Understanding Bitcoin with Marc Kennedy

Bitcoin Noob Barry Carter gets poker player Marc Kennedy to explain what poker players need to know about the cryptocurrency.

I don’t know a great deal about Bitcoin, but I know it is going to figure significantly in poker in the future, so I spoke with former Full Tilt Pro Marc ‘sparky999’ Kennedy who is well known in the 2+2 community for his advice and insight on the cryptocurrency.

You were an early champion of Bitcoin in the poker community, what was it about Bitcoin that you found so appealing?

Mark Kennedy: The two things that struck me immediately were the censorship resistant store of wealth and secondary to that the ability to send any amount of money to anybody in the world, for a poker player, that is incredibly useful. That immediate utility struck me, because moving money around the world is difficult and if you are traveling the world playing poker, you need to move money around. Crossing a border with a USB drive with any amount of money on it is much more convenient than carrying a suitcase full of cash.

I personally am only starting to find my feet understanding Bitcoin. I have finally bought some, mostly because so many people now have confidence in it. Is that ultimately why it has value, because there is this level of trust now?

Mark Kennedy: No. Value equals scarcity plus utility. Bitcoins are scarce, because there will only be 21 million of them, and they have utility because you can do things with them that gives them value. That value is backed up by the computing power of the network, preventing it from being attacked. Price and value are not the same thing. Price is affected by demand, when supply is fixed and demand increases, price must increase also.

"The most secure protocol ever written"

Is it the blockchain technology itself that is the foundation as to why Bitcoin is so popular?

Mark Kennedy: What the blockchain technology does is provide a digital record that cannot be changed. That sounds quite simple, but it wasn’t possible before. To have an immutable digital record of something is phenomenally valuable in all senses, from free speech to financial sovereignty.

People talk about blockchain like it is unhackable, which always strikes me as a dangerous claim.

Mark Kennedy: It’s not that it cannot be ‘hacked’ or ‘attacked’, it is that the record cannot be changed. The market capitalisation of Bitcoin is essentially a bug bounty. A bug bounty is where software providers offer rewards to people who find bugs in their code. The value of Bitcoin is now something like $80 billion, every single day the hackers are trying to crack this because the prize is bigger than anything out there. Every single day they have failed for the last seven or eight years. This must therefore be the most secure protocol that’s ever been written.

If it were hacked, couldn’t that spell disaster for the entire currency?

Mark Kennedy: Bitcoin by design is antifragile, but in theory yes. What would most likely happen if it was a network destroying hack, the Blockchain at its last point of security would be copied and replicated, and all the honest people in the network would form a new chain and peel off. Would it cause a huge loss in value and maybe never recover? Yes, but it’s unlikely. The best hackers in the world have been looking for this and haven’t found it. By design it’s resilient to all sorts of attacks, it’s beautiful. The biggest concern right now is miner centralisation, Bitcoin desperately needs more manufacturers making Bitcoin mining chips.

It strikes me that Bitcoin might prove a better option than one’s own native currency. For example people who live in countries hit by economic crisis like Venezuela, or people who have regulatory issues playing poker, like in America.

Mark Kennedy: Bitcoin was mined in Venezuela and the government banned it. Failing governments need more people to use cryptocurrencies. Most people in the world don’t have access to Western banking systems, we are very privileged to grow up in places where we do. Far more people in the world don’t, to those people having access to a Bitcoin account on their phone is life changing.

"Avoid the mainstream media opinions"

Other than moving money around, what else is promising about Bitcoin for poker players?

Mark Kennedy: There are some interesting projects around at the moment, there is one called Edgeless Casino which doesn’t have a house edge on the Ethereum blockchain. You could imagine a casino with 0% edge would be fairly popular. I’m quite surprised that PokerStars at least don’t have Bitcoin deposit options, I think it has obviously been discussed within the company. I don’t know why it hasn’t happened yet, possibly because of what you have just said about meaning Americans might find a way to play on the site.

Right now the average Bitcoin using poker player probably self selects as a 'tough regular', and given the industry is moving more towards recreational players, Bitcoin deposits probably don’t come from the ‘ideal customer’.

Mark Kennedy: Yes, that certainly could be true.

The price of Bitcoin has been rising for a while now and we keep hearing of poker players who get rich from it. Surely that won’t last forever?

Mark Kennedy: It’s like the DOTCOM bubble. There will almost certainly be a crash and some people will lose a lot of money. Technology gets adopted in waves, people get way more excited than they should. People’s expectations get ahead of reality, but eventually either reality catches up with people’s expectations and the price stabilises significantly or this great experiment fails.

Without giving specific advice about the value of Bitcoin and whether you think it will increase, what would you say to poker players thinking of learning more about it and thinking of giving it a try?

Mark Kennedy: Read opinions from people on both sides of the fence. Try to understand the backbone of the technology even if you don’t understand the intricacies. Also try to appreciate what the technology could mean to different types of people in different parts of the world with different socio-economic backgrounds. Avoid mainstream media, similarly to how Hollywood covers poker - they just don’t get it. If you decide to buy Bitcoin always store it in a wallet you control the private keys for, preferably a hardware wallet like the Trezor.

To learn more about Marc Kennedy you can follow him on Twitter.