Michael Hajduk had sunk one year and about $20,000 into developing his online poker site, Infiniti Poker, when the U.S. online gambling market imploded. On April 15, 2011, a day now known in the industry as Black Friday, the U.S. Department of Justice shut down the three biggest poker sites accessible to players in the U.S., indicting 11 people on charges of bank fraud, money laundering, and illegal gambling. Player accounts were frozen, leaving thousands of Americans without access to their funds. “It was like a bomb went off,” Hajduk says. To continue gambling, “U.S. players were uprooting their families and moving to Malta. Crazy stuff was happening.”
Hajduk, though, was barely fazed. Calgary-based Infiniti Poker, like several other new online gambling sites, plans to accept Bitcoin when it launches later this month. The online currency may allow American gamblers to avoid running afoul of complex U.S. laws that prevent businesses from knowingly accepting money transfers for Internet gambling purposes. “Because we’re using Bitcoin, we’re not using U.S. banks—it’s all peer-to-peer,” Hajduk says. “I don’t believe we’ll be doing anything wrong.”
Developed in 2009 by a mysterious programmer known as Satoshi Nakamoto, Bitcoins behave much like any currency. Their value—currently about $13 per Bitcoin—is determined by demand. Transactions are handled through a decentralized peer-to-peer network similar to BitTorrent, the protocol for sharing films and music over the Internet. An assortment of merchants around the globe accept Bitcoin; it’s also the currency used on online black markets such as Silk Road, which processes an estimated $1.2 million a month in sales of illegal drugs, according to Nicolas Christin, the associate director of Carnegie Mellon’s Information Networking Institute.