October 24, 2018 by

Will Bitcoin Ever Replace Government Money?

The esteemed Wall Street Journal published an article in early October on the question of whether or not bitcoin, and by extension other so called cryptocurrencies, might someday become a “real” currency.

The article is especially interesting for businesses of all types including online casinos and their players. Online casinos may actually be “leading” the bitcoin “revolution” as more and more casinos are accepting bitcoin as a currency for deposit. It certainly pays at this point to understand how bitcoin works and how it would affect everything we do at an online casino from regular day to day gaming to offering, accepting, tracking, and evaluating such things as casino bonuses, jackpots, and strategy.

For the sake of clarity, we will use the term “bitcoin” to refer to all cryptocurrencies.

Sub-context of the Wall Street Journal’s Article

The sub-heading reveals a lot of where the article might go by stating the two “sides” in the issue: Is there a real need for another currency which the article calls an “alternative” currency or is bitcoin just a purely speculative investment on the same level as, say, derivatives?


One of the supposed advantages of the block chain—which is the absolute source of bitcoins—is utter transparency. Nevertheless, the Securities and Exchange Commission (SEC) rejected, in August of this year, nine attempts to float bitcoin denominated exchange-traded funds (ETF) calling the currencies not transparent enough.

The SEC was concerned that the price of a bitcoin might be manipulated in the block chain markets. The Wall Street Journal itself recently reported that “bots” have been found to be able to manipulate the value of bitcoins.

Bitcoin Gaining Gravitas

Fidelity Investments announced in just the last few days that it will “hold” bitcoins for investors and will trade them for hedge funds and other investors.

Bitcoins are very popular in markets where the regular government currency is less trusted than the so-called cryptocurrency. These markets include emerging and developing markets.

Lisa Ellis

The pro-bitcoin side of the argument is delivered by Lisa Ellis. She calls bitcoin a growing “store of value”. This term has been used for hundreds of years to describe gold. So, it may be that for a certain population, bitcoin has more intrinsic value than gold.

Ms. Ellis reports that the International Monetary Fund tracks inflation and that fully 98 countries, with a cumulative population of close to four billion, have had annualized inflation of at least 10% at least once on the past ten years. For the IMF, that indicates that many fiat currencies are inherently unstable. Ellis extrapolates from that point to say that there is certainly a need for a stable alternative to all of those unstable fiat currencies.

Ellis also uses bitcoin’s ostensive decentralization and open source generation to indicate that it can be more stable than centralized closed source fiat currencies.

Ellis lists five areas that critics often cite as reasons why bitcoin could never become a full-fledged alternative currency.

  • Stability: Bitcoin futures can be bought on two large exchanges and they can also be sold short which Ellis cites as a critical element in maintaining currency stability.
  • Transaction capacity: critics cite that bitcoin is used a very small fraction of transactions and use that statistic to “prove” that bitcoin use will never approach the standard transaction modes we use today. Ellis points out that there is a transaction method called the Lightning Network that will make bitcoin as useful in moment to moment transactions as a credit card is. In short, credit cards have a technological advantage over bitcoin not a currency advantage.
  • Security remains a big problem for cryptocurrencies so the market is feverishly trying to develop both the software and hardware necessary to alleviate this concern. In the same way that a market solution is being sought to remedy a weakness in cryptocurrencies, so the cryptocurrencies themselves are a market solution to general instability in the world’s money supply.
  • Business acceptance: This is the area that most directly impacts on casinos and online casino gamers. As more and more non-gambling businesses begin to accept bitcoin, the currency will become even more accepted by gamers and casinos. There is a kind of revolving door scenario here. Acceptance of bitcoin begets further acceptance of bitcoin.
  • Government approval: we might expect governments never to approve of cryptocurrencies. They would be in direct competition with the governments’ fiat currencies. However, the lack of government acceptance might actually be indicative of just how necessary an alternative to fiat currencies is.

In the past, gold served as the alternative to fiat currencies. It could be that in the digital age, there are enough people who are secure in the digital nature of bitcoin to embrace it and make it the most viable alternative to fiat currencies.

The enduring strength of gold as a store of value simply means that bitcoin will not take over the financial world in the near future. Hence, the use of the term “alternative” currency in the article.


The critical side of the coin is that bitcoins today are almost always used as a speculative investment. The meteoric rise in 2017 and the meteoric drop in the value of bitcoin in 2018 are seen as indicative of too great volatility and unreliability in bitcoin as a store of value. As such, critics say that bitcoin will never escape its volatile nature and will never become widely used in financial transactions in a world economy of many tens of trillions of dollars.

Bitcoin and Casinos

At the present time, there are a growing number of online casinos that accept bitcoin for deposit. However, these casinos convert the bitcoins into dollars or Euro. There may very well be a time in the future when online casino games are played in bitcoin.

Laurie Renfield Picture
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Laurie Renfield has been part of the casino scene for both print and virtual media outlets for over two decades. Renfield's research focuses on both land-based casino entertainment and online casino gambling. She is dedicated to making sure that, regardless of where a player decides to compete, they'll achieve the best gambling experience and the most satisfying rewards.

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