It’s impossible to elaborate on the influence of technology on gambling without cryptocurrency coming up. Blockchain payments took digital entertainment, such as iGaming, to a different level. They provided cheaper, faster and safer alternatives to traditional banking. Digital coins, including Bitcoin, made online sports betting more efficient than ever. Despite the advantages these digital assets offer, they have downsides. Cryptocurrency gambling is spreading fast. Use cases for virtual currencies keep growing, meaning more people are embracing them for various purposes.
Online sports betting is among the top uses for crypto. You can now easily find sportsbooks that accept dozens of coins. This growing popularity is why it’s important to learn everything about payment methods, including the bad and the ugly. Before venturing into crypto and using it for betting activity, know the potential pitfalls you could fall into. Understanding the risks prepares you since you are aware of what to watch out for. While digital coins vary across a wide spectrum, they typically function the same. Therefore, the risks apply to almost all of them.
Undefined Legal Framework
The biggest risk players take when betting on virtual currencies is the absence of proper legislation. Cryptocurrency isn’t legal tender in most parts of the world. So, governments find it difficult to regulate it. No public or private entity backs the currency. In other regions, Bitcoin and other coins are categorised as digital assets that are subject to certain laws. Due to the crypto’s complex regulatory tapestry, gambling operators that support the banking option carry the same risk. Yes, the most popular crypto bookmakers and casinos are licensed. However, it’s not mandatory. Since blockchain transactions are not regulated, operators aren’t required to have gambling licenses.
You’ll find that many crypto betting sites are under CuraƧao jurisdiction, which has the most lenient licensing requirements. Some betting platforms don’t even conduct KYC (Know Your Customer). Therefore, they harbour a high risk of fraudulent activity. Bad actors can create accounts on such websites and do whatever they want, thus compromising the safety of legitimate users. Cryptocurrency regulation is still in its teething stage, with governments, central banks and financial entities struggling to find common ground. A few countries have some form of regulation for digital currencies. Even in such places, however, users are not clear on what’s right or wrong. You risk noncompliance when you transact with crypto without understanding the full legal implications.
Security Concerns
One of the selling points of blockchain payments is robust security. The networks used to run crypto transactions are designed with the highest security standards. So, you might wonder how betting with digital currency could be unsafe. While the distributed ledger that records payments is tamper-proof, wallets and crypto exchanges are not. You need a wallet to store the keys used to authorise transactions. An exchange is where you buy, sell and trade with virtual coins. Hackers and other cybercriminals employ advanced techniques to steal funds stored digitally. They target the services asset holders use frequently.
Cyber attacks on crypto exchanges are not uncommon. Users have lost a lot of money due to security issues on these platforms. Online wallets are also risky. The slightest vulnerability leaves you open to attacks. You also have to worry about the cyber threats that gambling websites face. Generally, online bookmakers are desirable targets for cybercriminals due to the large amounts of data and funds they handle. The anonymity of the blockchain introduces another element. Operators find it difficult to identify real users and transactions, which endangers the platform and other customers.
Price Volatility
Virtual coins are inherently volatile, meaning their prices fluctuate constantly. Checking the performance of top coins over the past several months gives you an idea of the risk you are shouldering. In the morning a token might be worth $10, and by evening, the price could be $2. Cryptocurrencies react quickly to various market trends that affect their value. This instability could lead to significant losses when betting on sports. Maybe you win a handsome amount on an NBA game, but by the time you withdraw it, a decline in value for your preferred coin wipes out all your winnings. The same could happen to your bankroll.
An initial budget of $1,000 could be $200 less by the time you deposit it. Of course, the opposite is true. An asset could gain in a matter of minutes and boost your amount. However, it takes a serious understanding of the cryptocurrency scene to leverage price increases. A common solution is using stable coins. These assets are pegged to a fiat currency, like the US dollar or euro. Hence, a coin’s value remains practically the same. Nevertheless, the risk persists because stable coins aren’t foolproof. They can still crash under tough market conditions.
Using cryptocurrency for sports betting affords you several benefits. However, it also poses unique threats that you must consider carefully. A complicated regulatory framework, security issues and price fluctuation are only a few risks to factor in. Learning about the dangers you face helps you find effective solutions, such as enhanced safety practices, to mitigate potential harm.