Gambling is said to be one of the world’s oldest traditions, encompassing a wide range of cultures and civilisations. Ever since the first modern casinos were opened in the early 90s, gambling has gained global popularity and the industry just got bigger and bigger each year. And one of the reasons for the industry’s continued growth is its ability to evolve and move with the times.
When the internet was invented and became an integral part of people’s lives, for example, the gambling industry refused to get left behind. Online casinos, lotteries, games, and even betting shops also started appearing and were made available to almost everyone. Of course, just like anything else you see online, this aspect of gambling did not come without its fair share of issues.
For one thing, people became concerned with the issue of fair gambling by online casinos and lotteries. The main concern with regard to fair gambling arose from the fact that online players had digital access only to information that was shared with them. With traditional gaming machines, it is a bit difficult to rig the system, as that would require mechanical modification and redrawing. With online casinos, however, all it would take is to rewrite a few lines of code. Online gambling companies had to find effective ways of addressing this lack of trust and confidence.
The good news is that there is now an innovative piece of technology that could assure online players of fair gambling. This modern solution is known as blockchain. And those who are actively involved in the industry would notice the increasing popularity of blockchain-based online casinos and games. If you’re interested in online gambling, whether because you’re a player or an investor looking to enter the online gambling world, you would do well to gain a better understanding of blockchain technology and how it works for the gambling industry.
Blockchain Technology: What It Is
Blockchain is an open source distributed ledger or peer-to-peer network. It is an innovative technology that allows the logging and storage of information on an encrypted digital ledger. It records information sequentially, and then makes the data publicly available and unchangeable. It has similarities to the Internet, being a comprehensive information technology that uses tiered technical elements as well as multiple application classes, which could revolutionise practically all aspects of modern society.
The blockchain is a decentralised system. This means the recorded information is not stored in a central place to be controlled by a single person or organisation. This minimises the risk of hacking and leaves the digital ledger accessible at all times. The blockchain has immense potential to coordinate human activity on a massive scale. It is open technology like the Internet, which means it isn’t restricted to corporations or governments. The technology’s capabilities can therefore continue to evolve with user innovations.
The technology has the capacity for maintaining permanent records of commercial transactions, financial records, intellectual property, transfer of assets and contracts, and a wide range of applications across society. The best approach to blockchain technology is to treat it as a public ledger that can create an economic layer, thereby eliminating the need for a third-party intermediary. This capability could completely reconfigure human exchanges and activity beyond financial and economic domains.
The main advantages of blockchain protocols lie in their capacity to keep records secure from infiltration as well as unauthorised changes to the data. It offers partial anonymity and transparency at the same time. It also allows for the authentication of transactions and data, thereby creating a general image of trustworthiness. It therefore addresses the issue of a lack of trust.
Where the gambling industry is concerned, the advantages offered by blockchain technology enable online casinos, lotteries, and games that are based on cryptographic technologies to use accountability and transparency to prove fair play to their players. It will allow them to show that there is no way for them to interfere with the game processes, and give them the opportunity to gain a competitive advantage over their centralised rivals.
Other than the promise of fair play, blockchain technology also allows gambling businesses to offer stronger player privacy, personal information security, and faster transactions by way of cryptocurrencies. One excellent example of an online casino and sportsbook combining IT and blockchain implementations is the project known as Bitbook.ag.
Blockchain Technology: Revolutionising Online Gambling
There is now no question that the use of blockchain technology has helped solve a lot of problems that online casinos and games have been faced with since they started operating their sites and applications. To be more specific, these are the ways in which blockchain has started influencing the gambling industry:
1. Decentralisation of Operations
Blockchain helps create value for online gambling businesses through security, inclusivity, democratisation, and immutability. It gives casinos the ability to create their own tokens. This, in turn, give players the opportunity to become shareholders. This means people can help fund casinos and benefit from that casino’s growth by way of dividends.
A good example of this is vSlice, a project currently currently being run on the Ethereum platform, which allows individuals who hold tokens to receive part of the profits. The Nevula project run by Chain Base casino is another good example. Their tokens are now visible on cryptocurrency charts, and this is playing a significant role in building awareness of their platform.
The use of digital currency offers more freedom to players. It gives them access to games everywhere via their Internet connection. The security afforded by the system also enables all players to become a member of any online game or casino. This increased freedom and easy access is expected to make players more confident in playing online games.
People have always understood that when they play, the betting companies make money. The problem was that they used to have no idea as to what actually happens “under the counter”. To make matters worse, there has always been talk of online betting companies using tricks to make sure players do not beat the house.
With blockchain technology, the situation has changed and online casinos have become a bit more trustworthy in the eyes of players. That is because the technology offers just the kind of transparency players need. The shared ledger makes them feel that they have more control, and because transactions can only be confirmed if they are valid, it will be almost impossible for casinos to use their old tricks, if they, indeed, had any.
At traditional casinos, the number of players at each gaming table is usually limited, and you had to go through a lengthy verification process, which includes filling out countless forms and providing several documents. This has become a cause for concern for players, especially those who win significant amounts, because they could easily become targets for criminals if their identities aren’t protected.
Bitcoin casinos and other blockchain-using gambling platforms are not subject to the same regulations that cover traditional casinos; at least, not yet. This means players don’t have to share any personal information they’re not comfortable divulging, and they can remain anonymous, even when they win big. The technology also gives players the confidence of knowing that hackers won’t have a chance of stealing credit card numbers and other sensitive information.
4. Anti-fraud Capability
The issue of fraud has caused huge losses in practically every industry, and gambling is no exception. As soon as the system is hacked, everything from the players’ credit cards to their personal information can be used to the hacker’s advantage. The problem with traditional online gambling systems is that they have a lot of vulnerabilities that make them easy to hack.
Top-notch security is one of the most widely publicised attributes of blockchain technology. Blockchain systems typically have airtight mechanisms in place that help keep all data safe from any security breach that could possibly lead to fraud. Blockchain technology also involves smart contracts that enable you to immediately withdraw your winnings. The system doesn’t even allow banks and third parties to confiscate your money.
Online gamblers are typically restricted by location, which is why there’s great use for cryptocurrency in the online gambling industry. With cryptocurrency gambling, players can all make deposits and withdrawals in a wide range of currencies. This puts all players on the same page, whether they’re in Japan or the United States, or anywhere else in the world.
Additionally, since banks are not involved in these transactions, costs are significantly reduced. Cryptocurrency gambling also allows players to bypass their country’s betting restrictions without having to resort to the use of illegal betting services. Blockchain casinos allow you to play as many games as they want as often as they want. All you need is a stable Internet connection and a cryptocurrency wallet.
Blockchain Technology: What It Means for Regulators
Blockchain technology could potentially disrupt existing online gambling regulation. Disruption happens when smaller companies decide to target sectors often overlooked by established businesses, thereby gaining a foothold by offering more suitable functionality. And it doesn’t hurt that this functionality is also often provided at lower cost.
With the technology providing a high level of transparency for the gambling industry, the need for a third-party intermediary point of trust--the gambling regulator--becomes redundant and almost unnecessary. The use of cryptocurrency also means the money is always secure at all points, and no payment providers or banking institutions are involved in the transactions. Knowing that blockchain sites are trustworthy may also lead to the redundancy of gambling affiliates and review sites in the future.
There are currently very few online gambling sites that accept bitcoin payments. Most of those that do accept this form of payment are those licensed in jurisdictions with minimal restrictions and requirements. There is a lot of debate going on regarding the value of cryptocurrency. Cryptocurrencies generally don’t fit with existing regulations and may require new legislation.
Blockchain Technology: The Current Situation
Many online gambling companies now use bitcoin as a method for making deposits and withdrawals, with Cozy Games being the first regulated online gambling operator to ever accept cryptocurrency payments. They outsource this method of payment via a partnership with GoCoin, allowing the use of cryptocurrencies on all 90 games making up their platform. This partnership is a concrete example of how legit online gambling companies incorporate blockchain technology to reach new markets, while reducing transaction costs.
One of the most established bitcoin games is Satoshi Dice, a dice betting game that has been transformed into a bitcoin casino. This game allows players to act as the house by placing bets on a shared bankroll. The site was launched in 2012 and is duly licensed by the Government of Curacao. It is said that over 4 million bitcoins have been won on the site since it was launched.
The online gambling industry is a very picky industry. Blockchain technology has just the right features that could transform this picky industry and solve many of the problems it has faced since its inception. Blockchain systems and cryptocurrencies have not really been widely accepted to date. And as things stand, it may be safe to say that it is still too complicated for most consumers and businesses to fully embrace.
People currently need high-level technical knowledge is needed to work with blockchain systems. But most technological innovations started out that way and continue to evolve to overcome challenges until they reach a tipping point. Take the Internet, for example. People didn’t quite understand its capacity at first, and security issues posed some serious challenges. Today, however, the Internet has become an integral part of everyone’s lives.
It may take some time for people to fully appreciate and accept blockchain as a universal platform replacing traditional commerce and finance. Nevertheless, those who already understand its advantages and have started adopting it are likely to stay engaged. This includes established gambling institutions and companies. Furthermore, players do not need an extensive technical understanding of blockchain mechanics to use the system, provided that online gambling sites have an easy-to-use consumer interface.
Blockchain technology will need the involvement of trusted organisations in order to move beyond pilots and start-ups. It needs to establish itself as part of an ecosystem of advanced technologies that will be pivotal to the future of commerce and society. Only then will it be able to truly revolutionise online gambling.