How Do Bitcoin Casinos Work?

Bitcoin casinos showed early on the potential of blockchain. We look at how Bitcoin casinos work with Blockchain, and their other key features.

By Steven Gleiser
Published Feb 20, 2019 and Updated Sep 8th, 2022
How Do Bitcoin Casinos Work?

Bitcoin gambling has a very interesting history. Gambling was the first activity that showed the potential of the blockchain as a tool to make decentralized, P2P transactions work. It also revolutionized gambling in itself by offering provably fair gaming – giving the players the opportunity to verify the randomness of the outcome on each bet by checking the blockchain, which cannot be tampered with. Nevertheless, many people don’t really know how a Bitcoin casino works from the inside. The truth is that with the development of Bitcoin gambling over the last 10 years and the integration of millions of Bitcoin users around the world, no Bitcoin casino works exactly like any other in the space.

The Distinction Between Brands

Yet there are a few factors that most Bitcoin casinos have in common. Here are the basic features that will allow you to understand at the most basic level how Bitcoin casinos work:

  • Provable fair gaming is a basic feature. Most players who use Bitcoin will not settle for anything else, and there are just a handful of brands that offer Bitcoin gambling but do not offer provably fair gambling.
  • Quick withdrawals thanks to the speed of the blockchain.
  • Added safety features – most Bitcoin casinos hold their funds safely in cold storage, keeping hackers away.

Three Types of Bitcoin Casinos

Apart from these features that most brands in the space have in common, the rest of the operation is highly customized and depends on the particular preferences of each brand. As for how each brand operates, there are some similarities despite the uniqueness of each. Bitcoin casinos fall into 3 very broad categories, which define the way the operate, to a degree:

  • Pure Bitcoin casinos – or pure crypto casinos.
  • Hybrid brands.
  • Online casinos that take Bitcoin payments.

How do Pure Bitcoin Casinos Work?

The first category includes the pioneers of gambling in the space. These brands generally design their own games, which often makes them a little dull insofar as graphics and the story behind the game are concerned. Pure Bitcoin casinos work based on the blockchain and automation. Generally, your bet will go to a certain address and if you win, you will have your prize sent automatically back to the address you sent coins from when you placed that bet.

This feature makes it quite hard for a pure Bitcoin casino to give you a bonus. Some pure Bitcoin casinos have a faucet that you can claim a few Satoshis on and then gamble, but that is about as much of a bonus as you are going to get on one of these brands. To summarize how pure Bitcoin casinos work, just look at the basic philosophy under which Bitcoin operates – monetary policy, irreversible transactions that are P2P and decentralized – and you will understand just how these brands work behind the scenes.

How do Hybrid Brands Work?

Pure Bitcoin casinos have several advantages over traditional online casinos, but it is not all pros; there are some cons. That is exactly why the hybrid casino rose though the ranks and now dominates the space. Hybrid casinos operate just like an online casino, but they offer all the advantages that a regular online casino does not offer, like provably fair gaming and quick withdrawals. These brands also offer bonuses just like traditional online casinos.

Most of the hybrid brands, however, have to comply with local laws and certain restrictions to offer all the elaborate games from the top software providers in the gambling space. Therefore, they might recur to KYC procedures and they must be licensed, which means that they fence off users in certain jurisdictions. Pure Bitcoin casinos work under the assumption that since Bitcoin cannot be regulated, their activities do not require a license or KYC.

How do Hybrid Casinos Operate in Comparison with Online Casinos that Just Take Bitcoin Payments?

So, if the hybrid casino is basically just a derivative of the traditional online casino in so many respects, how do they compare to the traditional brands that are now taking Bitcoin payments? The answer is simple: they offer provably fair gaming and quick withdrawals, with some even processing withdrawals automatically. Traditional online casinos that take Bitcoin payments, just operate like they did before Bitcoin was around. The only difference now is that some might have integrated provably fair gaming, along with Bitcoin payments.

How do You Operate as a Gambler?

There are more differences; no two brands are the same in terms of how they operate. However, now that you know how Bitcoin casinos work, it is up to you to choose the right kind for you. Within those broad categories, you will be able to identify just how much you would like to take your chances with one given brand or another.