April 15, 2011 was one of the most disappointing days of my young life. It’s a date without much meaning to most, but for poker players it is known as Black Friday. Why? It is the day that the U.S. Department of Justice 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 major source of adding funds, pre-paid debit cards I’d purchased at the grocery store, had seen its acceptance recently discontinued. Regardless of the deservedness of the indictments, the ensuing years were extremely painful for American poker players. For most it was simply a loss of a major 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 which emphasizes different skill sets because of its much slower pace, or start playing on gray market poker sites which had far less overall poker activity.
While these disruptions were painful and costly, the worst part of the shutdowns were the funds that became frozen. Many players kept a sizable balance on these sites. Moving money on and off the site was slow and expensive. It was poor risk management in retrospect, but many poker players simply didn’t see the need to store money elsewhere. Much of this money was ultimately returned years later, but the stress of not knowing whether it would ever be recoverable took a significant toll on the community.
A very similar scenario is beginning to play out in the cryptocurrency trading space. Exchanges operating under regulatory jeopardy are beginning to face crackdowns. Recent examples include BitMEX and OKEx, the latter of which suspended withdrawals, hopefully temporarily. Exchange hacks have been a long-time feature of the space, but a regulatory crackdown which results in user’s funds being tied up for a long period of time appears to be growing more likely.
Exchange users face the same conundrum that poker players do, but with greater severity. The amount of funds a poker player will want to use is relatively predictable, but many traders can’t rule out the possibility of a trade which demands significant capital relative to what would otherwise be in the market on a risky exchange. The high transfer costs of most cryptocurrencies and the high cost of converting to fiat has resulted in a significant portion of the crypto economy being held on exchanges, much of it in the form of stablecoins like Tether, $18.5B at the time of this writing. These reserves contain their own risks which include potential regulatory crackdowns and extend to questions about whether or not these reserves are fully backed. Everyone knows the exchanges aren’t always reliable and that funds are at risk, but they continue to be used because there isn’t an acceptable alternative.
This is a very ironic scenario given the initial promise of cryptocurrencies. Qualities which once drove the typical Bitcoin sales pitch included the ability to self custody, low transfer fees, and instant settlement. Due to changes made to Bitcoin in the form of BTC, the one currently trading at about $18,000, these qualities have been replaced by high fees, hour-long plus settlement times, and the need to store significant balances on exchanges because so much of crypto’s purpose is now trading. Other 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 aren’t in the Bitcoin SV space, you probably haven’t heard of Peergame or TDXP. You also probably haven’t heard of MoneyButton or RelayX, and unfortunately you probably haven’t even meaningfully heard of Bitcoin SV. But, if you are a user of platforms which require storing a capital balance in order to most effectively use them, then these technologies being built on Bitcoin SV are on course to make your life much better.
Peergame is the first regulated casino built on Bitcoin SV, a version of Bitcoin which has restored and professionalized the original Bitcoin protocol to retain qualities like instant transactions and extremely low fees. TDXP is a new exchange also built on Bitcoin SV.
Both of these platforms are unique in their use of non-custodial Bitcoin wallets like MoneyButton and RelayX. On traditional platforms, money is first moved from the user’s custody onto the platform and then into use - perhaps into a poker game, a bet, or a trade. On Peergame and TDXP, money is moved directly from the user’s custody into use. If you are placing a bet on Peergame, the money goes straight from your wallet into the bet, and if you win, immediately back into your wallet. The money is only out of your custody while it ought to be, when it is in use. On TDXP, you start your trade with a payment directly out of your wallet. When you end the part or all of the trade, the money goes immediately back into your wallet.
Why isn’t every platform built in this way? Most payments can’t be settled quickly and for low fees. For uses like gambling or trading, only so much leeway can be afforded before payments are truly settled, so wait times of 24 hours or more are common when using legacy payment systems. Cryptocurrencies like BTC and ETH can be processed quicker, but not immediately. BSV is unique in that it uses a simple technology called zero-conf, which allows for instant settlement. This would be possible on BTC were it not for technical alterations made in pursuit of other goals.
While instant settlement is the primary 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 imposed by the service. BSV fees are about 1/100th of a cent. This means that much smaller bets and trades become practical. Want to play penny slots without needing to create an account and deposit money? No problem! Want to put on a 100x leverage BTC short with only $1 of capital? Go for it! Interestingly, instant settlement makes larger bets and trades more practical as well. Want to make a big short without needing to tie up capital on a risky exchange to cover margin? No problem, just pay your margin as needed. Want to play high stakes poker without needing to store a ton of extra money on the site for additional buy-ins? 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 online gaming and trading platforms, but with the added convenience, who knows what other types of experiences are now possible. At Unbounded Capital, the first US fund 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.