Mbit’s news team reveals how online casinos accepting cryptocurrency to fiat currency deposits have been broadening their horizons by becoming major financial players on the blockchain.
There are plenty of online casinos that offer slots, blackjack, and roulette whereby their clientele play using their cryptocurrency of choice. However, there is also a huge rise in online casinos that accept cryptocurrencies such as Bitcoin and Ethereum, which are then converted into €/£/$ fiat currency. With the huge drop in cryptocurrency value since the beginning of 2018, these casinos have had to adapt.
If we start to look at the decline in the two most widely available cryptocurrencies, it is hard to see how the online casinos that deal with only games that offer gambling using fiat currency have coped. Many of these casinos have accepted Bitcoin and Ethereum. However, by employing financial and blockchain specialists, the online casinos have coped very well indeed.
The process begins when the online casino takes a player’s Bitcoin or Ethereum payment as a deposit method. The casino uses the latest cryptocurrency rates to exchange the value of the cryptocurrency into fiat currency. At this point the cryptocurrency is then passed over to expert margin traders, blockchain investors, and financial risk management analysts.
This process has led to many questions being asked on how the online casinos are making these trades and investments legally with integrity. In fact, the explanation is simple, totally legal, and extremely impressive.
The Legality of Online Casino Margin Trading & Investment on the Blockchain
Depending on the law, most online casinos are not allowed to use player’s cash for any other purpose other than to have the player’s balance held in a holding account. Cryptocurrencies are no exception to this rule.
With this in mind, many have been left to wonder how the online casinos have managed to still report yearly profits without their bottom line being negatively affected by the sharp decline in value of many of the mainstream cryptocurrencies.
The notion that these casinos use expert margin traders has been ruled out by many because of the financial laws that apply to an online casino company’s management of player account money. On the contrary, the truth behind the many still very profitable online casinos that trade in cryptocurrencies is down to the fact that they do employ margin traders and financial risk management experts.
The Online Casinos are Not Using Player Account Money to Trade
A very smart move by these cryptocurrencies to fiat currency casinos has been to dedicate fiat currency to their holding accounts, which they are legally required to have. This fiat currency is the casino’s own surplus.
The procedure is very simple. At the point in which a deposit is made using cryptocurrency to the point it is converted to fiat currency for the player account, no margin traders or risk managers are needed. At this time, only basic accounting is needed.
Casino software will track the transaction and credit the player account with fiat currency. The cryptocurrency is stored in the casino’s own wallet. Now the amount transferred is calculated and sent to a central accounting system. That system then ensures the fiat currency is paid off using the casino’s own surplus of cash, which is placed into the holding account required by law.
For example, a player deposits $100 worth of Bitcoin. The $100 of Bitcoin remains in the casino’s Bitcoin wallet. The casino will then take $100 of its own cash surplus and place this into the holding account to make sure that financial laws are adhered to.
Margin Traders & Risk Managers Make Cryptocurrency Trading Decisions
Expert blockchain margin traders and risk managers are not employed to manage the player transactions, accounting, or holding account legal compliance. Their only job is to make sure that the casino does not make a loss from its cryptocurrency investments.
A lot of the time, the casino is not purposely investing in cryptocurrency. All that it is doing is opening its doors to players that want to make a deposit using cryptocurrency thus extending the casino’s reach. In essence, the strategy here is to accept as many deposit methods as possible in order to attract as many customers as possible. The casino is actually forcing itself to invest in the blockchain in this case.
Becoming Blockchain Financial Investors
For the most part, casinos that trade crypto for fiat currency will trade a lot of their received Bitcoin and Ethereum for fiat currency on exchanges. In addition to this, the casino’s margin traders will invest into the blockchain further by purchasing other cryptocurrencies and investing in new ICOs that have been flagged as a potentially good investment for the future.
casinos own investment in cryptocurrency. The casino’s financial team are able to do this because as soon as the fiat currency for the player’s balance is in the holding account, the cryptocurrency then becomes the casino’s surplus cash in which the casino is free to invest in whichever way their financial team sees fit.
Any huge fluctuations in cryptocurrency are down to the traders to deal with. There are weekly meetings that review trades and experts that ensure the casino sells its crypto at the right time. Therefore, the Q1 2018 crash in Bitcoin, Ethereum and many other cryptocurrencies was quickly spotted and dealt with by the casino’s blockchain financial investment and analysis teams.