Cryptocurrency is becoming more and more popular in many countries around the world. It is especially in great demand in the gambling business — financial market experts suppose that up to 50% of transactions are being made with it.
Recently cryptocurrency has received official status in Ukraine: on September 8, 2021 the Verkhovna Rada (Parliament) adopted the law «On Virtual Assets».
Currency for globalization
The idea of creating a single currency for the whole world arose long ago. So long ago that the experts of a financial market cannot specify the exact date when. Somebody guesses that it occurred at the beginning of a globalization process after the end of the World War II. At that time the US dollar strengthened its position greatly and this caused concern among many economists who not without reason believed that the focus on the “evergreen” would force other countries to work for the US economy.
There is also another version why cryptocurrency was invented. It is based on the historical development of the monetary system. It dates back to ancient times when metal coins came into circulation. Then there paper money appeared thus significantly reducing the cost of their issue and making it more difficult to counterfeit.
With the advent of the Internet virtual money began to be in great demand. Their owners got a unique opportunity to pay online for all services and goods as well as for their delivery directly from the place of residence or work.
It was the World Wide Web that brought the humanity to the need to create a global currency that would work for its users rather than for individual national economies. In 2009 Bitcoin became the first cryptocurrency. Satoshi Nakamoto is mentioned as its creator although it is still unknown whether it is a real name of a particular person or his nickname or even a group of developers.
Work without intermediaries
Today few people remember the correspondence with papers. But until recently people were actively writing letters to each other. The exchange of information in this case depended on a number of intermediaries: postal workers, railways, airlines and so on. And any failure in their work immediately added complications: urgent issues could remain unresolved.
Digital technology made it possible to get rid of such intermediaries. Now information is delivered directly and instantly.
One of the main features of cryptocurrency is that it does not need intermediaries. It does not require banks to be stored, an owner keeps it in cyberspace and has an access to it by using his own code which is created by complex computer calculations. At any time an owner can directly transfer the currency to other users even without a fee.
This approach greatly simplifies financial transactions and speeds them up. In this case the geographical factor and state borders lose their meaning. This is extremely important for the modern economy and increases its competitiveness.
Another feature of cryptocurrency is that it does not have an administration and a central governing body. The asset is built on the principle of a continuous chain of blocks (blockchain principle), all operations in which are checked by the network of participants.
Accumulation with forecasted emissions
One of the functions of money is possibility to get accumulated. Usually people raise funds to address serious issues. In particular when somebody wants to buy an apartment, car, to create deposit programs, etc. When keeping money in cash at home or in a bank account their owners mistakenly believe that only they manage it. In fact monetary policy is determined by regulators and is influenced by a number of factors. For example, the National Bank decides to issue money which can lead to the emergence of its additional supply in a market and the depreciation of a currency unit. The owners of accumulated funds cannot influence such processes.
The uniqueness of cryptocurrency is not just absence of regulatory authorities but also the fact that the volume of its issuance is foreseen. Mining (production) of cryptocurrency involves creation of new blocks to receive remuneration in the form of issued currency and commissions. For example, today a schedule of Bitcoin volume till 2033 has already been drawn up. This allows the owners of funds to use them more rationally and plan long-term expenses.
Users of cryptocurrency are also attracted by its pseudo-anonymity: transaction information contains only data on account numbers but does not show their owners. You need additional information to determine them.
Legalization or prohibition?
Today Bitcoin remains the most popular cryptocurrency. But along with it others appear. Now there are about one and half a thousand of them. In particular Litecoin, Namecoin, Ripple, Peercoin, Quark, NXT.
In some countries cryptocurrency has been officially recognized already. For example, in Switzerland it is equated to foreign currency. In Poland its mining and sale are allowed. In El Salvador Bitcoin can even be taxed as it has become the official means of payment there.
Cryptocurrency has been also legalized in Japan. Companies selling it have to pay tax for it. In Germany they went further: all purchases paid for with virtual currency are not taxed.
In the United States cryptocurrency has acquired the status of securities. It is becoming a routine matter for Americans who willingly pick up various innovations. There are already about 23,000 ATMs in the country that accept Bitcoin. According to this indicator the United States has already come out on top in the world. Moreover the distance from their successors is very significant. The second place is occupied by Canada where there are about 1.5 thousand such ATMs.
But there are countries where the circulation of cryptocurrency is strictly prohibited. For example, in Bangladesh and Bolivia. And in Indonesia, Croatia and Kyrgyzstan it is still not recognized as a legal instrument of payment.
In Ukraine cryptocurrency has been legalized after adoption of the law “On Virtual Assets”. 276 members of the Ukrainian Parliament voted for it. This law provides legal protection to users and market participants including cryptocurrency exchanges and banks that will open accounts for crypto companies.
In the Verkhovna Rada (Parliament) Committee on Anti-Corruption Policy the need to adopt such a law then was explained as follows: the daily volume of transactions with virtual assets in our country ranges from 150 to 200 million dollars and the capitalization of virtual assets has already exceeded USD2 billion.
According to the law cryptocurrency is not recognized as an instrument of payment in Ukraine and cannot be exchanged for property and services. However, the Ministry of Finance clarified that the law would fully work only when necessary changes to the Tax Code are made. It is expected that they will stipulate the possibility to pay taxes in cryptocurrency.
In online casinos — with online currency
The gambling business reacted rather quickly to the emergence and spread of cryptocurrency. This is largely due to the fact that in recent years it has been actively going online and thus expands its customer base and creates additional comfortable conditions for those who use its services. Anyone can join any online casino even if it is located in another country or even on another continent and pay with virtual currency.
The benefits of cryptocurrency attract many fans of gambling. Above all it applies to those who want to keep their anonymity and often even to hide the nature of their funds origin. And the absence of a commission in payments also plays a significant role for them. Some cryptocurrencies remain a real find for players in the countries where gambling is banned. In particular it applies to a number of Asian countries. If transactions are made with gambling sites there it will immediately provoke a response from local banks and regulators. At the same time trust in cryptocurrency increases faith to an online gaming platform and its members.
Recently in the United States the company International Game Technology (IGT) patented the technology of paying bets using one of three cryptocurrencies — Bitcoin, Bitcoin cash or Ethereum. The cryptocurrency chosen by a client will be transferred to his gambling account and will be automatically converted into fiat money after he pays commissions. IGT is known for its development of slot machines and technologies for casinos. It promises to spread this innovation to all its digital platforms and allow players to bet in cryptocurrency at any online casino.
In many countries around the world cryptocurrency is becoming handy for online poker players. For this purpose they only need to register on a cryptocurrency exchange, create their own cryptocurrency wallet and then choose an online platform which accepts cryptocurrency.
In Ukraine such an option fails to be fully used. Today we have only one legal online poker platform but it provides services without the use of cryptocurrencies.
The gambling business in Ukraine was legalized only last year. It has significant prospects and the latest technologies only strengthen them.
At the same time the country continues to develop rules that will help this business to function in a civilized manner. One of the principles it must profess is transparency. And market participants note that this will directly affect the use of cryptocurrency which as yet provides for anonymity.
The state does not want to let out of sight any business and in particular the gambling one. This applies to the nature of the origin of funds circulating in the market, payments of taxes and etc.
Such issues are especially important for Ukraine as the state commits oneself to the international community to fight against corruption, terrorism, smuggling and other negative phenomena. Ukraine is also very interested to fill the State Budget which is in dire need of funds.
Therefore the supervisory authorities will closely monitor the activities of gambling establishments and will require them to comply with all licensed terms and current legislation in force.
Taking into account the situation in which the gambling business exists, its representatives will aim for not only to maximize the use of modern technologies but also to ensure that it will take place within the legislative field.
To some extent it may even restrain the use of cryptocurrency in Ukraine. But we must also take into account that the risks of working with it will also become lower.