As the crypto-currency Bitcoin continues to weather controversy, entrepreneurs are hoping that the use of Bitcoins will gain a foothold in the online gambling industry. On the heels of a scandal that continues to shake the struggling digital currency, one important e-commerce company has banned Bitcoin, and a U.S. court has stopped the sale of a major Bitcoin trading site. Though shaken, enthusiasts and business people still hope that Bitcoin can find a home in online gaming.
After the February implosion of Bitcoin trading site Mt. Gox, the crypto-currency seemed on the edge of failure. Bitcoin was created in 2009, and by December of 2013, it was worth a record $1,151. In February, Mt.Gox, a website created to sell “Magic: The Gathering” cards that had become one of the largest Bitcoin traders, reported that the trading of Bitcoins had been hacked, and shut down all trading. After that, the value of Bitcoins was more than halved. On February 25, the day that Mt.Gox announced they would halt all transactions, Bitcoins were worth around $534. Their lowest value since the collapse of Mt.Gox was around $360 in April. Today, Bitcoins are worth around $598. Now, an auction of Mt.Gox-related site Bitcoins.com that was scheduled for Thursday has been postponed.
Bitcoins.com, a website owned by Mt.Gox’s former CEO Mark Karpeles, was scheduled to have its domain name auctioned off by Heritage Auctions. The court order halting the sale comes from a lawsuit in which Mt.Gox is involved against former partner company, CoinLab. CoinLab asserts that Mt.Gox still owes money to the company, and by selling this domain name and other assets, Mt.Gox will avoid giving CoinLab the money that is owed. Marsha Pechman, a U.S. federal judge, agrees, and granted an order delaying the auction for 14 days.
Along with the hit that Bitcoin’s popularity took in the wake of the MT.Gox scandal, it has recently been banned by influential internet payment service NETELLER. Located on the Isle of Man, NETELLER is one of the leaders in digital currency transactions, specifically when it comes to the online gambling industry. The Isle of Man itself has become a center for Bitcoin commerce, and while other companies have made no moves to ban Bitcoin, and in fact are embracing it, the island is making moves to regulate the digital currency so the island can capitalize on it.
Though NETELLER has moved to ban Bitcoin, other companies have taken to the digital currency. In the United States, the World Poker Network has joined with Betcoin Poker to create a Bitcoin-dedicated poker room for players. Players deposit Bitcoins into the site’s system, converting them into U.S. dollars immediately and having no trouble withdrawing funds when ready. This could either become a huge problem or a nice boon for the Bitcoin industry. As Bitcoin users lose places to make their digital transactions, they could turn to these poker sites as a method of just changing their Bitcoins to dollars and cashing out of the system. Conversely, this could also bring people into Bitcoins, providing an entry point through these poker sites. Of course, there is a chance that Bitcoin could prove too popular, and paint itself into the corner of being only for gambling, failing to reach the mainstream at all.
As commerce turns increasingly online, the troubled digital currency Bitcoin rests its hopes on online gambling. While the online gambling industry may be Bitcoin’s savior, there is also the chance for online gambling to force Bitcoin into a niche, keeping it out of the mainstream.
Commentary by Bryan Levy