PBS – Mechs is a whale. More specifically, Mechs is the username of a well-known high roller whale on an online gambling website where there is nearly no limit on the size or frequency of bets. Last October, Mechs made a series of winning online wagers, culminating with a single all-or-nothing bet of a little more than $800,000. Mechs had a 96.2 percent chance of winning. Mechs lost.
But what really set Mechs’ game apart wasn’t the odds, but the currency. All of his bets were placed in Bitcoins. The wagers rolled instantly across the Internet in both directions, registered in Bitcoin’s public ledger, known as the blockchain. Mechs’ transactions were anonymous, but as public as a scoreboard at a high-school football game. While Mechs betted, other gamblers watched as his fortune drained away.
Bitcoin gambling has had a short, but explosive lifetime on the Internet. Satoshidice.com, the most widely-known gambling service, was founded in April 2012. In July 2013, the site’s founder, Erik Voorhees, sold it to an anonymous buyer for 126,315 bitcoins—equal to $12.4 million. That pile of Bitcoins is worth around $70 million today. By most estimates, more than half of global Bitcoin transactions are wagers on gambling sites. Just-Dice.com, where Mechs made his colossal bets, has handled more than $2 billion in wagers since it was founded in June 2013. All of this gambling happens in a currency that is largely unregulated, on websites set up on offshore servers, and right under the noses of officials who are unaware it exists.
Bitcoins have gained popularity in a relatively short period of time (as our Making Sen$e broadcast segment explained). The currency is growing and changing so fast, regulators are having a difficult time keeping up. Even Sen. Tom Carper, D-Del., who chaired last November’s Homeland Security Committee hearing on virtual currencies, admitted to the PBS NewsHour that he’d only learned about Bitcoin six months before. His only knowledge of virtual money had come from his teenage son’s World of Warcraft habit. Carper had heard of Bitcoins being gambled, but said “we talked about a lot of uses of virtual currency yesterday, and I don’t recall gambling ever coming up in a two-and-a-half hour hearing.”
Efforts to regulate Bitcoins, let alone Bitcoin gambling, have barely begun to materialize. Meanwhile, wagering the currency grows ever-more popular.
