This post originally appeared on the Unbounded Capital website and we republished with permission from Jack Laskey.
April 15, 2011 was one of the most disappointing days of my young life. It’s a date with little meaning to most, but for poker players it’s called Black Friday. Why? This is the day the US Justice Department issued indictments against the three largest online poker sites in America – Full Tilt Poker, PokerStars, and Absolute Poker.
I probably should have seen it coming, especially given the fact that I had been using Full Tilt as an underage gambler and my main source was adding cash, prepaid debit cards I had bought at the grocery store, has recently received expiry. Regardless of the merits of the indictments, the years to come were extremely painful for American poker players. For most, it was simply a loss of the main source of entertainment, but for some it was also a loss of their livelihood. Thousands of online poker pros were forced to retire, relocate, switch to live poker, a game that emphasizes different skill sets due to its much slower speed, or started playing on gray market poker websites that had much less poker activity at generally.
Although this disruption is painful and costly, the worst part of the closure was the funds that froze. Many players maintained a significant balance on these rankings. Moving money on and off site was slow and expensive. He was managing risk poorly in hindsight, but many poker players simply didn’t see the need to store money elsewhere. Much of this money was eventually returned years later, but the stress of not knowing if it was ever recoverable took a significant toll on the community.
A very similar scenario is starting to play out in the cryptocurrency trading space. Exchanges operating under regulatory risk are beginning to face conflict. Recent examples include BitMEX and OKEx, the latter of which hopefully halted withdrawals. Exchange hacks have long been a feature of the space, but a regulatory clash that results in long-term tying of consumer funds seems to be growing more likely.
Exchange users face the same conundrum as poker players do, but with more seriousness. The amount of funds a poker player will want to use is relatively predictable, but many traders cannot rule out the possibility of a trade requiring significant capital compared to what would otherwise be the market on an exchange dangerous. The high transfer costs of most cryptocurrencies and the high cost of converting to fiat have led to a significant portion of the crypto economy being held on exchanges, much of it in the form of fixedcoins like Tether, $ 18.5B at the time of writing. These reserves carry their own risks that include potential regulatory conflicts and extend to questions about whether or not these reserves are fully supported. Everyone knows that the exchanges are not always reliable and that funds are at risk, but they continue to be used because there is no acceptable alternative.
This is a very ironic scenario given the initial promise of cryptocurrencies. The qualities that once drove the typical Bitcoin sales pitch included the ability for self-custody, low transfer fees, and instant settlement. Due to changes made to Bitcoin in the form of BTC, the one currently trading at around $ 18,000, these qualities have been replaced by high fees, settlement hours as well as settlement times, and the need to storing significant balances on exchanges due to so much crypto’s purpose is now trading. Crypto currency alternatives are not much better. Fortunately, cheap, fast Bitcoin is back in the form of Bitcoin SV, and with it we can have our cake and eat it too.
If you’re not in the Bitcoin SV space, you’ve probably not heard of Peergame or TDXP. You probably also haven’t heard of Silver Button or RelayX, and unfortunately you probably haven’t even heard meaningfully about Bitcoin SV. But, if you are using platforms that require capital balance storage in order to use them most effectively, then these technologies built on Bitcoin SV are on track to make your life a lot better.
Peergame is the first regulated casino built on Bitcoin SV, a version of Bitcoin that has restored and professionalized the original Bitcoin protocol to retain qualities like instant transactions and very low fees. TDXP is a new exchange that is also built on Bitcoin SV.
Both of these platforms are unique in their use of non-prison Bitcoin wallets like Cash Button and RelayX. On traditional platforms, money is moved first from user custody to the platform and then to use – perhaps to a poker, bet or craft game. On Peergame and TDXP, money is moved directly from the user’s custody to use. If you place a bet on Peergame, the money goes straight from your wallet to the bet, and if you win, straight back to your wallet. The money outside your custody is only when it should be used. On TDXP, you start your trade with payment directly from your wallet. When you stop all or part of the trade, the money goes straight back into your wallet.
Why isn’t all platforms built this way? Most payments cannot be settled quickly and for low fees. For uses like gambling or trading, there is only so much freedom that can be afforded before the payments are truly settled, so waiting times of 24 hours or more are common when using previous payment systems. Cryptocurrencies like BTC and ETH can be processed faster, but not immediately. BSV is unique in that it uses a simple technology called zero-conf, which allows immediate settlement. This would be possible on BTC were it not for technical changes made in pursuit of other goals.
While instant settlement is the main requirement to unlock Peergame and TDXP’s unique user experience, the extremely low fees make other types of experiences possible as well. Cryptocurrencies like BTC and ETH have typical fees ranging from $ 2- $ 10 per transaction. This probably means that any trade or bet has a minimum size of $ 50- $ 200 to be worth the transfer fee in addition to whatever fees are set by the service. BSV fees are about 1 / 100th of a hundred. This means that much smaller bets and trades become viable. Want to play penny slots without the need to create an account and deposit money? No problem! Want to give BTC a 100x leverage short with only $ 1 of capital? Go for it! Interestingly, an instant settlement also makes larger bets and trades more viable. Want to make a big short without needing to tie capital on a risky exchange to pay for profit? No problem, just pay your profits as needed. Want to play high pole poker without the need to store tons of extra money on the website for extra buy in? Easy – just deposit as you go.
Bitcoin SV entrepreneurs understand that simple things like low fees and instant confirmations are extremely powerful. Not only can they revolutionize the user experience for gaming and online trading platforms, but with the added convenience, who knows what other types of experiences are now possible. At Unbounded Capital, the first US fund that focused exclusively on Bitcoin SV, we are excited to find out.
To learn more about the Bitcoin blockchain and relevant projects currently being built on it check out Unbounded Capital’s Free E-Book explaining BSV and comparing it to popular alternatives like BTC and Ethereum.
See also: Jack Laskey’s presentation at CoinGeek Live, Transaction Processing: A Key to Driving BSV Business Adoption
New to Bitcoin? Check out CoinGeek’s Bitcoin for Beginners section, the ultimate resource guide to learn more about Bitcoin – as originally envisioned by Satoshi Nakamoto – and blockchain.