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Cryptocurrencies and the World of iGaming: You Decide

More and more iGaming companies are introducing digital currency as a method of pay — is  cryptocurrency the future of the industry?

Online gaming has come a very long way in the last decade. Several companies have released countless games that can be played online from anywhere in the world, bringing communities closer and like-minded fans of video games together on a neutral platform. Day by day, access to online gaming becomes much easier, more accessible and even more functional as the online experience of video gaming continues to progress. A seemingly endless supply of online games of all categories, from car racing to full-metal action, are released almost every few weeks, adding even more to the world’s library of gaming gems.

 

Enter the Bitcoin

Bitcoin, the cryptocurrency taking the world by storm, has been a part of gaming for quite some time now, with the popular currency becoming more and more prevalent in online transactions. In a sense, bitcoin is the perfect companion to online gaming. The fact that this digital currency was created specifically for online use can be divided endlessly and can be paid out anonymously to deter identity theft or fraud makes the currency perfect for gaming in every sense.

Take downloadable content (DLCs), for example, they have become a standard for almost every online game released in recent years. DLCs are additional content a person can download to add even more gameplay to their video game of choice, and gaming giants like Microsoft’s Xbox have already implemented bitcoin as a method of payment as opposed to conventional currencies and bank transactions.

Online gambling sites like Bitcasino allow you to make wagers and bets when you deposit bitcoin into your casino account and often reward deposits with substantial welcome bonuses. Online casinos benefit from the cryptocurrency, which makes online gambling much easier due to the speed, ease and accessibility of transactions. For these reasons, bitcoins’ uptake has seen a whopping 500% increase this year alone as more companies, iGaming, gambling platforms and stores introducing the digital currency as a method of pay.

Because many developing countries don’t have access to traditional methods of banking or the means to pay for online products like DLCs and online casino gambling, bitcoin is the perfect solution. Avoiding credit cards, bank procedures and more time-consuming transactions, anyone can simply tap into their bitcoin wallet and purchase any gaming product they like at unparalleled speeds. Cryptocurrencies open up a whole new world for online gaming, allowing more players to access games and additional content much easier and without worrying about unavailability or transaction issues.

 

Is it the future of iGaming?

The biggest question often asked is: “Are cryptocurrencies like bitcoins the future of iGaming?” Judging from its recent sky-rocketing and rise in popularity, it would seem so. Bitcoin means a whole new page for iGaming. Mass amounts of players and audience bases all over the world, which were previously untapped due to the barriers mentioned previously, mean a much larger market and a greater flow of money. A person looking to play a casino game who would otherwise be unable due to a lack of sufficient banking structure can now bypass the tedious walls of everyday payment methods like debit or credit cards in a matter of minutes with bitcoin. Connecting players to gaming online is easier, seeing that pay-to-play games are now actually reachable.

As cryptocurrencies continue to become more convenient, easier to access and implemented in online gaming and gambling platforms, it’s safe to say that the perfect answer to everyone’s gaming issues is in these invisible online currencies.

 

 

Malta as the Upcoming Blockchain Capital of Europe

Blockchain, Cryptocurrency and Other Usage in the Gaming Industry

Blockchain is without any doubt one of the technologies most talked about in the world today.
The Maltese Government has recently announced a drive to promote innovation and to make Malta the blockchain capital of Europe. Being at the forefront of innovation in the gaming sector, but also enhancing Malta’s reputation and economic activity in other areas of the economy is crucial.

Cryptocurrencies, such as Bitcoin, Ripple or Etherium, just to mention a few, make use of blockchain technology. Essentially, they are digital money in which computational algorithms rather than central banks or financial authorities, are used to regulate the generation of units of currency and verify the transfer of funds.

The authority’s approach to the acceptance of cryptocurrency as a form of payment using a controlled framework (as a test and learn environment) is a sensible step forward that balances risk with opportunity through a well thought out and coordinated initiative.

Blockchain, however, is not just limited to cryptocurrencies in its adoption and usage. The technology provides an innovative model, which along with the world wide web, delivers an infrastructure for the recording and verification of data on a distributed platform. We are now seeing the latest wave of blockchain, generally referred to as blockchain 3.0, which embraces wider adoption in areas of government, healthcare, transportation and energy.

The Malta Gaming Authority is in fact looking into other possible applications of blockchain technology to further enhance the regulatory landscape in Malta and truly make it future proof and innovative.
One such area being considered is a Unified Self Exclusion platform residing on such technology. It is still early days in this ambit but work has already commenced in exploring this project.

SIGMA-igaming-Joseph Cuschieri

Joseph Cuschieri – Chairman & CEO of the Malta Gaming Authority (MGA)

Definition of a blockchain and its advantages

What is a blockchain? The blockchain, is essentially a software database which creates a revolutionary way of storing, retrieving, allocating and interacting with digital assets, such as cryptocurrencies or smart contracts, in a secure and transparent manner.
The blockchain is a global online distributed database which anyone, from anywhere, with access to an internet connection can safely and transparently make use of.

Unlike traditional databases which are generally owned by central figures such as banks or governments, a blockchain does not have one central figure owning and regulating it, and with an entire network looking after it using the distributed concept, cheating the system by faking documents, transactions or other information becomes extremely difficult if not near impossible.

Blockchain stores information permanently across a network of computers. This not only decentralises the information but distributes it to all nodes (computers) on the network, too. Since, blockchain applications may have millions of users it is almost impossible for one person to hack the system or take down the entire network.

The many people who run such systems use their own computers to hold packages of records submitted by others. These records are known as blocks. Each block has a timestamp and a link to a previous block, forming a chronological chain of records. One can view the information stored in a blockchain, add records to it, but more importantly one cannot alter information that is already stored on the blockchain. This is achieved using the cryptography techniques mentioned earlier.

Since their inception in 2009, Bitcoin and other cryptocurrencies have gained in popularity and consumption. According to a study published by the University of Cambridge in 2017, the current number of unique active users of cryptocurrencies is estimated to be in the region of 2.9 to 5.8 million users with up to 11.5 million wallets currently estimated to be active.

Risks of Blockchain technology and preventative activities

The Malta Gaming Authority has been closely following the rise of blockchain and cryptocurrencies. Conscious of the need to remain at the forefront of innovation and to keep up with new developments in technology and the industry, as well as being fully aware that the system at the back of such transactions provides the industry with fast and cost- effective alternatives to traditional payment mechanisms, the Authority is committed to allow the use of cryptocurrencies by its licensees in the immediate future.

Having said that, the Authority is mindful that there are also risks which have to be addressed in order to ensure that such developments do not prejudice the protection of players, the importance of the prevention of crime in line with the 4th Anti Money Laundering directive and the reputation of the Maltese jurisdiction. To this effect, the Malta Gaming Authority commissioned a study
to assist in the development of an all-encompassing framework, to be inclusive of all necessary safeguards.

While the risk discovery process highlighted challenges in the adoption of cryptocurrency it also served to confirm that through a robust framework, a contained approach and proper guidance, the risks associated to cryptocurrencies may be well mitigated.

The Authority has embarked on a journey in identifying a potential way forward to develop the right balance of measures which will safeguard the gaming industry against such risks but without stiffing innovation and suffocating the legitimate use of cryptocurrency.

Cryptocurrencies in a sandboxed approach

To this effect the Authority will be looking into adopting a sandboxed approach to the acceptance of cryptocurrency in the Gaming industry. The idea is that cryptocurrency as a form of payment would be introduced in a controlled framework and for a period of time, to test the proposed controls and legislation with a view to further refining the regulatory approach. This approach is ideal since it gives exibility to be able to manage the various variable risks and allows for a track record of cryptocurrency usage in the industry to be built in a controlled manner.

The Malta Gaming Authority will be adopting a supervisory role in all aspects of the cryptocurrency introduction in the gaming industry.

The Authority will soon be publishing a framework within which cryptocurrency payments shall be permissible in the online gaming industry. The framework will include controlling parameters for operator restrictions, game restrictions, restrictions on Payment Service Providers, transaction limits and nature of transactions. The framework will also include monitoring, supervision and reporting requirements and a validity period for the authorisation granted.

Banks Around the World Start Implementing Cryptocurrency

Banking on the Crypto Factor

“The surge in cryptocurrencies and their underlying technology is becoming too big for central banks, long the custodian of official money to ignore”, states Patrick J O Brien.

Earlier this year Norway’s largest online-only bank, Skandiabanken announced it plans to offer clients the ability to link bank accounts to cryptocurrency holdings. While some saw this move as one of traditional banks embracing bitcoin, really what it did, was herald a new shift in the evolution of cryptocurrency into the greater fintech space. The banks intention was to let users connect a bank account with a Coinbase account, allowing users to view their cryptocurrency balances within the banking app.

Around the world, mobile banking is taking a lead over branch-centred activity. In Malta, for example, over 80% of the population access online banking sites and that number is growing. The proliferation of fintech services that ‘unbundle’ traditional banking functions, combined with the maturing of the internet-first generation, are accelerating this trend. What’s more, the European Revised Payment Services Directive (PSD2) activates in 2018. This directive will mandate that banks have to share customer data with third parties through APIs, which could include access to cryptocurrency services.

The Dutch central bank has already created its own cryptocurrency for internal circulation, to better understand how it works. Cryptocurrency tied to central-bank-backed money could give governments a way to issue digital tokens that are a lot like cash. Users of such a “FedCoin” would enjoy the level of anonymity that Bitcoin provides, while being protected against the volatility that has so called plagued cryptocurrencies. Many countries’ central banks are investigating this idea, but again it seems that’s it’s the Nordic countries to be the furthest along.

Speaking in Brussel earlier this year, Prime Minister Joseph Muscat argued that governments in the European Union should “double down” on the tech, which he pointed out is slowly catching on amongst the bloc’s financial institutions. The PM’s remarks were in the context of reinvigorating the EU, which has faced rising socio-economic pressures in recent years. He also proposed that leaders in the bloc create financial mechanisms to invest in areas that may be inclined to leave the EU, as was with the case of the UK’s so-called “Brexit” vote last year. Though prefacing his statements by saying that he is opting to advocate for “outright insane” sounding ideas, Muscat argued that “the rise of cryptocurrencies can be slowed but cannot be stopped”.

As cash becomes more and more rare, central banks may begin to think about how they can minimize systemic risks from their own unintentional and unseen miscalculations or misjudgements which can have considerable effects on the economy to the point of bringing it to even bankruptcy. With blockchain based cryptocurrencies being a potential solution to return some balance between the private free market and the centralized planners so as to avoid a single point of system wide failure. As of now, however, it’s not clear which country might show such foresight but Malta’s sandbox test appears interesting, not least because they recently announced the education ministry was to issue academic certificates through the blockchain technology, a world first at state levels. Read more about Bitcoins in Malta.

SiGMA-igaming-Banking On The Crypto Factor

Photo: Exante’s Co Founder, Anatoliy Knyazev and CEO Alexey Kirienko leading experts in cryptocurrency at a recent meeting with PM Joseph Muscat

Relive the highlights from our last show and stay tuned for this year’s SiGMA. Watch out for what we’re branding as the ‘iGaming Village’ this year.

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Russia recognizes Bitcoin as legitimate currency

Russia has officially recognized the legitimacy of the world’s most popular digital currency Bitcoin and plans to introduce regulations in 2018 to facilitate the use of the cryptocurrency.

Only just a year ago, Russia’s Finance Ministry threatened jail time for anyone found using digital currencies. Now, in a turn of events, Russia has finally realized the growing popularity and legitimacy of Bitcoin and its potential to aid in implementing regulations against money laundering and illegal transfers.

The bitcoin has been continually climbing in the past three weeks after a sharp fall in the second half of March. As of Tuesday in New York, the price of a single coin rose by 1.1% and sold for as high as $1,232, an increase of 28% since the beginning of the year.

The news of Russia jumping aboard the bitcoin train follows the recent developments coming from Japan who has passed a law at the beginning of the month allowing financial institutions to participate in the bitcoin market making cryptocurrencies a legal method of payment in Japan now.

The assignment of a legal status to Bitcoin as a currency encourages the use of it by community members for a variety of functions such as payment for their daily needs and opens doors for updated regulations governing the use of Bitcoin in the country.

Within the next few months, the financial governance and regulatory bodies in Russia are expected to take a decision regarding the legal status of Bitcoin. Once this is finalized, the involved departments and ministries will begin to draft new regulations and compliance requirements for Bitcoin platforms and the cryptocurrency community.

Deputy Finance Minister of Russia, Alexey Moiseev said in an interview that the authorities hope to recognize bitcoin and other cryptocurrencies in 2018 as they seek to enforce rules against illegal transfers. He went on to say: “The state needs to know who at every moment of time stands on both sides of the financial chain. If there’s a transaction, the people who facilitate it should understand from whom they bought and to whom they were selling, just like with bank operations.”

Have you attended SiGMA last year? Relive the highlights from our last show and stay tuned for this year’s SiGMA. Watch out for what we’re branding as the ‘iGaming Village’ this year.

Bitcoin is now worth more than gold

Based on Bloomberg data, one unit of the digital currency Bitcoin is now worth more than one ounce of gold for the first time. The digital currency is often considered a new kind of currency and though both gold and bitcoin are thought of as alternative assets, they do not normally trade in correlation. However, it is still noteworthy to acknowledge its rise above the price of gold.

BitcoinThe cryptocurrency closed on Thursday at $1,268 while an ounce of gold stood at $1,233. Although the swap could be attributed to a bad gold day and a good bitcoin day, bitcoin has still more than doubled within a year up 185% compared to last year. Gold, on the other hand, has stayed stagnant trading at exactly the same price as a year ago.

This current bitcoin rise has been attributed to the rising outflow of it in China via local exchanges. Word is also spreading that Mexico along with Greece, Italy and France are active as well. This along with the renewed interest for blockchain has helped to incite interest in the virtual currency.
The US Securities and Exchange Commission is also expected to rule on a proposal by March 11 to introduce an exchange-traded fund based on the digital currency.

Back in 2014, Bitcoin’s value plummeted after the largest exchange collapse. This month’s surge is a huge reversal of that performance. Since its launch back in 2009, there has been uncertainty about the currency with experts questioning its future.

However, this recent price switch could be considered a sign that more mainstream investors seem to be appropriating some portion of their alternative investment portfolio to bitcoin.

Eric Benz

Eric Benz, Managing Director at Cryptopay who has been confirmed to be a speaker at SiGMA 17 conferences on Payments, had this to say: “This is the beginning of a much more pragmatic and nuanced strategy towards our understanding of money and a drastic move away from the previous bashing and skepticism generated by bitcoin in its early days. In the famous words of the great Frank Sinatra; ‘The best is yet to come”

Are you a startup? Then apply for the SiGMA Startup Pitch 2017 and meet hungry investors. View Startup Pitch 2016 gallery here.

Malta’s financial services could be part of a Blockchain revolution

Patrick O'Brien

Patrick O’Brien

Communications Director of Exante Patrick J O Brien talks about the blockchain revolution and the future of banks and financial services adopting this revolutionary technology in aid of reducing costs and improving security. The company Exante and its directors have been hailed by Forbes as being at the forefront of blockchain technology.

Below is a written report from Patrick J O Brien on the blockchain technology and its future:

bitcoin-blockchain-bankBlockchain is undoubtedly one of the most talked-about technologies in financial services today. For anyone who’s been following innovation in the financial technology space, the word blockchain is the buzzword du jour. Tech analysts are consumed with the underlying ledger technology that powers Bitcoin as nearly every major bank in the world is in the process of testing or implementing this technology to help reduce their costs and improve security. Blockchain, in theory, is a web-based transaction processing and settlement system whose efficiency banks say could slash costs. It creates a “golden record” of any given set of data that is automatically replicated for all parties in a secure network, eliminating any need for third-party verification. It’s estimated that over 1 billion Euros has been invested in blockchain start-ups since the technology was introduced.

While expert opinion varies as to the way in which blockchain will impact financial services and to the extent to which it will disrupt the existing ecosystem, there is widespread consent that the technology has powerful potential to herald a new age of efficiency in the industry.

This year it is estimated, 15 percent of banks will have blockchains in commercial production. These pioneers are prioritising blockchain efforts to break through barriers to creating new business models and reaching new markets. They are also prioritising blockchains to benefit time, cost and risk in three areas: reference data, retail payments and consumer lending. They also expect blockchains to yield the greatest effect in opening up new business models in three areas: trade finance, corporate lending and reference data. Pioneers see a significant wall of disruption heading their way in core business areas.

Business opportunities enabled by blockchain technology are not dissimilar in concept from other disruptive technologies built on the peer-to-peer model, such as Uber and Airbnb. And that’s where things start to get really interesting for blockchain. Like these other types of peer-to-peer applications, blockchain has the power to significantly disrupt the status quo by removing administrative layers from the banking and finance process, ultimately streamlining labour and cost intensive functions across a wide array of financial services. While we’ve yet to really see the first real Uber or Airbnb of blockchain emerge, there are dozens of different firms working to develop solutions based on the technology. Imagine what will be possible when they get the recipe right.

As with all big economic and technological transformations, those nations that adapt first and fastest are the ones that will find themselves at the centre of new, emerging economic ecosystems. Malta’s Ministry for Education and Employment (MEDE) is working with Learning Machine Group (LMG) to put University degrees and earned credentials on the Bitcoin blockchain using the Blockcerts open standard whilst The Malta Stock Exchange has formed an internal ‘Blockchain Committee’ to guide the development of a strategic roadmap for testing the tech.

Online Betting estimated to reach One Trillion dollars by 2021

According to analyst Juniper Research in a whitepaper published this week, the gambling industry performance is expected to reach $1,000,000,000,000 (One Trillion Dollars) per year in bets by 2021. This rise is due to the increased power of mobile technology geared to build customer engagement with the use of media and live streams, said the paper. This surge represents a 42% increase on the $550 billion that is expected this year.

The paper states that “wager levels will thus approach total spend on all digital goods and services by [2021], forecast to exceed $1 trillion for the first time [in 2021].”

The paper’s author, Lauren Foye reported that drawing in return business relies on the user engagement which goes a long way.
“Providing features such as news and media on favourite teams, as well as personalised offerings based on past betting activity, enables greater engagement and is likely to reduce churn.”

The Virtual Reality Casino World

Foye also argued that virtual reality will also have a play in increasing customer engagement especially in the online casino vertical. The high-end virtual reality speed of adoption which allows players the opportunity to explore virtual casino spaces and to gamble on real money casino games was something that the experts were still divided on.

Slots Million, the online casino became the first operator to launch a full blown real-money VR experience late last year. This launch announced the arrival of the real-money virtual reality casino gaming.

At the moment however VR is still a step ahead of the market as the VR experience requires an investment of around $1,500 with the price of headsets ranging around $300, and the high-spec PCs needed to deliver the VR experience well around $1,200. These steep prices are at the moment a hindrance in the adoption of VR for mass marketing.

In the beginning, this new format of VR will have their niche clientele, however, the report predicts these participants to wager substantial amounts on real world ‘casino-style’ VR gambling products.

The future of Bitcoin

The adoption of VR is eventually expected to reach mass market adoption, unfortunately, the paper did not predict the same outcome in the gambling sector for Bitcoin and other digital currencies. “Whilst a number of leading sportsbook providers, including William Hill and 888 now offer Bitcoin, Juniper believes that the cryptocurrency is unlikely to see mass-adoption, even in the gambling space,” quoted the report.
The reasons behind this included the technical complexity of it and increased regulation around the globe. This included the extreme incompatibility of digital currencies with anti-money laundering directives.

UKGC to Allow Acceptance of Bitcoin Payments at Online Casinos

The United Kingdom Gambling Commission has made some changes to gambling regulations, making it possible for online casinos to now regard cryptocurrency as a cash equivalent.

This new amendment will come into force on October 31st of this year, and will apply only to online casinos operating in the UK market. The regulatory body has issued over 700 licenses to more than 400 online casinos this year. Understandably, bitcoin casinos in other regions might now consider the possibility of expanding to the UK market.

This move further strengthens the viability and potential of bitcoin in engaging players and creating more opportunities for gambling markets.

40% of bitcoin yield is already attributed to online gaming. There are more than 150 bitcoin casinos worldwide, and hundreds of websites that accept cryptocurrency as a method of payment apart from traditional options like credit and debit cards, cheques, and drafts. Bitcoins can be used as a betting currency or gaming chips and can encompass several games from blackjack to poker.

There are various advantages of bitcoins, such as the fact that it can be deposited and withdrawn instantly at online casinos. Bitcoins also offer the cheapest transaction fee in comparison to debit cards and even PayPal. As bitcoins allow players to make anonymous transactions, they are also highly appreciated by those people who do not want their bank or credit card statements to reflect gaming-related payments.

There are some online gaming platforms that already use bitcoins to fund loyalty programs, thereby encouraging players to further explore the use of digital currency for transactions. It is also expected that bitcoins will eventually become a standard payment option at casinos.

China and the UK have a pro-bitcoin stance, while France has been wary of them. In Cyprus, bitcoins are not illegal but neither are they regulated. According to bitcoin.com, the US, Canada, Denmark, Sweden, Estonia, the Netherlands, Finland, South Korea, Australia, and the UK are the most bitcoin-friendly countries in the world, in no particular order.

Bitcoin Jumps Back to $600 Price Range Amidst Yuan Devaluation Fears

It has been announced that Bitcoin has officially bounced back to the $600 price range; the highest price range that the digital currency has reached since the hack of Hong Kong-based bitcoin exchange Bitfinex in August.

During the hack, an estimated $65 million worth of bitcoin was stolen. Since then, the price of bitcoin has been hovering at about $570.

The digital currency’s sharp spike in price could have been influenced by several factors. For example, the renewed interest in cryptocurrency could have been caused by Bitfinex’s announcement that it has discovered a way for its customers to convert their BFX tokens. It could also be due to the fact that Russian authorities have finally admitted that a blanket ban on digital currency is “not worth implementing”, given that the technology is still evolving.

Another possible factor is the renewed fears of yuan devaluation among Chinese investors. The Chinese economy had a brief hopeful period in the days leading up to the G-20 summit. The optimism, however, was destroyed following the announcement by China and the US that they are refraining from competitive devaluations and not targeting exchange rates for competitive purposes.

This means that yuan will remain to drop in value against the US dollar, prompting numbers of investors to turn to digital currency to safeguard the value of their investments, acting as a safe haven asset, particularly at times like this.

Bitcoin’s price continued to rally at $604, with a market cap of nearly $9.71 billion and trade volume of $22.52 million.

UKGC Makes Bitcoin Payments Available to Online Licensees

The UK Gambling Commission (UKGC) has given online licensees the green light for digital currencies such as Bitcoin to be accepted payment methods.

Following a series of consultations with licensees and industry stakeholders, the UKGC released its updated License Conditions and Codes or Practice (LCCP); regulations which are set to take effect on October 31st 2016.

In the LCCP, Section 5.1 addresses “cash and cash equivalents, payment methods and services.” Licensees are told that they are to “implement appropriate policies and procedures concerning the usage of cash and cash equivalents by customers.” These cash and cash equivalents include bankers, drafts, cheques and debit cards, as well as digital currencies.

The intention behind this is to reduce the risk of money laundering activity and to “provide assurance that gambling activities are being conducted in a manner which promotes licensing objectives.”

Licensees were advised that they need to take into account any applicable learning or guidelines issued by the UKGC from time to time.

Quoting CEO Sarah Harrison, the UKGC’s annual report last month said that digital currencies were among the regulator’s areas of “continuing future focus”, but Harrison gave no specifics on what that might entail.

The acceptance of Bitcoin by UKGC, a high-profile body, could help to stimulate public acceptance of alternative currencies. The only jurisdiction to date that has allowed online gambling licensees free reign to accept the Bitcoin as payment is that of Curacao.

Momentum seems to be increasing, however, as in May, Isle of Man Gambling Supervision Commission proposed allowance of its online licensees to accept deposits made in “convertible virtual currencies.” The Malta Gaming Authority also reportedly held a meeting recently on this very subject.

A year ago, the UKGC wrote to emphasise that any Bitcoin gambling operators wishing to serve the UK market will still require a UK license. It also hinted at its upcoming policy adjustments by saying that the form of currency is “almost irrelevant”, as long as licensed operators could demonstrate that “crime is kept out of gambling and consumers are protected.”