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Everyone is talking about blockchain innovations in Fintech and banking, but another industry successfully adopted blockchain to coinbase gambling while we weren’t paying attention. Online gambling is now one of the most prominent early adopters of blockchain. According to Statista, the industry is now worth $46 billion. The market is predicted to reach $94 billion in 2024 — and it has been steadily growing for years.
From the early days of the market, Bitcoin and blockchain have been tied to online gambling. As early as in 2014, digital gambling is reported to account for half of all Bitcoin transactions. Now that blockchain is going mainstream, online gambling faces many more promising possibilities. Let’s see what the blockchain and gambling trends are right now.
Blockchain is a decentralized database that contains transaction records on an immutable ledger. Blockchain saves and validates ownership of all crypto assets — they are verified by other networks’ participants and their nodes (blocks of a blockchain). Each node contains data on the time of the transaction, previous operations, and details about the involved parties. For online gambling — the industry that’s based on transactions — this technology has a lot to offer.
In contrast to typical centralized data storage, blockchain transactions aren’t validated only by a single authority. All network members have to agree that the transaction is valid before it can occur.
Private keys are created for security reasons. Each key is protected by a digital signature and serves as a permit to personal wallets and funds. Both public and private keys are generated randomly and are uncorrelated — it’s mathematically impossible to guess a private key from the public one.
Private keys serve as additional authentication measures — when users send a transaction, the final confirmation requires them to sign an agreement with a signature from a private key. Only legitimate owners of the block can do that, so private keys create powerful anti-scam protection.
The beginning of blockchain’s history is dated 2008 when Satoshi Nakamoto released a paper on blockchain and peer-to-peer transactions. User networks are designed to play a key role in executing transactions and insuring data safety.
Instead of approving transfers from a single device or organization — typical for centralized models — blockchain relies on getting approval from each node of the network. For a transaction to be valid, more than 50% of members need to approve it. To hack a centralized system, the criminal would need to get access to one server. To hack a blockchain network, the hacker has to obtain access to 50% of all network devices, which could be thousands. It’s practically impossible to achieve because the attack is usually spotted much earlier.
In a gambling blockchain network, each transaction is verified by a zero-knowledge proof — a consensus protocol where one party verifies the validity of the information. Zero-knowledge proofs are enabled by complex cryptographic algorithms that are automatic — users don’t have to understand the complexities of the system. The protocol does not reveal personal information or any knowledge about the sender, except to prove that the transaction is valid. This way, using blockchain for gambling is perfect for participants who prefer to stay anonymous.
In traditional banking systems, banks have full control over resources, deciding who to fund and what loans to give. End users have little to no influence over the conditions of the transaction.
Blockchain paves an alternate path, allowing users to choose which currency to use and how to access it. Users have full access to their assets’ history and they can manage them any time for investments, trade, purchases, and online gambling. Most importantly, the value of digital coins doesn’t depend on local economic situations. The value of cryptocurrencies is assigned according to their demand.
No geographical limitations
In a typical system, making a cross-border transfer requires many intermediaries that perform conversion and reconversion of the currency. Blockchain cuts off these intermediaries, directly connecting owners and senders via a decentralized network. Blockchain isn’t limited to a particular location — the only necessary condition is Internet access. Thus, by adopting blockchain for gambling, online platforms can reach large international markets with no commissions.
Peer-to-peer crypto networks eliminate security risks that are common for centralized platforms. The data is evenly distributed among all connected devices — there is no single point of failure.
Even if something happens to the block, a miner can backup node copies. The database is replicated and stored on a distributed database. This permits online gaming providers and users to roll back the game settings in case of a technical problem and use a node copy if the original was damaged.
Distributed networking in DApps
Blockchain uses distributed computing to store data and exchange it with devices in the network. Apps that store nodes in a distributed fashion and exchange their information are known as DApps — decentralized apps. Here are some of the main benefits of online gambling platforms that are built as DApps rather than traditional centralized platforms.
Each blockchain node has crypto keys that describe its history and nature. These are random number sequences that are assigned to the block as soon as it was mined. Each user obtains a public and private key. On public keys, blockchain stores non-personal data, which is why it can be shared with other users. Public keys are available to all network members — everyone can get details on the node’s history.
For now, gambling systems rely a lot on relationship-based trust. Members learn more about the casino provider, receive guarantees, get first impressions, and eventually decide on a deal based on subjective factors. Blockchain introduces a new kind of trust — computational.
The creation of the blockchain token is specified by precise algorithms. If the node data indicates the rightful owner, casino players don’t have to fact-check that — because the ownership was decided automatically.
Smart contracts in blockchain gambling also benefit from computational trust. In such a contract, conditions are specified in a form of software algorithms. As soon as the necessary conditions were met, the contract is executed, once and for all — immutably.
Proof of stake
After the transaction is confirmed by the network, blockchain issues consensus protocols — proof of work and proof of stake. These protocols contain information on a deal’s conditions and amounts. Once the protocols are verified, the block is updated immutably — the data can’t be changed or removed.
Since gambling is illegal in many countries, users are highly concerned about stakes of joining the platform. Blockchain allows bypassing illegal bookmakers and connects directly to the blockchain network.
With traditional operators, users had to wait for several days for their wins to process — in a blockchain network, transactions are instant. Blockchain makes gambling more open — and two main characteristics of networks are their openness and the lack of a permission system.
Open blockchain networks
Blockchain networks are open to users all over the world. An open permissionless network requires no validation for joining. This is good news for casino platforms because users can easily enter a game and it’s likely to increase the service’s conversion rate — more interested participants will be converted into players.
Permissionless blockchain networks
There is no third-party guarding or access control, which is how online gamblers can maintain their privacy. The casino providers aren’t responsible for in-game decisions, which makes game management much easier. Also, this effort-free joining process allows online gambling providers to expand their solutions to more users and offer a more intuitive gaming experience.
Online gambling companies have been among the earliest adopters of blockchain because the innovation fits well with the purposes of casinos, developers, and end-users. Let’s see the best example of blockchain online gambling platforms.
A gaming platform where users can play online games, communicate, and make bets. As a complex blockchain ecosystem, Wink uses the variety of blockchain mechanisms: behavioral mining, smart contracts, and a custom token. The platform supports developers who want to integrate DApps into their websites and provides them with full backend infrastructure for blockchain adoption.
Wink received 16 million dollars in ICO funding and became a leading example of using blockchain to increase gaming transparency. All online purchases are reglament by smart contracts — hence, no fraud. Users receive protected cryptographic reward that can be accessed only with a private key. Social events and community features bring gamers closer, further increasing mutual trust.
A peer-to-peer blockchain gambling platform that connects players to different casinos and allows them to place bets in cryptocurrencies. So far, the platform is available only in the United States — users can register and view the offers on the platform, but they aren’t allowed to bet yet.
As the first provider of blockchain for sports gambling, ZenSports created its cryptocurrency — a SPORTS token that can be exchanged for USD or Bitcoin. All tokens are stored in a personal ICONex wallet. Users can transfer money with little to no commission per transaction.
The first online casino built with Ethereum and a smart contract for winning payouts. The service offers a series of gambling games, such as Ice Dice, Spooky Dice, Roulette, Cryptojams, Blackjack, and others. The team regularly introduces new games to the community, with new rules and win algorithms.
So far, Edgeless seems to be a huge success case for adopting blockchain in online gaming — at least, according to the statistics on the website. More than 136 million wagered tokens and 707% bankroll rate increase in a year are great achievements.
A decentralized social betting network with a peer-to-peer gambling community, custom online games, and traditional casino tables. In Bethereum, users bet against each other, not against a company. All transactions are powered by Ethereum-based smart contracts and can’t be changed. Once conditions for rewards were met, there is no chance of a fraud.
Betherum also has a custom token, ERC223, that runs in all platforms of transactions. The currency is supported on many Ether wallets, including MyEtherWallet. It also can be exchanged for other cryptocurrencies (Bitcoin, Ether, LiteCoin) and traditional currency.
A blockchain platform, designed for developers and providers of casino platforms. The service allows creating a blockchain betting site, adding games from a template, and export the game to users’ domains.
For many online gambling developers, Cashbet is a starting point. The platform helps create a basic online gambling site, which helps to validate the business model and attract first users before moving on to complex custom solutions.
A platform for online gambling companies that want to integrate blockchain into their services. TruePlay helps to adopt smart contracts, set up cryptocurrency-based transactions, and create a decentralized network.
The platform connects a game’s API to blockchain networks, providing access to Ethereum and Metahash. The gaming authority model relies on blockchain-based smart contracts and protocols of proof, making gambling transparent both for casino providers and players.
Blockchain has infinite potential for solving all of the online gambling current issues. In traditional systems, a gambler has to put up with fraud, commissions, and unfair rules. Casino providers, on the other hand, need to spend a lot of money on assuring the central server’s security and maintenance.
Blockchain, with its transparency and decentralization, provides a safe way for gamblers to connect to online platforms. Such increased visibility will likely attract more users to online gambling platforms and improve the industry’s reputation.At Blaize.tech, we work on adopting blockchain solutions to the needs of gambling providers and their users. Our experts develop decentralized apps, smart contracts, and custom cryptocurrencies for open online gambling on local and international markets, and provide blockchain consulting for gambling. If you’d like to be among the early adopters of blockchain in gambling — just contact us, we are thrilled to help!
Our team can offer a consultation to discuss all your ideas and help your business take the next step