Online gambling is obviously a lucrative business, everybody knows that, especially the companies that are profiting with it. Online gambling might even be illegal in the United States since 2006, but that is not enough to bring the business down, as players always found ways to go around the rules. Bitcoin is one of them.
But what happens when you realize that half of all cryptocurrency transactions are generated by online gambling accounts? According to Jeremy Liew, a partner at a venture capital firm called Lightspeed Venture, the main “culprit” is one of the biggest Bitcoin gambling sites, the recently sold SatoshiDice. In a blog post, Liew revealed that the transactions from SatoshiDice accounted for a huge percentage of all Bitcoin transactions in the month of June 2013, somewhere between 25 percent and over 50 percent.
In January of 2013, for instance, SatoshiDice reported 33,310 BTC in profits from 2012. The gambling website also reported that it made an average actual profit of 135.96 BTC per day from May through December of last year.
In a public financial statement released in June, the platform reported 372,712 bets placed over 30 days. In other words, this means about 12,424 bets per day. Winning bets involve two transactions – placing the bet and retrieving the winnings-, but losing a bet only means one transaction. If every bet on this website was a winning bet, there would be almost 24,800 transactions in June on SatoshiDice.
According to the blockchain, there were about 48,400 transactions per day in June, so this means that SatoshiDice could be responsible for 51 percent of all Bitcoin transactions in that month. But since not every bet is a winning bet, the number of transactions in June is higher than 12,4000, but lower than 24,800. However, the company hosts a few dozen similar games and all the numbers can be part of the crypto-math we’re doing.
Jeremy Liew says that, as stated by these numbers, “SatoshiDice accounts for somewhere between 25 to 50 percent of all network traffic by transaction volume, depending on the distribution of bets, but we think that the distribution of bets is toward the higher probability of winning, so more like 50 percent than 25 percent”.