With Bitcoins being used as a currency at a few online poker sites and being considered still by others, the recent seizure of accounts at the world’s largest Bitcoin exchange by the Department of Homeland Security (DHS) is closely being watched by the poker community.
Many are wondering if the shutdown of the Tokyo-based Mt. Gox will be the death knell of the 4-year-old Bitcoin in online poker. The digital currency is currently used by U.S.-friendly Seals With Clubs and mobile operator Switch Poker. Another site expected to launch this summer, Infiniti Poker, also plans to employ the use of Bitcoin currency for players in the U.S., while providing additional options for rest-of-world customers.
In light of the attack on Mt. Gox by the feds, it certainly doesn’t look promising for Bitcoin usage for online poker sites that cater to the U.S. market at the present time. However, the DHS prefers not to use the word “attack.” It is attempting to enforce registration of Bitcoins in an effort to control the digital currency.
I would imagine that it would be hard for U.S. players to embrace using Bitcoins as a currency if they have not already done so. The whole idea surrounding the regulations currently underway in various states such as Nevada and New Jersey is to protect players and their funds. With the DHS moving in, those funds in the form of Bitcoins certainly don’t look very safe.
The use of Bitcoins, which is not regulated by any governments, may scare many U.S. players away, at least right now. Especially the ones who are still waiting for reimbursements from Full Tilt, or those who played at Absolute Poker and UltimateBet. The latter will likely never see another dime. Those players won’t be all that eager to transact in a currency that the government is attempting to get its paws on. While there is, of course, no connection between a Bitcoin exchange and the Black Friday debacle, there are still millions of U.S. players who feel burned and lack confidence in using a non-regulated currency.
But just because Bitcoins are being targeted by the U.S. doesn’t mean that players in other countries won’t be able to use the online currency as an option for transacting funds at online poker sites. Governments of other countries do not seem as intent as the U.S. in grabbing some sort of control of the Bitcoin market. In fact, countries such as Canada seem to have embraced a hands-off policy regarding the digital currency.
The fact that Mt. Gox is seen as an “unlicensed money service business” by U.S. authorities does not extend to Canada. A number of Bitcoin exchanges north of the U.S. border received letters from the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) that put the exchange operators’ minds at ease by informing them of being exempt from any money-laundering laws, the Register reported.
The letter to the Canada exchanges said that “the transfer of funds is simply a corollary of your actual service of buying and selling virtual currency. Therefore, you do not have to register your entity with us.”
Should the U.S. pass some sort of Bitcoin legislation, American investors may find themselves trading in Canada or other countries to avoid the U.S. regulations. That’s eerie similar to what many online poker players have done following Black Friday — relocated elsewhere. Again, there is no corolation to the April 15, 2011 shutdowns and Bitcoin trading. I’m merely making an observation.
The U.S. is very intent on stamping out money laundering and believes that unregulated Bitcoin trading is a prime way for criminals to move illicit funds. The feds liken digital currency trading with financial operations such as Western Union, who are required to report transactions greater than $10,000 in order to stop money laundering.
So the question remains, is there a future for Bitcoins in the world of online poker? That seemingly depends on who you talk to. Obviously, recent events at Mt. Gox do not bode well for expansion of Bitcoin usage in the U.S. online poker market at this moment. But that doesn’t necessarily mean that other parts of the world might not someday embrace Bitcoins in online poker.
But let’s forget about poker for a moment and contemplate whether Bitcoin trading itself will see a long future. Mike Caldwell, who created Casascius Coins, recently told theverge.com that Bitcoins will survive any future cyber attacks and continue to proliferate unless people lose interest. He stated that Bitcoin is the “embodiment of the idea that we now have the technology to democratize money.” As long as the demand is there, Bitcoin will survive unless something else comes along “that does a better job,” Caldwell added.
That sentiment was not echoed by Jack Alderson, an entrepreneur who claims that “Bitcoin is already dead.” Alderson made a good deal of money in Bitcoin trading, but is now defending some lawsuits related to those profits.
Let’s remember that Bitcoin has already survived huge cyber attacks, various technical glitches, and severe price fluctuations that made even the calmest traders succumb to panic attacks. After the media began earnestly reporting on Bitcoin about two years ago, the value of Bitcoins jumped to over $30, only to bottom out under $2 four months after. In recent months, the currency skyrocketed to over $200 (making many millionaires in the process), and now rests around $120.
Indeed, everyone seems to have a differing opinion on Bitcoin’s prospects of longevity. Whether or not the digital currency does survive remains unanswered. But the most positive remark seemed to come from trader Marak Squires, who attended the Bitcoin 2013 convention in San Jose along with more than 1,000 other Bitcoin devotees.
Of the future of Bitcoin, Marak said, “It only dies if you turn off the Internet.”