Rising Bitcoin, Ethereum Prices Causing Big Problems for Crypto Casinos

Ethereum has some gas issues.

Bitcoin’s flirting with the $12,000 mark these days and the market capitalization of Ethereum is sitting at over $45 billion at the time of this writing. With the entire cryptocurrency industry seeing a huge influx of new investment capital entering the market over the last month or two, it would be easy for gamblers to assume that both they, casino operators and blockchain investors alike would be making money hand over fist.

While it is certainly true that price appreciation in the crypto world is making people wealthier, not everybody comes out on the winning side of that. In fact, most casino operators actually earn more money when the market is living in fear believe it or not. The majority of crypto casinos actually report taking more bets when the price of Bitcoin plummeted earlier this year thanks to the onset of the coronavirus pandemic as opposed to the present moment, which is seeing many investors gamble with government stimulus money.

Generally speaking, unpredictable market conditions and the associated volatility that comes with it is bad for business. As much as gamblers love the thrill of chasing a big win, a volatile market also affects the betting industry in a negative way. On top of that, accepting wagers in the form of digital currencies also impacts a casino operator’s bottom-line.

How Gas Prices Impact Houseless Blockchain Casinos

Houseless casinos are not to be confused with the Bitcoin casinos you probably wager with on a regular basis. Houseless casinos use the blockchain to run everything so there is no need to pay fees to the casino operator.

The upside of this is that it saves gamblers on fees, but there is also a downside. These projects lacked stability when the price of crypto goes up, because it means the price of fees goes up. This means that gamblers used to wagering in small amounts are still only gambling in those amounts, but the cost of every transaction is now higher. Imagine spending two dollars on blockchain fees to place a five-dollar bet. This is exactly what’s happening on Ethereum casino platforms.

The Other Elephant in the Bitcoin Gambling Room

Bitcoin functions like money, but at this point in the evolution of cryptocurrency, users actually invest in Bitcoin to keep it. In other words, they treat it more like digital gold rather than money to be used on a day-to-day basis. This means that somebody gambling with Bitcoin is actually less likely to place wagers when the price of the currency itself is going up and more likely to gamble with it when the price is going down. So even though Bitcoin casinos could potentially be turning a profit on the crypto holdings the casino itself maintains, the lack of betting means most of the revenue being generated from transaction fees is slowing down during times like these.

How Can Gamblers and Operators Solve These Issues?

There isn’t necessarily a short workaround solution for the fact that crypto prices are skyrocketing and causing operators to lose out on profit in the short term. However, what’s happening right now in the market certainly isn’t a death sentence for Bitcoin casinos. Ultimately, casino operators are hoping that gamblers place bets impulsively. That’s how casinos make money after all. But the business itself is about long-term gain. Any business should be. With the price spiking in the short term, it’s easy for a gambler to hold onto their crypto and assume those get rich by waiting on the sidelines.

Years from now however, the broader trend of increasing adoption and an increasing number of use cases for cryptocurrency ultimately provides Bitcoin gambling operators with long-term profitability as more and more gamblers get used to using digital currency.

Jack Choros byline

Jack Choros

Jack first invested in Bitcoin in 2016 and continues to gamble with it to this day. He loves the Toronto Raptors as much as he loves cryptocurrency. Jack’s work has appeared on ESPN Radio, Yahoo Sports, OddShark.com and many cryptocurrency related publications, namely BTCGG.com.

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Cryptocurrency Prices by Coinlib