Crypto corner: Bitcoin’s revival

Bitcoin has surged over 150% in 2019, going from a low of $3,200 in January, to an annual peak of nearly $9,000 in late May. Though we are some way off all-time-highs, by any standard that’s quite an impressive feat, and one that speaks to the first cryptocurrency’s resilience and strength.

That’s great news for established crypto operators like Cloudbet that can expect further market growth, but for those that eyed crypto with suspicion and took the recent winter as justification to write it off, now might be the time to reconsider that position.

The atmosphere within the crypto industry has returned to one of overall optimism; an optimism that had all but disappeared after last year’s extended bear market. But because of the extraordinary nature of market dynamics up-cycles are predictably accompanied by cries of “bubble!” from the usual doomsayers, crypto sceptics, and couch analysts, who are probably chiselling yet another epitaph at the next BTC tombstone.

So, who is right? Is this just another bubble, like the tulip mania that so often is brought in as a comparison or are things different this time and what implication does that have for the gambling space?

This time is different

We know every piece of (good) advice on any type of investment warns against believing that “this time is different”. Sir John Templeton called these “the four most expensive words in the English language”. However, the issue lies more in understanding the relevance of time to the bitcoin adoption story.

The fact that bitcoin is 10 years old and has already been through multiple boom-bust cycles and hard-forks yet hasn’t experienced a single double-spend and continues to show growth in key fundamentals means that we should change the lens.

The constant tulip comparison is redundant as that was a one-time mania that popped, while bitcoin persists – albeit with varying degrees of market confidence reflected in price.

So yes, we can say, this time is different because bitcoin ‘per se’ cannot be viewed simply as a financial instrument and price is only half the story. If the bubble burst of 2017 has shown one thing, it is that people will flock by the droves into whatever they see as a chance of easy money. And yes, that happened to crypto, and yes, it crashed down hard (for the n-th time).

An interesting side effect of this, though, was that the money that got injected (at least part of it) was actually used to fund a great amount of crypto projects. Granted, a good deal of these were complete flops. But after a long and harsh winter, some of them have actually started to address crucial issues of adoption, custody and UI.

That bubble planted the seeds of innovation and laid the bedrock for a much more mature infrastructure. And while in 2018 crypto was declared dead by the market, the industry kept on building.

And as crypto grew, regulators took notice and began building the necessary legal framework to do away with the uncertainty. Gambling is also starting to catch up on that front, though has some way to go.

The gambling industry takes a piece of the pie

Today, buying bitcoin is easier than ever in many countries, and demand is greatest where access to banking and/or a stable currency represents a huge challenge. There are nearly five thousand ATMs across 77 countries that offer many options. Several exchanges cater now for most of the world, and you can even buy bitcoin in tobacco shops in France.

Bitcoin price against the US dollar over the last three months
Source: Coindesk

That was unthinkable only a couple of years ago.

Moreover, adoption is on the rise, with countless merchants accepting BTC or other crypto payments. Layer two solutions, like the Lightning Network, are starting to solve scalability, which in layman’s terms means that bitcoin transactions can finally rival VISA type transaction throughput.

Enterprise-grade custodial solutions are already ushering corporations into the space. Plus stablecoins, cheap hardware wallets, friendlier wallet UI, cryptophones, and countless other such developments are a sign that crypto isn’t dying anytime soon.

And it’s worth highlighting that gambling is still one of blockchain transactions and of dApp development – (applications built on Ethereum). This means more potential players than ever. Existing crypto customers who have accrued capital gains are now more eager to take chances.

For the gambling industry, one of the pioneers in the use of crypto, opportunities abound. Early operators are already reaping the benefits, and newcomers have a big chance to jump in – or risk falling behind.

And that doesn’t mean going all-in and switching everything into blockchain. Much can be gained by merely integrating crypto as a payments railway. Currently, gambling dApps and prediction markets are still pretty immature and UX isn’t close to professional grade; so the jury’s still out. Smart operators will keep their eyes on the future and incorporate what works, while focusing on offering a great user experience.

Warning: construction work ahead

It’s not all roses, though. First off, as the dotcom bubble has shown, price alone is a terrible indicator of success. Even if it weren’t, bitcoin’s price rise is far from being a given. Plus, there are still many unsolved problems out there. One example is custody.

Fiat operators can rely on banking and insurance partners to safeguard their funds. Given the peer-to-peer nature of cryptocurrencies, crypto operators need to run and manage their own treasury on top of their regular activities, which can be a daunting task. And despite the undeniable progress, regulation is still in its infancy, with some jurisdictions being less friendly than others.

The takeaway

Even though market prices aren’t the end of the story, they’re generally a good indicator of collective sentiment. And in the long run, price trends for the crypto market are still incredibly positive. Who knows? Perhaps gaming operators who jump in right now may even experience passive growth as their treasury accrues value and acceptability.

But the real takeaway here is that the gambling space should look beyond just price and understand the unstoppable systemic transformation set off by crypto, from which the industry will not be immune. The exact shape of the innovation crypto is bringing is still not clear but, by all measures, it looks like a bright future ahead – and this may well be the last call for some.

If the future were a casino, bitcoin is much like the house. And as every sensible person would tell you, it’s never a good idea to bet against the house.