“Bitnplay” — a new online poker room that will provide real-money play using the cryptocurrency Bitcoin — is set to launch in February of this year.
The idea of side-stepping government backed currencies — and their regulations — has something of a cult following amongst the more technologically savvy portions of the poker community.
It remains to be seen if the cryptocurrency online poker model can be sustainable over the long-term. However, new investment will go a long way toward determining if there is in fact a viable business strategy here for the industry moving forward.
Rake Tokens Offered
Starting an online poker room is a project with high barriers to entry. It’s a capital intensive enterprise where quickly establishing economies of scale is essential to success.
To meet these requirements, Bitnplay will be selling non-expiring “tokens” that entitle the holder to receive 100% rakeback at the site. Tokens will be fully transferable (they are marketed in company literature as an investment), with a peer-to-peer exchange set up where they could be traded at market value. The initial price is being set at two Bitcoins per token (currently valued at approximately $576).
If the plan is a success, it would raise start-up capital while simultaneously guaranteeing the site a player base with a vested interest in advertising to other poker players from the moment that cards are in the air.
Regulation? What Regulation?
The main advantage of a Bitcoin-only poker room is that due to the nature of cryptocurrency, there is no need to “deposit” a sum of money to be held in trust the way a traditional online casino would do it. Instead, the site would only need to verify ownership of the amounts being played with by players at any given time.
This is a change from the current model in two ways. First, no third-party would be in control of a large amount of funds that are not being used, eliminating the possibility of a “Black Friday” scenario. Second, the banking system is completely bypassed, eliminating the need for “payment processing” that is subject to government regulation.
Nature of Player Pool Could Be Problematic
Bitnplay lists part of its business strategy as appealing to non-western markets where the desire to play poker is strong, but the banking sector currently makes payment processing a barrier:
We will actively enter financially under-developed countries with sufficient incomes but ‘frictional payment services.’ In these markets we will use the BCN payment system to simplify payment transactions and circumvent the difficulties of playing online poker.”
The specific countries envisioned are not mentioned, but the company plans to initially focus on South America, Africa, and Asia. While it’s undeniable that untapped markets do exist in these areas, their viability for business profits is far from certain. Currently, grinders from areas where the standard for a decent daily wage is much lower than in western countries are being blamed for making tight, aggressive play that gives no real action the norm at micro and lower-stake games.
Deliberately targeting players from such areas to shape the site’s ecology will either be a stroke of genius or folly.
A Pipe-dream? Or an Idea Whose Time Has Come?
Whether the model will be a sustainable niche in the long term — or be successful enough to compete with traditional models of online payment — remains to be seen.
Bitnplay is not the only site seeking to make inroads into the market. “Breakout Gaming” — backed by some of the more notable names in the game — is another cryptocurrency site set to launch in the near future. All sites currently using this model are counting on the fact that because online poker players tend to be more in-tune with the latest technology and open to Internet culture, they will be quick to embrace cryptocurrencies as they move more and more toward the mainstream.
The founders of Bitnplay state this clearly in their “partner manifesto”:
“Inevitably, online poker players will embrace Bitcoin as a payment method.”
Whether or not such a development is inevitable or not, it still remains to be seen if the poker-playing masses are ready enough to make the gamble a success today.