Cryptocurrency does not refer to a misspelled monetary system on Krypton, Superman’s place of birth. But the names affixed to various types of cryptocurrency sure sound like they could be from Krypton. Or Middle Earth.
Bitcoin. Ethereum. Shiba Inu, Dogecoin. And don’t forget blockchain, which supports everything else in the crypto universe. I know what you’re thinking: Tales from the Crypt. Closer than Krypton in spelling. Sorry. Wrong answer.
Cryptocurrency, and everything that goes with it, is a monetary system, but one that has nothing to do with fantasy worlds. To a growing percentage of the populace, the system is the next big thing in finance.
The origin of crypto, the word, comes from cryptography.
“Cryptography is the origin of blockchain, and blockchain produces cryptocurrency,” says Earle G. Hall, CEO of AXES.ai and vice chairman, International Gaming Standards Association. “Blockchain is a methodology to secure information in a database by replicating the information over many computers in the same or different networks simultaneously to infinitely reduce the risk of intrusion, tampering or theft.”
Sounds confusing, but casinos are beginning to understand.
“Most casinos accepting cryptocurrencies at the moment are only allowing guests to exchange crypto for cash at the casino cage,” says Josh Swissman, founding partner, the Strategy Organization.
Or through the use of an ATM-style device. The latter includes the Casino @ Dania Beach near Miami as an example.
“Our slot machines and poker tables do not currently accept crypto, but our casino is constantly evolving to exceed our guests’ preferences and expectations,” says Armando Suarez, general manager of the property. “The Coin Cloud Digital Currency Machine is a fabulous amenity which now offers our guests a convenient and easy way to buy and sell Bitcoin, Ethereum and over 40 other digital assets with cash.”
A Crypto ATM
“Cryptocurrency will evolve much like ATMs did in the late 1990s,” Hall says.
The Coin Cloud DCM allows guests to conveniently sell their digital currency for cash to play at one of the casino’s 750 slot machines or poker tables. They could also convert their winnings into crypto if they choose.
ATM-type Bitcoin machines have appeared all over the world in the last couple of years, as it is a very easy way to cash out of your cryptocurrency account into the local fiat currency for whatever country you’re in. And often vice versa. Coin Cloud’s team constantly investigates which coins customers are actively considering and adds new offerings after a proprietary approval and compliance process.
“Our first DCMs were installed in casinos in our home base of Las Vegas,” says Chris McAlary, founder and CEO of Coin Cloud. “Today, we provide digital currency for more than 4,500 installations across the U.S. Our latest at The Casino @ Dania Beach demonstrates that commitment and represents a perfect location to appeal to both digital currency beginners and experienced investors.”
The Casino @ Dania Beach believes having on-site access to cryptocurrency will soon become necessity in the digital future. “Cryptocurrency is quickly becoming mainstream and appears to be here to stay,” Suarez says.
Casinos aside, major credit card companies such as Visa are currently reporting record cryptocurrency-based transactions.
“Every quarter the trends and metrics prove that cryptocurrency is being adopted as a universal means of funds transportation,” Hall says.
“It is very early in the process and many casinos are still working through their cryptocurrency policies, so it is tough to discuss which specific coins will become widely accepted,” says Swissman. “I will say that it is much more likely that the more well-known and stable coins are likely to be the ones you will see most frequently in the casino space.”
But not at the moment in most gaming locales, Atlantic City included.
“Crypto is not authorized for the receipt of wagers, or the payout of winnings,” says Lee Moore, spokesman for the New Jersey Division of Gaming Enforcement.
Neither is it available at Dania Beach beyond the DCMs.
To be classified as a cryptocurrency, Hall says, there can be no human intervention, no central authority that can influence or corrupt the transaction and proof of ownership. “A cryptocurrency can only be done by a cryptographic signature which resembles a serial number that is automatically generated when the transaction is made.”
In case you’re wondering, cryptocurrency is not the same as digital currency, although you might think so.
“A digital currency is a fiat currency such as the U.S. dollar that is transported by an electronic means, whereas a cryptocurrency has no fiat equivalent,” Hall says.
Fiat currency is a term given to the traditional monies that countries use for commerce: the aforementioned U.S dollar, the Canadian dollar and the euro as examples. With fiat the currency is backed by a traditional banking system. Fiat is used to define any currency that is legal tender and authorized by a country to use for barter and trade, Hall says.
Crypto is not country-backed, nor is cryptocurrency attached to any country’s economy.
As big crypto exchanges like FTX and others become commonplace, conducting cryptocurrency transactions also becomes a more prevalent and trusted way to pay for goods and services, Swissman says. “I think the non-gaming amenities and payment opportunities will be the first to manifest. For gaming crypto transactions to occur, much regulatory updating would need to take place.”
Now that we got that straightened out, one of the greatest myths is that cryptocurrency is anonymous. In fact, most cryptocurrencies operate in public blockchains, Hall says. This means that the operators of the chain—known as miners—can see every transaction without being able to intervene or influence said transaction. All they see is transaction numbers, but the transactions are in the public logs called, appropriately enough, ledgers.
Another falsehood that has surfaced is that crypto is a haven for illicit activities. It’s not.
“In today’s world, to sign up for a reputable exchange to buy and sell crypto, you must adhere to all the know-your-client policies and disclosures. There is no difference in 2022 between fiat and cryptocurrency transactions, and all depend upon KYC policies of the buyer and seller,” Hall says. The only difference remains in the political and legal framework of a country to permit such transactions.
Then there is the volatility with certain coins. “In the cryptocurrency world, Bitcoin and Altcoin have evolved as volatile coins that trade upon the perceived or speculated future value, much like stocks on a traditional stock market but without a direct link to a physical asset,” Hall says.
Since early December, Bitcoin and Ethereum, two of the largest crypto platforms, have had daily average price swings of 4.8 percent and 6.2 percent respectively with individual daily price swings of as much as 20 percent, says Cory H. Morowitz, managing partner of Morowitz Gaming Advisors LLC, a consultancy firm. With such swings, cryptocurrencies are not appropriate methods of payment exchange for casinos, he says. “Imagine trying to manage a casino cage or manage daily cash reserves with a currency that fluctuates to that level. Until that volatility is solved, these are not appropriate for businesses that have high turnover and cash needs.”
Stablecoins may be the answer to that dilemma at the moment.
“A stablecoin is a cryptocurrency with a fixed value equivalent to a fiat currency in most cases,” Hall says. “Casinos must consider the integration of a cryptocurrency strategy as players are moving to this much more affordable and efficient way of moving funds from one source to another.”
Some best practices to follow are:
- Employing a strict KYC policy to accept cryptocurrency to ensure that you are in line with all future compliance and SEC guidelines.
- Moving a cryptocurrency-recognized trading partner to migrate the Bitcoin to a stablecoin to remove the risk of the fluctuation and volatility immediately upon reception.
- Ensure that your electronic wallet partner has all the compliance, regulatory and intellectual property rights and technology to accept cryptocurrency from the various sources and to migrate them to your cashless environment. An electronic wallet exists on the internet. But e-wallets are every bit as real as the leather wallets sold at Macy’s or Kohl’s. Electronic wallets are the new standard in financial transactions, Hall says, more so in the aftermath of the Covid pandemic.
Truth is that an electronic wallet doesn’t differ much from cashless gaming or cashless anything. When you pay for your shopping order with a debit card on your cellphone, you’re using an electronic wallet. When you send money to your cousin Vinny via Venmo, you are relying on an electronic wallet.
“Just as the casinos moved from coins to cashless, they will also move from cashless to electronic wallets, including crypto,” Hall says.
What’s more enticing is an electronic wallet is universal. A person can cash in from the same wallet to an iGaming, sports betting and land-based account all from the same source.
“Cryptocurrency is already being accepted in many of these environments, and the core, generic source of legitimacy is a strong KYC process,” Hall says. “The electronic wallet can be used to cash in and out of literally any gaming activity and will become the common denominator.”
As younger people mature, their e-wallet will become their primary source of fund movement and their choices of entertainment, product and service purchasing will depend on the availability of electronic wallets, Hall says. As vendors such as Venmo, Robinhood and cryptocurrency buy-and-sell platforms become more and more widespread, cryptocurrency will evolve as the electronic fund of choice, he says.
The advantage of a cryptocurrency wallet as opposed to a debit card or Venmo comes down to cost and speed. ATM cards employ the fiat-based banking system that is very costly. Transaction fees are simply too high. Cryptocurrency has fees, but much smaller ones, Hall says. Moreover, using blockchain eliminates the traditional checks and balances used in other transactions. The traditional ways e-wallets work is neither fast, secure or cheap, he says.