How will Cryptocurrencies Change Online Gambling in the Future? - Baltimore Post-ExaminerBaltimore Post-Examiner

How will Cryptocurrencies Change Online Gambling in the Future?

Cryptocurrencies and gambling are a match made in heaven. Of all the industries on the planet, gambling is one in which trust is most important. The creation of trust where previously it was lacking is at the very heart of cryptocurrency.

Cryptocurrency works without requiring a participant’s trust in a single authority. Consider, by contrast, your bank. If you want to send money from your bank account to another account at the same bank, you initiate the transfer and trust that the bank will indeed credit the correct account with the money you sent.

Now, consider what happens when you want to send money to an account at another bank. We automatically introduce a second entity in which you need to trust. The bank also needs to trust you. Remember all the documents you provided when you first set up your bank account? That was all part of the bank ensuring it could trust you.

There are several problems with all of this, and these are addressed by cryptocurrency. Firstly, banks have betrayed the trust of their customers before and it stands to reason that they will do so again. The 2008 financial crisis was an all-too-real example of banks abusing the trust their customers had in them and the losers were the customers themselves.

An additional problem arises when the bank doesn’t trust you for whatever reason. What if you lack the documentation needed to set up an account in the first place, for example? There are literally billions of people around the world in this position.

Cryptocurrency establishes trust between disparate network participants using open-source, fully-verifiable code. This code ensures that only transactions that abide by the network rules are accepted. If the party sending and that receiving the transaction trust the code, there is no need to directly trust one another. This is incredibly powerful.

Removing Trust with Programmable Money

Since everything about cryptocurrency is digital, it is possible to program it to behave a certain way based on various defined inputs. Programmable money in this fashion is often referred to as a smart contract. Platforms like Ethereum, EOS, and NEO, all support the creation of smart contracts.

These smart contracts can be used to enforce certain outcomes. For example, in a simple dice throwing game, you might program the smart contract to pay the player if an even number is rolled and pay the house if an odd number is rolled. This is a very basic example of how smart contracts can be used to reduce the necessary trust a player needs have in an online casino when using cryptocurrency. If our dice game was built using entirely open-source code, it would be possible for the player to inspect the code themselves to see if the game was indeed built to pay them whenever their bets won.

Provably Fair Gambling

This can be taken a step further. Cryptocurrency casinos are increasingly experimenting with a concept known as “provably fair” gambling. Whilst this is much too complex to explain in this short article, you can think of it like being able to take the deck of cards off the blackjack dealer at any point, check them for consistency versus a fair deck, and continue playing. Again, when done using open-source code, this is potentially massive for the casino industry.

Huge sums of money are spent each year by casino operators getting their games audited. Provably fair casino games could make this a thing of the past. Using blockchain and smart contract technology, the legitimacy of a game be can checked in minutes and at any time. There is no need for an official team of auditors to delve deeply into the finances and operations of a company. The fairness of every hand ever played can be inspected since a record of it is stored on the blockchain that the very casino is built upon.

Democratisation of Online Gambling

Another perk of cryptocurrencies is that you do not need to ask permission from a central entity to use them. This could have a dramatic impact on parts of the world that have outlawed online gambling.

Those living in jurisdictions that are hostile to the pastime can bypass whatever controls have been put in place by the banks to stop people gambling. This is potentially incredibly liberating for those living under such draconian legislation.

Fast Cheap Transfers

Finally, the speed with which value can be transferred is a revolutionary quality of cryptocurrency. If you’re not familiar with how banks really work, you might well be thinking, “Depositing at my favorite website takes just seconds, how can cryptocurrency be any faster?”

The truth is that the money you send to your online casino that appears to arrive less than a second later has not really moved that quickly at all. Banks take a long time to update their ledgers. All that is happening is when a deposit seems to occur instantly is yet more trust.

Your casino operator trusts that your bank has indeed initiated the transfer that you requested and loans you the money to play with until yours shows up. It can actually take days for the funds to truly move accounts. The exact same applies to withdrawals too.

All that trust isn’t cheap. Banks charge hefty amounts to process transactions and the casinos must take the brunt of these fees. Naturally, they pass this cost on to you, the player, in the form of reduced return-to-player rates and more measly bonuses.

Cryptocurrency, when used as a payment option, requires far lower fees to make a transaction (some are even free). Cryptocurrency casinos, therefore, pay much less in terms of overheads (remember they don’t need quite the same level of auditing either) and these savings can be passed on to the players themselves in the form of loyalty rewards, juicier promotions, or just fairer games!

Given the unique properties it possesses, it’s not surprising that gambling is one of the first industries that cryptocurrency is disrupting. However, this is just the beginning. There are many more sectors in which blockchain and smart contract technology can be used to replace trust in fallible human participants with hard, dependable code. As technology improves and its implications are fully grasped, it’s likely that this revolutionary innovation will impact many more corners of our lives than just gambling.

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