Virtual Currency

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Virtual Currency GamingAnalyzing Their
RelationshipBit by Bit(coin)
Michael D. Lipton, Q.C. Jack I. Tadman
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What is Virtual Currency

• What is virtual currency?
• What is the connection between
• virtual currency and gambling?
• Virtual currency as currency used in social
  gaming (Value of virtual currency and virtual
  goods are generally restricted to virtual world)
  (E.g. World of Warcraft Gold, Zynga poker chips)
• Virtual currency as electronic money (Form of
  alternative currency not produced by any central
  banks) (E.g. Bitcoin)

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Zynga Poker

• Social gaming on Facebook involving poker
• Launched in 2007, had approximately 40 million
  users during height of its popularity
• Users receive for free virtual currency in the
  form of poker chips. Users can buy more chips
  either through Facebook, on black markets, or by
  giving third parties users personal information.

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Bitcoin

• Created by Satoshi Nakamoto an anonymous or
  pseudonymous developer or group of developers
• Debuted in 2009
• Used in peer-to-peer transactions in which
  participating parties recognize its value
• No central bank or clearing house, no financial
  regulator, not tied to any currency
• Bitcoin are stored and sent through e-wallets
• Traded/exchanged through online virtual currency
  exchanges (Mt. Gox, TradeHill)

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Bitcoin (contd)

• Approximately 11 million Bitcoin have been mined,
  21 million Bitcoin in total.
• Miners supply Bitcoin network with computing
  power needed to maintain the security of the
  block chain (a distributed technology that acts
  as Bitcoins ledger)
• Every single Bitcoin carries the entire history
  of the transactions it has undergone, and any
  transfer from one owner to another becomes part
  of the code
• Bitcoin is stored in such a way that the new
  owner is the only person allowed to spend it.
• Miners are rewarded with blocks of issued
  bitcoins (a block currently contains 25
  bitcoins) this is how currency is issued
• Price of Bitcoin fluctuates wildly. As of April
  23, 2013, 1 bitcoin is worth 130 USD

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Bitcoin (contd)
Bitcoin/ USD chart
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Virtual Currency Gambling

• 3 Elements of Gambling
• Consideration
• Chance
• Prize
• Virtual Currency Gambling
• E.g. Zynga Poker
• E.g. Satoshidice.com, Bitbook.biz

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Discussion Virtual Currency iGaming