Ahead of the session at iGB Live! - "Case study: crypto by experience" - we spoke to CEO of Winning Poker Network, Phil Nagy, to find out what all the buzz is around cryptocurrencies.
Phil has been the CEO of the Winning Poker Network since 2011, with 14 total years in the gaming industry. He spearheaded the early adoption of Bitcoin on the network, and strongly believes blockchain technology and cryptocurrency will change the world. Under his leadership, cryptocurrency now accounts for 60% of their overall business, up from 2% in 2015.
Why iGB Live? What do you hope to achieve from the event and what are you looking forward to the most?
Phil Nagy (PN):
With three consolidated events, this conference is a “can’t-miss event” if you’re a gaming operator. There are a host of high value speakers and some great networking opportunities.
We’re all about cryptocurrency here at WPN and if there’s anything I would like people to take away from meeting or talking to us, it’s that cryptocurrency can and will revolutionise how we all do business in the future.
Your session is on Crypto. Can you go into more detail as to what you will be presenting?
PN: In the gaming industry, we were early adopters of cryptocurrency. We started taking Bitcoin back in early 2015, and now accept more than 60 cryptocurrencies for both deposits and withdrawals on the network. What started as 2% of our overall business, now accounts for 60%.
In our session, we really want to try and take people through our journey of how we got to this point. As it is a new technology and unchartered territory for many, we had to create new processes to deal with everything you can think of, from security to customer service, to fraud and dealing with price fluctuation.
We’re flying down a whole crew of people who are specialists in each field of our business, so they can discuss and educate those who attend the session. I think it will be extremely valuable for anybody who wants to learn more about cryptocurrency, its advantages, and things to look out for.
Cryptocurrency, blockchain and gaming could be a huge market in the coming years, however, there remains a great deal of skepticism as to whether this is simply a bubble waiting to burst. What would you say to that and how can you convince the naysayers that it is here to stay?
PN: I’ve debated this a lot over the years with people. I’ve seen “renowned” financial experts publicly compare it to previous bubbles such as the “Tulip” craze that happened back in the 1600s. If you’re unfamiliar with this, the cost of tulips went through the roof back in the day until they realized it’s just a tulip, and everyone can grow them, and then the market crashed!
At any rate, there are some big differences here in what blockchain technology and cryptocurrency has to offer versus something that has no value. Here we have a technology that allows you to transfer money to anywhere in the world for almost no cost, cut out the middleman, and allow for total public transparency for each transaction.
Truth be told, its ability to disrupt the status quo of how we’ve always done business that has people a bit on edge. If massive fees and the dependence on financial institutions to move money become a thing of the past, there’s a lot of people who will be out of work. That’s a big reason why you’ve seen as much negative coverage in the press as you may have.
But it’s the future, of this I’m sure. It may take time for much-wider adoption, but its uses are too many to dismiss as a fad or a bubble. It’s just far too practical.
What have been your highs and lows in the crypto market?
I would say the biggest high for us is just how much money it’s saved us in transaction fees. Credit card transactions carry a price tag between 13%-22%, person to person transactions like Moneygram or Western Union cost 9%-12%. Alternatively, cryptocurrency average operational costs are around 3%. That’s obviously a big difference.
When you’re talking about millions of transactions since its adoption, it’s saved us a bundle. It’s also done wonders for our overall player value. Cryptocurrency deposits are not only faster and cheaper but allow for bigger deposit limits as there’s no risk of chargebacks for example. So, cryptocurrency users tend to deposit more.
The lows for us came in the growing pains of early adoption. Cryptocurrency can be unforgiving as once it’s sent, it’s gone. In the early days we had a hacker find a way to send himself more than $1 million of our funds. I would say that was a low!
It’s also a constant battle to educate and convince customers to use it. Once they do they’re always glad they did, but it can be an uphill battle at times. Still, I suppose that’s more of a challenge than a low.
A lot of people would assume that the price downturn in recent months would be a low for us but it hasn’t really been. We have processes in place to deal with fluctuation and it’s really about checks and balances. It’s not like we have all of our money sitting in cryptocurrency and we’re taking on all the variance. We’ve got a pretty great team on hand to keep an eye on the markets and make sure we’re not too heavy in any position.
In what areas do you see it having the biggest impact and why?
The No. 1 area will be the use of cryptocurrencies for cross-border settlements. This could be business to business or through peer networks. As well, crypto will see immense growth in emerging markets with limited or no banking infrastructure because crypto only requires a smartphone to transact value.
The uses of the underlying blockchain technology are endless. The public ledger aspect of it will offer immeasurable benefits in all industries from doctors to insurance, you name it. When there’s a public record of everything you do, accountability will go up across the board.
How will the overturning of the Paspa sports betting regulation have an impact on your business and the wider market?
There will definitely be an impact on the gaming industry in general, particularly those who service the United States, but I think it will take time. They’ve had the ability to legalize online poker on a state-by-state business for over 6 years, and they’ve still only pushed it through in 3 states.
We’re a US-facing online poker site, and though we do offer sports betting in the poker client, the primary reason that players come to our site is to play poker. So the direct effect shouldn’t be too severe on our end.