Why stablecoins make more sense than Bitcoin for online casino payments

Digital currencies, especially Bitcoin, have helped reshape how money moves through online casinos over the last decade. Deposits no longer need to wait for bank approvals, nor do players have to worry about transactions being flagged as gambling-related, as Bitcoin has stripped away much of that friction. However, for all the borderless transfers and fast settlements, using Bitcoin as a direct gaming currency exposed a fundamental flaw. 

While crypto is great as a speculative asset and store of value, Bitcoin’s constant price swings are a major obstacle to its use for payments, particularly in online gambling. This flaw has led to a rise in pegged tokens like USDT and USDC, stablecoins designed to solve the price volatility. In this piece, we highlight why these stablecoins are becoming increasingly important in online casino payments and how Canada’s regulatory bodies are adapting to this move.

Bitcoin’s price swings cause a volatility problem

Bitcoin has always worked well as a long-term digital asset for people looking to hold crypto. However, as a form of payment either in casinos or on e-commerce platforms, Bitcoin’s wild price fluctuations make it a not-so-stable means of payment. 

Say a Canadian player deposits $100 worth of BTC. The casino credits the account based on the value of BTC at the time the deposit arrives, which may be higher or lower than when the deposit was initiated. Your balance takes a hit even before you place your first wager. The same happens during withdrawal. A player could win $500, but the value of that gain in BTC could be lower by the time the withdrawal process is complete. When you layer this unpredictable BTC exchange rate on top of the speculative nature of casino games, then it gets messier for both players and operators.

Bitcoin’s volatility adds macro-crypto market swings to what is supposed to be a simple transaction process. Stablecoins are meant to remove this layer of speculation entirely from the deposit and withdrawal processes. You want a $100 deposit to maintain its value throughout the payment process, including wagering and withdrawals. 

Canada’s banks have also flagged BTC’s price swings as a reason why it is not ideal for performing traditional functions of money. It’s no surprise that most Canadians holding crypto do so for investment, not for making payments.

Stablecoins keep deposits and payouts predictable

Yes, Bitcoin helped decentralization and security in payment systems. However, the network’s mechanics’ limitations on fast retail processing eventually made stablecoins the preferred choice for regular transactions. Stablecoins are pegged to the dollar, combining fiat money’s predictability with crypto’s decentralization and security. A $100 deposit in your online casino will remain a hundred no matter how long you take wagering on the platform. Decide to withdraw it, and it’s still $100, give or take a few cents.

Stablecoins run on layer-2 networks; hence, transactions clear in seconds. Players don’t have to wait endlessly for blockchain confirmations, as is the case with Bitcoin during global traffic spikes, when they are itching to lock in a time-sensitive bonus or tournament.

Besides, for Canadian players who have dealt with Interac’s e-transfer limits and declined cards, stablecoins’ fast transaction speeds and low fees – significantly lower than wire transfers and card charges – have proved to be a game-changer. 

Rarely will you find a player who has tried stablecoins and then went back to bank transfers, where they have to wait 2-3 business days for withdrawals to clear. Besides their predictability, you get operational benefits of crypto tech, including noncustodial wallets and P2P markets. 

Canada’s regulatory grey zones around gambling

Canada may be leading in online casino regulation worldwide, but it has yet to fully catch up with how the payment layer in crypto gambling has shifted. For instance, as of this writing, provincial regulators still treat crypto as a single, broad category without distinguishing between assets such as Bitcoin and Ethereum and dollar-backed stablecoins like USDT. The distinction really needs to be made since, while both are crypto, they have completely different risk profiles. 

That said, Canada’s recently enacted Stablecoin Act, which provides a prudential framework for fiat-backed stablecoins, is a sign that regulators are looking to clear this grey zone. It’s also worth noting that despite being pegged to the dollar, stablecoins are not completely risk-free. The implosion of TerraUSD in 2022, wiping nearly $45 billion in market cap, is a perfect example of assets losing their USD parity, which can be devastating. However, stablecoins like USDT and USDC have so far proven to be more stable.

Today, top-rated crypto online casinos in Canada are quietly shifting towards using stablecoins as their default crypto rails. This change in payment infrastructure already shows that stablecoins’ predictability and speed offer greater upside than using Bitcoin for online gambling payments. Going forward, Bitcoin can remain useful as a store of value for players, while stablecoins provide a clean, reliable ledger for tracking their online casino spending without worrying about unpredictable price swings.

Disclaimer: This is a paid post and should not be treated as news/advice.