Storing and Acquiring Bitcoin
What the heck is Bitcoin, anyway? This article guides you through exactly how to get some Bitcoin (and store it) for use at your sportsbook of choice, but first, we’ll give you a short refresher on what Bitcoin is.
Bitcoin is a virtual currency that lets you make secure transactions online, and using it is just as simple as using a platform like PayPal. Backed by a revolutionary technology called the blockchain, Bitcoin is 100% secure; the aforementioned radical component, the blockchain, allows the currency to operate without a central authority. A perfect fit for a sports betting site, no doubt!
What that means is that Bitcoin’s security and functionality is guaranteed by a network of computers running Bitcoin software, communicating with each other via the world wide web – hence the internet of money! And since there are no banks involved in the currency, there are no fees!
Economists, nerds, and academics can debate until the cows come home whether bitcoin meets standards of an ‘official’ currency; the reality is that people are using it as money and Bitcoin has become a viable medium of exchange on plenty of sports betting sites and over 100,000 other merchants worldwide. Once you have a solid grasp on the fundamentals of acquiring and storing Bitcoin, you’ll find it’s no more complicated than using your credit card!
How to Store Bitcoin
To acquire and use Bitcoin, you must first decide what kind of Bitcoin wallet you want to use. We’ll break down to the major types of wallets for you.
Before we start, it’s important to note that while they may be called ‘wallets,’ you are effectively storing your Bitcoin in a virtual bank account; there are no physical Bitcoins transacted at any point. Every ‘Bitcoin Wallet’ is simply a computer program capable of interpreting and deciphering the mathematical equations within the blockchain (the underlying technology of Bitcoin). A wallet will securely store the digital private keys you need to access, transfer, and spend the Bitcoin stored on a Bitcoin address.
An online wallet is a wallet provided on the ‘cloud’ by a third-party wallet service; this type of wallet is only accessible if you have a working internet connection. Online wallets are the most popular form of Bitcoin wallet, due to the flexibility of access it offers. Some of these online wallets also have extensions and applications that allow you to use them on both desktop and mobile platforms.
If you want to place your bets with Bitcoin from anywhere, be it in the comfort of your own home, in the office, or on vacation, then an online wallet might be the right storage option for you. In addition, it is effortless to transfer Bitcoin from an online wallet to a sports betting site, but we’ll get into that later!
Online wallets all have varying degrees of security, from highly secure platforms that require multi-factor authentication to inferior platforms that only need an ID and password. We highly recommend you use two-factor authentication and secondary passwords whenever possible; this immensely increases the security of your Bitcoin and protects from malicious hackers!
Popular online wallets:
Desktop wallets are similar to online wallets, except that they store your Bitcoin on your hard drive instead of on the ‘cloud.’ If your computer remains connected to the internet in some capacity, you are privy to many of the same advantages as if you were using an online wallet.
There are a plethora of desktop wallets for you to use, regardless of your computer’s capacity, power, or operating system. There are dedicated Bitcoin wallets for use with Linux, Mac, and Windows operating systems readily available on the market.
Desktop wallets are an excellent choice to use with your sportsbook, as they have many of the same advantages of an online wallet.
Popular desktop wallets:
Mobile wallets are optimized for Simplified Payment Verification (SPV); they also frequently make use of your smartphone’s ability to read QR codes, allowing you to transfer your Bitcoin with a quick scan. That makes mobile wallets one of the best methods to use with a sports betting site, as many sportsbooks will generate a QR code to facilitate Bitcoin transfers. QR codes make the transfers between you and your sportsbook almost instant!
Bitcoin wallets are available for both Android and iPhone, and there are select wallets that are also Blackberry-friendly. As long as you own a smartphone, there is a Bitcoin wallet that you can use.
Popular mobile wallets:
A ‘cold’ wallet is one that exists wholly offline; this is the securest form of wallet you can have when it comes to hackers and other forms of malicious online activity. With offline wallets, you are storing your Bitcoin address and private digital keys on a piece of paper, on the inside of your favorite jersey, or on anything else you should so desire. The possibilities of cold storage are limitless! The only risk you run is losing this information by misplacing it, and for this reason, we recommend creating multiple copies of your private key if you choose to use a cold wallet.
We would not recommend using a cold wallet for transferring Bitcoin to your sports betting site, as this level of security is unnecessary and inconvenient for regular use and transfer of Bitcoin. Cold wallets are usually reserved for serious Bitcoin enthusiasts, people who may be holding onto hundreds of thousands of dollars in Bitcoin.
As we touched on earlier, a common form of a ‘cold’ wallet is literally writing your private key down on a piece of paper, and keeping it somewhere that you deem physically safe (like a safety deposit box, or a personal safe).
To bet on sports, you will want to store your funds in a ‘hot’ wallet, one that remains connected to the internet, as you will likely be accessing your funds relatively frequently.
Unless you end up winning a considerable amount of Bitcoin at your sports betting site and want to stash the funds away for an appreciable length of time in somewhere like your safety deposit box, we wouldn’t recommend a cold wallet. They make accessing and transferring your Bitcoin a pain. They somewhat undercut the entire point of the easy-to-use currency.
Popular Cold Wallets:
Once you’ve decided which wallet works for you, you can move to the next step on your way to betting with Bitcoin: purchasing Bitcoin at a regulated, online exchange! Exchanges are the best way to acquire Bitcoin, especially if you plan on regularly trading in it. If you’re going to be betting at a sportsbook with Bitcoin, this applies to you.
A Bitcoin transfer on the blockchain is a complex mathematical process that requires unique hash functions, signatures, and other complicated cryptographic sequences. Rest assured, you will not have to understand any of these dense terms to acquire and transfer Bitcoin; exchanges were built with a user interface in mind. Using them is just like using a traditional currency exchange, like Forex. The vast majority of exchanges will allow you to store Bitcoin on them; in this sense, they can function similar to a regular bank account.
Popular Bitcoin exchanges:
The largest full trading exchanges, by volume, are:
Once you setup your account, you will have to provide some personal information for verification, as well as some financial information before you can convert conventional currency into Bitcoin.
Depending on your geographic location, your existing financial portfolio, and your desired method of payments, which exchange is right for you will vary. However, we are extremely confident that you can find an exchange within our listed options that suits your needs.
Peer to Peer Exchanges and Bitcoin ATMs
Online exchanges are not the only way to acquire Bitcoin. You can also acquire Bitcoin via peer-to-peer exchanges, or purchase it with cash from a ‘Bitcoin ATM.’ However, we recommend that bettors stick to online exchanges. Using a peer-to-peer Bitcoin exchange or a Bitcoin ATM is unnecessarily complicated and inefficient, especially if you are making your first foray into the exciting world of cryptocurrency. Further, there are major drawbacks for both peer-to-peer exchanges and Bitcoin ATMs; peer-to-peer Bitcoin transactions are less secure and Bitcoin ATMs often charge you between 3% and 8% per transaction.
A Step by Step Guide to Bitcoin Wallets
1. Head to your wallet of choice, be it online, desktop, or mobile.
2. Click on the ‘wallet’ button.
3. Once you’ve signed up for the site, you will be given a private key or a mnemonic phrase. This is extremely important, as it will be used to recover your account in the case of a password mishap.
4. After this, you will be taken to the main screen of your wallet, and provided with your Bitcoin wallet address.
5. That’s it! You’ll have a Bitcoin address to send and receive Bitcoin!
A Step by Step Guide to Bitcoin Exchanges
1. Sign up for your exchange of choice.
2. Verify your account, a process which will most likely take place via email.
3. Once you verify your email address, you will be given the option of adding your phone number. Do this, as this is the two-factor authentication that is so integral to the security of your Bitcoin!
4. Enter your bank account information, credit card information, or any other links to traditional currency that you may wish to provide. Your options will depend on the specific exchange you use.
5. Type the amount of USD you wish to send the exchange, and the exchange will display the corresponding amount of Bitcoin you will receive in exchange. (It is important to note that when you deposit with Bitcoin, your sportsbook automatically converts it to USD and you place bets with USD. Of course, you still have the option to withdraw with Bitcoin despite this conversion.)
6. Click “Buy”!
7. Confirm again on the following page.
8. Here is where it gets a little tricky. At this point, you can store your Bitcoin on the exchange itself, or you can transfer it back to your wallet of choice.
9. If you want to transfer the funds back into your wallet, click the “Send” button at your exchange.
10. Copy and paste the Bitcoin address of your wallet into the “To” section.
11. Enter the amount of Bitcoin you want to send back to your wallet.
12. Hit the “Next” Button.
13. You will be asked to review both the wallet address and the amount of Bitcoin you decide to send. Scrutinize this section very carefully, as transactions are irreversible once they are confirmed.
14. If the information entered is correct, hit “Send.”
15. After confirming the transfer, you will return to the main screen, which will show that you sent the Bitcoin and that it is still awaiting confirmation in the blockchain.
16. If you have any questions about the progress of confirmations, head to blockchain.info and you can track the progress of your transfer.
17. Once the transaction has been confirmed, your Bitcoin now safely resides in your Bitcoin wallet!
Banks and Bitcoin: A Word of Caution
When it comes to transferring your money to a Bitcoin exchange, it is always smart to exercise as much caution as possible. Bitcoin is legitimate, and all exchanges we recommend are legitimate businesses. That said, banks can be slow to adopt new trends, and Bitcoin is, unfortunately, no exception to the banking world’s overly cautious rejection of ‘the internet of money.’ Just like cable companies were slow to adapt in providing their customers with working modems, banks are slow to adapt to their customer’s cryptocurrency demands. Some banks consider Bitcoin, and the exchanges that trade in them, illegitimate, fraudulent businesses. Thankfully, your sportsbook doesn’t think the same way!
The consequences are not usually that grave if your bank isn’t friendly to Bitcoin; they usually will just put a temporary freeze on your account.
Here is a comprehensive resource on banks that have shut down transactions in the past here, so you can know if your bank is friendly or unfriendly to Bitcoin.
Why You Should Use a Bitcoin Wallet for Sports Betting
Using a Bitcoin wallet instead of storing your funds at an online exchange like Coinbase has advantages that transcend security. In some rare cases, major, regulated exchanges have terms of service against sending Bitcoin to direct to a sports betting site from an online wallet. While rare, there have been reported instances of an online exchange freezing a customer’s Bitcoin after the customer tries to send funds to a gambling website.
Rest assured, if this happens to you, you will not use lose your Bitcoin. You will merely be banned from making any further transactions on the exchange, and have to move your Bitcoin to a different wallet. To avoid this hassle, we recommend you always transfer your funds from an exchange to a wallet that exists wholly apart from an exchange.
Bitcoin exchanges, at least the ones above, are regulated and licensed businesses. They operate out in the open, and are privy to the same set of rules as any conventional monetary exchange; they register with the government not only for your security but the exchange’s protection as well. Consequently, they are subject to the same AML (anti-money laundering) and KYC (know your customer) rules that every monetary exchange must abide by. Bitcoin is brand new technology, and its subtleties and nuances are not entirely understood by many government regulators, at least not yet. To gain legitimacy in the eyes of the established banking sector, many Bitcoin exchanges such as Coinbase abide by AML and KYC to a higher degree than conventional monetary exchanges; they seek to become equals of the largest financial exchanges by passing compliance and legitimacy standards with flying colors.
Most online sportsbooks are located in select offshore areas and reside in jurisdictions that expressly licence betting and gambling websites. The sometimes cloudy status of sports betting websites in some countries that Bitcoin exchanges situate themselves in means they will occasionally prohibit funds from moving to betting websites. Exchanges are somewhat caught in the middle and is why we strongly recommend transferring your funds from an online exchange to a wallet, either mobile, desktop, or online. Once your Bitcoin is off the exchange, you are free to send your funds to whatever kind of business you want. Wallets are not subject to the same set of rules that Bitcoin exchanges are; you will be able to transfer your Bitcoin to wherever you like without any fear of infringement.