to the same dropdown menus you used before.
From there, enter your own virtual wallet’s private key as the Recipient, along with the amount (in USD or another fiat currency) that you’d like to withdraw. The site already recognizes itself as the Sender, so it will provide its virtual wallet private key to complete the transaction.
Once again, a miner toiling on a supercomputer somewhere will decode and confirm the transaction and add it to the blockchain. When they do, your virtual wallet will receive the corresponding amount as Bitcoin, and you’ll be right back where you started – with a bit of profit to boot.
One thing to keep in mind, however, is the fluctuating value of Bitcoin.
A single Bitcoin was worth just over $990 on January 4, 2017. Fast forward one year later, and that value has soared to just under $15,000. And within the span of mere hours, the price can jump or shrink by a few thousand bucks at a time.
In the example used earlier, one Bitcoin was valued at $15,000. Using that same exchange rate, your $5,000 cash out would return 0.33 BTC to your virtual wallet.
But what if the price of Bitcoin changed between the date you deposited and the date of your withdrawal?
Well, that’s all part of the Bitcoin ride, if I’m being honest. While fiat currency does have decided drawbacks, one of its main benefits is stability. Aside from the slow scourge of inflation, one dollar is worth one dollar, whether you spend it today, tomorrow, or a year from now.
Bitcoin users, on the other hand, have to cope with drastic swings in value.
Perhaps the price of Bitcoin fell to $12,000 during the month you spent grinding online. In this case, your $5,000 withdrawal would now be worth 0.42 BTC. You’d have more Bitcoin on hand, but that reserve would be worth less when exchanged for dollars.
On the other hand, if Bitcoin spiked to $18,000 in the interim, your $5,000 cash-out would return 0.28 BTC to your virtual wallet. You’d have less Bitcoin to work with, but what you do have is worth more than it was when you started this journey.
For this reason, online poker players who use Bitcoin for banking purposes should always be mindful of the exchange value.
Step 6 – Use Common Sense and Stay Safe
Whenever a new technology inspires rapid adoption and demand, inviting speculators to invest in hopes of turning an easy profit, pundits are quick to label the new trend as a “bubble.”
Those dot com startups that were all the rage in the late ‘90s drew billions in investment. But for every eBay or Amazon, hundreds of sites crashed and burned, creating one of the more infamous bubbles in memory.
More recently, the resurgent housing market of the mid-2000s created an artificial bubble, sparking a foreclosure crisis and the Great Recession.
Many self-proclaimed experts out there today have labeled Bitcoin as the next great bubble, and to be quite clear with my readers, I don’t know if they’re right.
I tell you this not as a word of warning against using Bitcoin for online poker. In fact, I’m a big believer in the blockchain and cryptocurrency as the wave of the future for online commerce.
With that said, the investment market that has sprung up so rapidly around Bitcoin does leave me concerned about the looming threat of a bubble. When the price peaked at $20,000, longtime holders of Bitcoin were shouting from the rooftops, beckoning new investors to get onboard the gravy train. But within the span of a week, that $20,000 valuation plunged to under $14,000 – representing a contraction of 30% of the entire market.
Online poker players know all about swings and variance, but 30% dips in a matter of days are drastic, to say the least.
Common sense should tell you that using your Bitcoin-based online poker bankroll for anything other than that isn’t the best idea. It’s a great way to make deposits and withdrawals, that much is clear, but once you’ve amassed winnings and withdrawn them to your virtual wallet, it’s probably best to convert your Bitcoin back to fiat currency.
That choice is up to you, of course, and sitting on a stash of poker winnings in Bitcoin form might just make you rich when it’s all said and done. On the other hand, if the bubble does burst and Bitcoin’s price plummets, that big-time tournament score can be devalued in a hurry.
As with any new technology, and financial vehicle for that matter, do your due diligence and put in the research before putting all of your eggs in the Bitcoin basket.
This step-by-step guide to playing poker with Bitcoin offers a complete education in using the most popular virtual currency to play poker online. Once you learn the benefits of using Bitcoin and how easy it is, you might never go back to using regular currency to play.