Virtual currency/crypto currency and its various manifestations(bitcoin, ripple, litecoin, etc.) have become all the rage in the virtual transaction world. Individuals and businesses are buying and selling items using virtual currency as opposed to "traditional" currencies which are backed by governments and their treasury's. The theory behind this hands off nature concerning crypto currency is that the market itself will self regulate resulting in a democratic establishment of "value".
Recently, I was exposed to an online gambling property that converted its investor equity into a virtual currency. In the beginning all was well until the currency they were using "deflated" causing the investor to loss significant value as a result of the conversion of equity into crypto currency.
This event was a real wakeup call for the investors as this was an unexpected event. Essentially, virtual currency is not created or backed by any particular government organization. Thus, the inability to intercede if a virtual currency is hyper inflating or hyper deflating.
Organizations that are caught in this type of free fall in value or perhaps a significant boost in value have to engage in financial engineering of their own. Should they buy more virtual currency and distribute the currency to the investors? Should they sell some shares of their own and distribute to investors, etc. Should they "cash out" entirely even if they could loss a significant amount of money?
Another issue for online gambling is the acceptance of virtual currency for gambling transactions. This has become a growing trend with several online gambling sites using crypto currency to engage in gambling. If you with to convert your crypto currency into "traditional currency" you must withdraw your crypto currency from the online gambling site, deposit them in a virtual vault of some kind and them find an exchange that will take the crypto currency and exchange it for a traditional currency.
The transition from the traditional form of gambling using government backed currency to "virtual" currency is growing rapidly. This is a natural transition given the movement away from brick and mortar commerce to online commerce.
Gamers that are new to online gambling using crypto currencies should do their homework before they go "all in" with virtual/crypto currency transactions. Make sure you know how to "deposit" and how to "withdraw". Also track the inflation and deflation of these currencies for the purpose of avoiding a loss of value or to take advantage of an increase in value as the crypto currency changes in value.
Kevin Flood is the CEO of Gameinlane, Inc. Kevin has worked for and with US land based casino operators helping them evaluate social casino and iGaming platforms for the purpose of joint ventures and acquisitions in addition to launching online gambling operations in Europe. Gameinlane is also startup "friendly" understanding the unique value new gaming companies bring to the marketplace. Kevin frequently speaks at gaming conferences around the world providing him with a unique perspective on this very interesting business sector. Kevin can be reached at kflood@gameinlane.com and or twitter at @kflow1776.
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