With the bitcoin dice investment model investors contribute funds to a site’s house bank that the players bet against with the odds in the house’s favor. If the house wins investors win! We explain the model in detail here.
While this sounds great it gives the site operator the incentive and opportunity to scam investors in a number of ways.
Exit scam
The most simple and common bitcoin dice investment scam is where the operator shuts down the site and takes all investors and players balances.
This can happen on any site that holds customer balances but the presents of the house bank makes it much more common on bitcoin dice sites. The insentives are pervers as doing a runner with a large house bank gives the operator more money in 1 day than they would make running the site honestly for a number of years.
beware scamer
I invested ฿1 in 9 dice sites for the purpose of tracking and comparing the returns on this table. In the first 6 months 3 of the sites, that is 33%, pulled an exit scam. My ฿3 bitcoins are gone forever and statists calling for licencing and regulations have 3 more examples to point to among several in the short history of the house bank investment model.
Underpaying investors
Investors receive a % of the sites profit, therefore all an operator has to do to underpay investors is under report site profit. Then they can keep the difference for themselves. There are a number of sneaky and dishonest ways site operators can do this undetectably.
A site could exclude some profitable bets from the site profit figure or a site could make a fake player account and use knowledge of the secret seed that determines bet results to win with that fake account. This would result in a loss to the house bank which would only be a loss for the investors.
These scams could be done continuously on an ongoing bases. If the operator did this to make a site that would have a 1% profit have a 0.8% profit people would just assume the site has been slightly unlucky.
Scam prevention
The only way to ensure you will not be the victim of a bitcoin dice investment scam is to not invest in bitcoin dice sites. That is my advice for now as the ecosystem is mostly comprised of scammers, amateurs and the B team. The best bitcoin gambling operators are not so desperate for liquidity that they would give 90% of their site’s profit to investors. However I have had just as bad results investing in altcoins and bitcoin start-ups.
If you can’t resist choose where to invest carefully and spread your investments out over a number of the more trustworthy sites. You can try to ascertain which sites these are by checking their Bitcoin Talk Forum threads and searching their name for mentions on the bitcoin sub-reddit, see how long they have been operating without scandal and see how they perform on our Investment Comparison Table.
There must be a way to make a bitcoin dice site trustless with multi-sig transaction, smart contracts, open source code et cetera but no one has done it yet. When someone does I will certainly consider investing as I do love that the model opens up the privileged position of being the house to anybody.
