Bitcoin wallet USB stick

The United States Security and Exchange Commission (SEC) issued an investor alert last week, cautioning people about Bitcoin as well as other, lesser known forms of virtual currency.

Bitcoin has been gaining more and more attention over the past year, but has been known in internet poker circles for longer than it has been by the general public. While still not particularly widespread, its popularity has increased amongst Americans looking for a way to deposit money on poker sites, as it has become more difficult to make money transfers to and from poker rooms since Black Friday.

Bitcoin is a decentralized, peer-to-peer virtual currency, not backed by any government. Bitcoins are generated through “mining, ” which is essentially using computing processes at high volume to keep the Bitcoin network functioning. After some time (and it can be a long time), a Bitcoin is produced. These Bitcoins are logged and transferred on a peer-to-peer network; there is no centralized Bitcoin banking system.

The advantage Bitcoin offers for poker players is that because they are exchanged in a peer-to-peer system and no government oversees the currency, they fall outside the restrictions placed on internet gambling in the United States. The prohibits financial institutions from transferring money to or from gaming sites, but since financial institutions are not involved in Bitcoin, that law can be skirted.

Bitcoin isn’t widespread in the online poker world yet, but a few sites do accept it as a form of currency. SealsWithClubs.com only uses Bitcoin as its form of currency, while America’s Cardroom and WinPoker.com both accept it as well as traditional currencies.