Bitcoin Forum

Economy => Gambling => Topic started by: ssaCEO on August 06, 2011, 09:55:17 PM

Title: StrikeSapphire TOS announcement re: current volatility.
Post by: ssaCEO on August 06, 2011, 09:55:17 PM
We just sent this to our players, and I thought we should publish it on the forum as well. The salient points are that we have maintained roughly equal USD value on our float despite the crisis, and we're making sure we keep doing that. Underlying this announcement is the fact that a large portion of our profit to date was in fact wiped out by the BTC decline, because we were waiting to pull it out pending dwolla / trading house issues. We launched believing Bitcoin had stabilized and we didn't need to go the extra two steps daily to USD and back to backup funds. It was a mistake, but all it really cost us was time and energy. We're still maintaining 3x total player deposits on tap at various trading sites for daily withdrawal, plus 25x total player deposits in bank reserves for jackpots. But now we're maintaining almost all of them other than petty cash in USD.

We're bullish on the long-term future of BTC, and we continue to view it as a viable payment method for gaming. We're also a USD-denominated casino, in a business with a lot of volatility ourselves, and our primary concern is to keep our players happy. If that means we have to deal with BTC as a currency solely for trade, then so be it.

No payouts have been late, and our initial float currently sits at the level it was when we launched, thanks to our orderly transition. It's just going to take a little longer to access it, because we're not leaving it in BTC overnight anymore.

This extra step makes us more secure, and your money more secure with StrikeSapphire. We hope to get back to instant payouts soon. We're putting this out in the interest of full disclosure: Most casinos take days or weeks to process withdrawals, and to this point we've never taken more than six hours. But we put long-term honesty and due diligence first; and keeping 3x player deposits in Bitcoin rather than USD at this point would be crazy. Hopefully this will be a satisfactory solution for everybody.


Dear players.

Due to recent extreme volatility in the Bitcoin markets, Sapphire shifted the majority of our Bitcoin reserve to USD early on to protect our players' funds.

This incurs additional time trading back to Bitcoin to process withdrawals.

Until Bitcoin stabilizes, BTC withdrawals of over US $50 will be batch-processed daily at 3pm GMT. Lesser withdrawals will be processed as quickly as possible, usually within 1-6 hours.

All withdrawals will be converted to Bitcoin at the ask rate at the time we process them. This allows you to get your USD-equivalent winnings back whole at the time we send the funds without causing us to absorb massive currency risk.

Sapphire has ridden out the current storm through prudent monetary management, and has taken the necessary steps to protect your money and our jackpot payouts as well.

Thanks for playing, and as always, if you have any questions feel free to contact us!

Josh Strike

Title: Re: StrikeSapphire TOS announcement re: current volatility.
Post by: BTCSports on August 07, 2011, 04:16:10 AM
You should consider doing away with the conversion to USD. Doing so creates extra risk for your company that is really unnecessary.

As an interested party in the same industry we feel that if we can make your company stronger than it will protect (y)our customers and make the Bitcoin gaming sector stronger as a whole.

Some comments:

Again doing away with the conversion to USD will alleviate all of the downside risk you are experiencing.  Leave player deposits in BTC and take your profits and convert them to USD or your currency of choice (or leave them in BTC) according to your risk management protocols.

BTC withdrawals of over US $50 will be batch-processed daily at 3pm GMT. Lesser withdrawals will be processed as quickly as possible, usually within 1-6 hours.

This is a ridiculously long time for a Bitcoin withdrawal to be processed.  As quickly as possible should be less than 1 hour and really closer to less than 15 minutes.  It is tough to understand why it would take until 3pm GMT or 1-6 hours for withdrawals to be processed if all that is necessary is for the USD you have on deposit at one of the exchanges to be converted to BTC and either withdrawn to your wallet.dat and then sent to your customer or sent directly to your customer from the exchange.

We have found that Bitcoin users expect near immediate deposit and withdrawals and we feel that someone should be able to get a withdrawal as fast or faster than they can make a deposit.  Comparing yourself to online casinos that deal in fiat currencies and stating "most casinos take days or weeks to process withdrawals" is very misleading.  We average less than 10 minutes for withdrawals and since we are the only comparable casino that deals in Bitcoins we take a little offense to you stating that most casinos take days or weeks to process withdrawals.

Online gaming may very well be the industry that sustains the growth of Bitcoin in the near future but as an industry we need to try to do better than just outperforming existing fiat currency casinos.

Title: Re: StrikeSapphire TOS announcement re: current volatility.
Post by: ssaCEO on August 07, 2011, 12:01:53 PM
Thanks for your concern.

We don't plan to denominate in Bitcoin, because we have other payment options in the works. We actually are a normal "fiat-currency casino" and software company, incorporated in Costa Rica. We just happen to be one that accepts Bitcoin. What works for you guys as a US-based "play money" site denominated in BTC just doesn't work for us, because ultimately people will be able to withdraw USD from us using other methods as well. We have a different legal and business model with a lot more overhead. Our customers withdraw expecting Dollar value the way it's shown on our site, regardless of Bitcoin price, and we manage the conversion at our own risk and expense. This way players know that on Sapphire, $5 Blackjack is always $5 Blackjack, whether you deposit with Bitcoin, Moneybookers or Visa. It's actually by increasing the mobility of the currency this way that we believe our site can make the best contribution to Bitcoin in general.

The reason for batching large orders is obviously to avoid having to execute a trade for every single withdrawal. It makes our accounting much clearer to have a daily settlement to Bitcoin, leaving enough petty cash in BTC for withdrawals under $50. This is perfectly reasonable; any large online casino that starts taking BTC is going to have to do the same thing. Our experience to date helps explain why you don't see companies like Bodog or making plans to accept Bitcoin (though they're following all of this). And as BTC has been dropping, batching the orders helps mitigate the "slippage" every time we have to move funds from trading houses to players... literally, the risk of Bitcoin losing a significant chunk of value in the 30 minutes or so it takes to move those funds across, forcing us to make up the difference. This isn't a normal currency exchange we're dealing with.

Of course, we'll start holding more BTC in the till as soon as we think it's safe to do so. For now, while we realize that any delay seems long in the Bitcoin world, a same-day payout guarantee is blazing fast for online casinos dealing in USD, and we think players will appreciate that we're holding their Dollar amounts in actual USD while Bitcoin is being manipulated all over the place. People play at Sapphire because it's unique, the games are original, the atmosphere is fun, and they know what they're getting. This way, they're welcome to leave their cash on our site to ride out the Bitcoin storm, and we don't have to worry about taking a loss on dead money lying around. Formalizing our policy on batch transactions just makes us a safer place to play.