Bitcoin-based Bitbetex wagers on peer-to-peer betting success

Just days after SatoshiDice sold for almost $12 million, another bitcoin-based online betting site has started up, but with a key difference. Bitbetex is a peer-to-peer betting system, that allows anyone to bet on anything with someone else.

Currently in beta, the site works by allowing someone to offer a bet on pretty much anything (in the explainer video, someone bets on the outcome of a football match with Spain). When offering a bet, a person also chooses the odds. They can either back a bet (betting that something will happen), or they can lay a bet (betting that something won't happen).

Someone else perusing the list of available bets may decide to take up the offer, and lay down their money.

Tony Hatchett, who coded the website in PHP, explains that he chose to use bitcoin payment exclusively for the site to reduce the cost of placing bets.

"Generally, fees of around 3% would need to be paid to a payment facilitator but bitcoin allows us to remove that overhead completely," he says. "Secondly, bitcoin is globally accessible, which allows us to match a bet from someone in the UK to a bet placed by someone in the US for example. No complicated currency conversions are needed." That's important for a site trying to gain traction and get as many respondents to its bets as possible.

This site joins a growing number of bitcoin betting exchanges. One of the closest to the Bitbetex model is BitBet, which also allows people to make their own bets. It offers bets in categories including politics, entertainment, and Bitcoin itself.

People on this site are offering bets on everything from Google's share price by October, through to who will declare candidacy for Texas governor next year.

However, most if not all bitcoin-based betting exchanges seem to offer betting pools, in which many people can wager on the outcome of a bet. Aside from increasing the betting volume, this betting model also serves as an opinion poll. For example, BitBet users wagered on whether Butterfly Labs would deliver ASIC devices before March 1, 2013, cheekily redirecting to the betting page from Josh-zerlan.com (Zerlan has been the public face of the company). 135 people gambled. 79% wagered a total of 898.52 BTC that BFL wouldn’t make the deadline, while 56% bet 791.28 BTCs that the firm would (they lost).

Similar sites include Bets of Bitcoin. On that site, 45% of the total money wagered is given to the bet winners based on the proportion of their bet. Another 45% goes to the winners, based on how early they placed their bet. Another 5% goes to the user who submitted the bet (we see an opportunity to make considerable amounts of cash there, with the right bet idea), while the site gets 5% commission.

Bitbetex also charges a standard 5% commission on the profits from a bet. Loyal members will begin getting discounts, going as low as 3%, says Hatch, adding that it will also run some bets at 0% commission, presumably to encourage interest in the site. It will ensure that bets are paid by acting as an escrow service, holding both stakes until the bet is settled.

BTCBet is one of several bitcoin-based sports books, while BitSaloon offers online casino and sports bets. Others follow the lottery system model, allowing people to bet on the bitcoin block chain itself, rather than the outcome of real-world sporting events. Bit Millions falls into this category.

“We will not allow bets on people dying, or on something that has implications for someone’s health or wellbeing,” Hatch adds.

Currently, the site is serving beta users with virtual coins, meaning that there is no real bitcoin payout on a bet. However, Hatch hopes to go live soon. “The date for beta hasn’t been officially set but we are very close to making a decision on this,” he says, adding that it is "close to a production-ready state".