You currently have many options for acquiring bitcoins to wager online or to exchange your Bitcoin gambling wins for fiat currency. Of course, you can buy from someone through LocalBitcoins, use one an online Bitcoin exchange or even visit a Bitcoin ATM in your locality.
And now there is a new addition to this list. It is one that is probably going to significantly change the business of selling and buying bitcoins. It is an innovation that seeks to make it possible for peer-to-peer transactions to happen in a secure and reliable online environment.
Spanish-based Coinffeine is one of the companies leading in the developing of this solution. The company has described it as a distributed Bitcoin exchange that uses smart contract technology to overcome the challenges of trust.
Just like with the blockchain, sellers and buyers operate in a network
In order to use the service, buyers and sellers will be required to download a desktop app, which essentially makes their computers nodes in the network. All the transactions that are carried out on the platform are scrutinized by this network.
The app itself is open source and thus everyone is welcome to be part of the project from its base.
Indeed, many aspects of this technology mirror exactly how the blockchain and, by extension, the entire cryptocoin ecosystem is supposed to work.
You probably will agree that exchanges have become points of weakness within the cryptocurrency setting. There is always a risk of losing your money when you rely on a third party to provide trust for transactions.
Each time you give out your money and wait for even a few seconds to receive its equivalent in the other currency, you momentarily lose control over it and at that point, anything is possible.
Trust is a hindrance and a cost in exchange transaction
It is important to mention, however, that buying or selling bitcoins through centralized online exchanges has improved significantly in terms of security and adoption of best practices. This is especially true with reputable entities in the market.
Having said that, Mt. Gox, which handled close to 80% Bitcoin transactions at one time, did change our perception of what is a reputable online exchange.
But how does the decentralized Bitcoin exchange work?
When two individuals link up for a transaction on the platform, the money exchanged between the two ends is broken down into numerous micro-transactions. The performance of these micro-transactions happens one after the fulfillment of another through what is known as a micropayment channel.
This way, one party cannot swindle the other by taking payment and not honoring their end of the bargain.
Apart from safety, the platform is also designed to make the transactions fast. Coinffeine, which plans to start operation in early 2015, has made it public that they are going to use payment processors to make this possible.
When the technology finally is available to users, Bitcoin usage will become truly decentralized. The next question, then, is will the same setup take over the Bitcoin gambling industry in the years to come. This opens the potential need to have Bitcoin exchanges in casinos for a more efficient and convenient experience for cryptocurrency players.