Legality of a risk site
I plan on creating a site that allows the clients to (without signing up) "swap" a certain amount of BitCoins. In short though, it is just an online currency. Basically, the client would send in x amount of bitcoins. Their amount would be switched with another persons count. This would give client a's bitcoins to client b and vice versa. Basically, you would risk the chance that you could swap your coins to get more. There would also be the chance that you would get less. The chances of getting more would be higher the more coins you offered up.
This also sounds like gambling and was wondering how legal this would be? I live in North Carolina so naturally, I would be hosting it from my own computer in NC.
I would be getting profits from the users that risk their BitCoins. I might take a small fraction of the coins risked (A single BitCoin can be divided quite a bit).
The other problem is, BitCoins have an approximative USD worth of $8.5 each. Would this change the legality of this?
So...
- Is this gambling?
- Is this legal in the United States of America?
- Is this legal in my current state (North Carolina)?
- Do you think this is a decent business idea?
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And people ask after that, how we can't see the world economic crisis is coming. "$8.5 each"? - This is classic Tulip Bubble. – Ross 13 years ago
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I don't see how there is any issue - after all it is like monopoly money or anything else with no value. GO ahead and do it. The bigger question is why would this site be useful at all? Is this like Swaptree.com? Again, I see no value at all - but probably because I think bitcoins are an esoteric joke - like Esperanto. – Tim J 13 years ago
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@Ross, in truth, BitCoins themselves are very hard to acquire. The process to get them requires a lot of patients and multiple servers (to get anything worthwhile). I currently have 0.02 BitCoins :) – Xan 13 years ago
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@Tim, Alright, I don't think BitCoins are the best thing. They can be traded for cash (as has been proven). That is all I am in it for ;) Post it as an answer :) – Xan 13 years ago
2 Answers
Whether or not this is considered to be gambling under US law is a question best asked to a lawyer. Since BitCoins do have value and can be traded for money, they may be considered to have the same legal status as a poker chip, which would make this gambling.
Being involved in the gaming industry, I have learned that the location of your servers and your business registration make little difference to the Department of Justice. If you offer online gaming in the US, then you can be charged.
- No, it's not real money.
- See 1.
- See 2.
- What part of that allows you to make money? A commission? If so then I guess it's a decent idea, though you'll be hard pressed to find people who will actually use your site as most people who own any decent amount of bitcoin are smarter than your average bear, so will likely either figure out how to abuse your system or will see themselves losing a lot of money doing it.
Also a correction: bitcoin is NOT hard to get. You can swap for most currencies at several different sites. It IS hard to "mine" and that's 100% intentional.
edit One other note, if you're concerned about legality then host offshore where there's no way it would be illegal. It's definitely more expensive but if it's a big enough concern for you then you'll likely find it worth the extra cost.
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Thanks a lot! It all makes sense :) Yes, when referring to the difficulty of getting BitCoins, I was talking about mining ;) – Xan 13 years ago
