Bitcoin has some perceived flaws that mean it isn’’t ideal for use in commerce, however. When paying for items or services, both buyer and seller like the value of the payment to stay the same. They also like speedy payments that don’’t cost too much.
Stablecoins, like Tether, seek to address some of the issues with Bitcoin as a payment’’s network. And some online casinos have been quick to embrace the digital currency, just as they were with Bitcoin.
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A Bit of Context
The attention Bitcoin received led people to imagine a world of decentralised finance. A world without banks and governments messing in the production of money. However, it hasn’’t really panned out like that so far.
Bitcoin has a few shortcomings that make using it for payments problematic. Firstly, its finite supply means that without a frankly enormous market capitalisation (the combined value of all coins in circulation), the price will always be volatile. Changes in demand, impacted by an ever-evolving regulatory climate and other external factors, have a dramatic impact on price. Bad news makes it go down and good news makes it go up.
Additionally, the network’’s unrivalled security model is expensive to maintain and demands time to arrive at absolute consensus. The changing fees and length of time transactions take on the Bitcoin network can make some applications, like small purchases, unfeasible.
The very reasons why Bitcoin isn’’t quite the world-changing payments network people once thought it would be actually make it desirable in a different way. With its inherent scarcity and rock-solid security model, many people consider Bitcoin as something of a digital gold (with transactional capabilities) today.
Various digital projects have come along in recent years to attempt to fill the payments niche that people thought Bitcoin would. For example, the likes of XRP, by Ripple, slashed transaction costs and waiting times to microseconds but did nothing to tackle volatility.
That leaves a gap in the market and it looks like an innovation called Tether is best positioned to fill that at the moment.
What is US Dollar Tether (USDT)?
USDT is a digital currency that was designed to hold a consistent value regardless of market conditions. Every USDT token is backed by a dollar (or the equivalent in assets) held by the company Tether. Tether, the company, creates and burns tokens, in accordance with supply and demand, to maintain the currency’’s peg to the value of the dollar. It reports daily on both creations and burns, which are all available on the various blockchain explorers for the networks that host USDT.
That’’s because Tether isn’’t a blockchain in its own right. Rather, it exists as a token issued on various existing open blockchain cryptocurrency networks. These include Bitcoin’’s Omni and Liquid Protocol, Ethereum, EOS and Tron.
Tether tokens benefit from characteristics of their underlying blockchains. Bitcoin-issued USDT benefit from increased security but remain more stable than BTC, and Ethereum or Tron USDT is quicker to make transactions with and has lower fees.
Tether has been no stranger to controversy over the years. The company and the closely associated Bitfinex cryptocurrency exchange have had their fair share of banking issues and even a case against them brought by the New York Attorney General.
Many accuse the companies of not actually holding enough assets to back the Tether in circulation. With the absence of a full financial audit, they might be correct.
Following the success of USDT, Tether has created other fiat currency stablecoins. These include the Japanese Yen and the Euro. Today, the entire market capitalisation of all Tether tokens across all networks in circulation is more than $6 billion.
Why is Tether Useful for Online Gambling?
Bitcoin was quick to be adopted by online casinos because it was cheaper, faster, and less restrictive than traditional payment methods. Tether does all of the above but with one major added bonus – its value stays the same.
There are two real flaws with using Bitcoin for online gambling. The first is its volatility. The price can move by 20 percent or more in just a matter of hours. This is because Bitcoin price is a product of supply and demand only. No one can destroy or create more Bitcoin and this is one of its strongest features.
That said, for day to day use, this volatility is off putting. Say you deposit $500 worth of Bitcoin to a casino and decide to wait until tomorrow to play. You could wake up to find that your bankroll had shrunk in dollar value by $100 or more. Not ideal!
As explained, Tether tokens hold their value to a dollar. Although the price does fluctuate slightly, it is by fractions of a percent. On rare occasions, the peg has been broken but it quickly returns to its dollar value.
The second major benefit of Tether is that it's quicker. Bitcoin settles with absolute finality much faster than any other non-cryptocurrency payment network on the planet. However, it can still take up to an hour and sometimes longer when the network is overwhelmed with transactions. Tether based on Ethereum or Tron, being based on faster (but less secure) networks, arrives at the recipient within a matter of minutes. This is obviously a major perk for casino companies.
For now, there aren’’t many online casinos that accept Tether. However, we’’re expecting that to change thanks to the clear advantages it has over traditional payment methods.
How do I get Tether?
Getting Tether tokens is still a bit of a pain. The reason for this is that most cryptocurrency exchanges that sell USDT for fiat currencies require a full “know your customer” check. There are ways around this though.
The absolute easiest (but probably longest) way to get hold of some Tether is by signing up to an account with the Bitfinex exchange and completing the full account verification process. This will allow you to buy cryptocurrency with fiat currency and you can buy your Tether directly on the exchange.
The verification process will likely demand you submit a lot of forms of identification. It will also probably take around a week to complete.
For those not wanting to wait or submit identification for whatever reason, there is a slightly more convoluted way. First, you need to buy Bitcoin using a peer-to-peer marketplace like LocalBitcoins. Different traders will advertise different payment methods. You want a seller who will take cash in person or payment via bank deposit.
Once you have your Bitcoin, you will need to send it to an exchange that supports Tether withdrawals without KYC. It will likely be an unlicensed exchange, so, that is something of a concern. These do exist but, for obvious reasons, we don’’t want to promote an unlicensed exchange personally!
At the exchange, trade your BTC for USDT (or another version of Tether you want to use) and withdraw it to an appropriate wallet. It’’s very important that you check which network supports the Tether you are buying. You will need to make sure to only ever send your Tether to wallets that support that type of Tether. If you send Tron Tether to an Ethereum Tether address, you will lose it!
Whichever method you use, you should transfer your Tether off the exchange to a wallet for which you and only you know the private keys. For Ethereum Tether, use any wallet that supports Ethereum transactions, for example.
One you have the Tether in your own wallet, you’’re ready to sign up to a Tether casino. Register with the operator and find your account’’s Tether address in the Cashier section. Input the address into the Send Address field on your wallet and enter the amount. Double check the address and hit send.
From there, it’’s just like using any other online casino! Load up your favourite game and test your luck!
Pros and Cons of Tether Casinos
To conclude, let’’s sum up the above with some simple advantages and disadvantages of the stablecoin.
- Very fast. Almost all versions of Tether are much faster for both deposits and withdrawals than almost any other payments network.
- Cheap. Casinos save money by not needing to pay Visa processing fees and establish banking relationships.
- Stable. Unlike Bitcoin, half the value of your bankroll can’’t disappear overnight.
- Borderless. Tether will travel just as quickly and cheaply across a dinner table as it will the entire planet.
- Associated with a pair of dubious companies. There is A LOT of controversy surrounding both Tether and its sister company Bitfinex. There are other stablecoins out there but Tether is by far the largest and most accepted.
- Many more steps to using Tether than most other payment methods.
- More likely to require KYC checks than Bitcoin.
All told, it’’s quite exciting to see online casinos starting to offer Tether deposits. It’’s early days, as it is for the entire cryptocurrency space, but we’’re excited to see what other innovations this fascinating industry will bring to iGaming.