jstrike

The Announcement
On Thursday night, we opened for Bitcoin after all. At about Midnight GMT, when it hit the front page of Hacker News, Reddit and the Bitcoin forums, StrikeSapphire was getting up to 2,000 unique visits -- at one point, 30,000 hits an hour. I was convinced our site was going to crash under the strain, but it turned out we didn't...doing my homework beforehand paid off.

All those people were just checking it out. They weren't gamblers, they were just Bitcoin enthusiasts, hackers, technophiles, lookie-loos. I knew they would be -- that's the draw with Bitcoin right now.

I was asked by a friend here what changed my mind about accepting Bitcoin, and I thought I'd explain...and maybe take you all inside what it's like to run a 1-to-2 man launch of an online casino under completely hectic circumstances...and keep it all up and running.

The Change of Heart
I was worried about the stability of Bitcoin, even my ability to trade in and out of the currency, and certainly whether it was user-friendly enough for most players to bother dealing with. I still am. But I had a long conversation with the three founders of Tradehill, which is a new Bitcoin trading site. They assured me that, first of all, even if we got pretty big our volume wasn't going to be big enough to cause hangups in the withdrawal process. Second, they told me they had something under their hats -- something they were working on to make it much, much easier for non-technical users to buy and sell Bitcoins. It's not out yet, and that's all I can say; we'll have to see if it comes through, and how great it actually is. But that conversation reassured me a lot.

Secondly, I got the impression that most Bitcoin users -- right now, like I said, they aren't a gambling crowd really, they just like new things -- weren't going to want to deposit or bet a lot. It was a chance to set up $500 maximum weekly deposits, and take all the games down to around the $5 level, and $0.25 per line max for slots, where our survival would be a pretty sure thing on our small bankroll. (It turned out that wasn't enough; right away I started getting requests to take our poker down to $2 sit & go's, and $0.10/0.20 tables. And by far the most popular game right now is $0.01 cent Roulette, which it looks like some people are playing all day from work...)

Lastly, it was really starting to look like nothing was going to happen, in terms of getting "real" payment processing, at least for a long time. I'd heard the rumors that other software companies had stuff in the works more like Sapphire. I don't know if they're true, but I couldn't wait any longer to take the games public.

So I borrowed a bunch, and put most of my savings into Bitcoin and in places where I could change it to Bitcoin fast to bankroll the site, and just bit the bullet. I wanted to wait for the first wave of drive-by hits to go away before I announced anything on the CM forums, because I wasn't sure we'd survive it. But so far, so good.

How (not) to Start a Business
When we launched I was the only one running the show. I knew this was going to "eat my life" for awhile, but only once it started did I realize how incredibly stressful it would be. For 72 hours I didn't sleep and barely ate. Finally I wrote a program so my partners could monitor it from their phones, and slept for 12 hours. But all I could dream about were hackers and sites crashing.

When I woke up, someone who had deposited $26 had just made over $12 Million in withdrawals. My first reaction was to freak out, obviously. Luckily, the withdrawals had been rejected as mistakes, and it turned out to be a pretty minor glitch. He'd actually been trying to deposit another $12, and because it was a Bitcoin amount with 8 decimal places, our software went nuts adding it to the last deposit, and decided it was a giant negative number. We patched that up, took care of the player (who hadn't even noticed), and everything was okay.

In six days we've had about 200 signups and 20 depositors. Bitcoin lets you deposit tiny amounts, and it allows instant withdrawals, and there are no transaction fees. I realized early on that percentage bonuses for every deposit weren't going to work. We've seen everything from $250 deposits down to one that was only $0.14. We've processed around 10 withdrawals, all within an hour...and had at least two people re-deposit a little later the same day.

The good news is: It seems to work. It can be done. A certain rep on these boards said we'd likely broken a record in terms of how little it cost us to launch. I'd say we definitely broke one with how few people we had managing a launch -- of this, or any other kind of major website.

Big Trouble in Little Vancouver...
One of the things about Bitcoin is, it's pretty anonymous. Not perfectly anonymous -- governments could still track it with supercomputers, probably, but for the average company taking it, you have no way of finding out where it comes from.

Most online casinos today that want to comply with laws, that give a damn anyway, get away with blocking American IP addresses and then just taking payment methods that do the hard work for them. Visa and Mastercard, Paypal, Moneybookers and Neteller have a lot more to lose by taking US bets than any one casino has to lose. But for us, with Bitcoin, we really had to think about how to block them. I came up with a complicated way of doing it. Basically if someone seems suspicious -- if their IP doesn't match where they say they're from, or it's on a proxy, we make them go through an ID process before they can deposit.

US players started screaming about it right away. Bitcoin fans really like the idea of anonymity that comes along with their currency -- which is fine -- but along with that comes responsibility for a business that's going to serve them. We have to be able to set our own house rules.

Well, within a few hours we had people on the Bitcoin forums bragging about how they could get past our block by driving over and signing up in Canada. Suddenly we had to be worried we'd broken a law. We gave back money to Canadian players and froze some accounts until we'd established that actually, it was mostly a lot of bragging, and as far as we know no bets were really taken from the US. But it put me on edge and made me realize how far we have to go -- which is funny, because even though I don't live in the US, I still pay income taxes there.

They were right about Poker...
I was warned by a lot of good people in the industry, including reps here, that starting a poker room would be the hardest part of this trip. I'd just kind of assumed that freerolls would be enough to reel 'em in, and since you can play six tables on the software at once, other games would naturally spring up around freeroll times. I was wrong.

Poker players are always looking for a bargain. "Why not make it zero rake?" people have asked me. That's kinda like asking Ford why the Mustang don't run on water, and why they aren't giving 'em away for free.

And of course the most important thing to poker is critical mass... and to get that, you've got to give away a lot of cash, do a lot of advertising, and hope that all those little seedling tables sprout into a forest just so you can break even. In short, it's a lot tougher than just having some good software and doing some freerolls.

I'm not canning poker just yet, and I already promised another freeroll for player-points on Sunday. I can just see this isn't going to be the leading edge of the business I thought it was gonna be.

What's it all mean?
I'm proud to say that after 6 days, our gaming revenue is up to just over $330. After a $100 freeroll and about $100 in comps and referral bonuses paid, I'm pulling in right around $0.90 an hour (20% of that going to partners), making this far and away the hardest, lowest-paid work I've ever done. But as I sit here watching the chips go down and the cards dealt out at my own tables, in my own casino, I've gotta say it's been an incredible feeling to see three years of work finally come together into something that people can enjoy. People just walk in and play, and take it for granted that it's there...when before there was nothing. It's definitely the biggest thing I've ever done, and one of the hardest projects I could ever hope to pull off. And with a little luck, this is just the beginning.