The recent rally in Bitcoin’s price is often attributed to institutional buying support, with many publically traded companies adding the digital asset to their balance sheets – Tesla being the one that grabbed the maximum eyeballs.
However, Bitcoin and blockchain’s story begins more than a decade ago when the cryptocurrency was first released by an anonymous person or group of people known only as Satoshi Nakamoto.
Regardless of whether you think cryptocurrencies like Bitcoin are in a bubble or not, the underlying technology called blockchain that powers them is objectively groundbreaking.
The iGaming industry was one of the early adopters of Blockchain and cryptocurrency. In this article, we take an in-depth look at blockchain and cryptocurrency, how they are used in the iGaming industry, and where they might be heading in the future.
Blockchain And Cryptocurrency
A blockchain is a database where information is stored in different “blocks” and chained together via cryptography methods.
Bitcoin introduced blockchain to create a decentralized network that could operate trustlessly. You do not need a third-party to validate a transaction between two parties; instead, the transaction is validated through a decentralized consensus-building process known as “mining.”
In the case of Bitcoin, there is no single entity keeping track of the entire blockchain database. Instead, it is maintained by a massive network of “miners” who validate new blocks by competing against each other to win rewards.
Cryptography techniques are used to protect the system and enable the competitive mining process, which is why Bitcoin is called a “crypto” currency.
Since the database is decentralized and validated by a large number of computers worldwide, it is not possible to alter previous transactions recorded in the ledger because to do that, the majority of miners will have to agree to change the transaction in the history of the ledger; this removes a central point of failure and makes the ledger immutable.
Additionally, since the entire blockchain data is available to the public, every Bitcoin transaction in history can be viewed by anyone, providing transparency since all the information is publicly available.
As people kept researching blockchain technology over time, several developments have been made like “smart contracts,” which allow you to run applications on a decentralized network using Blockchain. Private centralized blockchains also became possible as an excellent way to store data and prevent the chances of fraud securely.
It is important to note that blockchain technology and cryptocurrencies overlap but are not the same thing. For example, blockchains are also used to improve Supply-Chain Communications and Proof-of-Provenance, which has nothing to do with Bitcoin or any other cryptocurrency.
Blockchain: iGaming Industry Advanatge
In 2018, it was estimated that 50% of all Bitcoin transactions were related to online gambling. One of the earliest gambling websites that used cryptocurrency was SatoshiDICE, where players could use Bitcoin to bet on a game of Dice. The company was eventually sold to an unknown buyer in 2013 for 126,315 BTC (worth $11.5 million at the time).
Today, blockchain is used for many purposes in the iGaming industry other than just for processing payments. Here are some functional areas where blockchain can help iGaming companies:
- Transparency and fairness
As mentioned above, blockchains are immutable, reducing the risk of fraud and all the transactions are publicly available. Applications built on “smart contracts” are called decentralized apps or Dapps. Currently, several online gambling Dapps provide a transparent and provably fair experience to players as all the transactions are freely available for anyone to audit.
Additionally, gaming regulators may also start using Blockchain technology in their licensing procedures to ensure better compliance and bring more transparency.
- Blockchain-based iGaming platforms
One of the significant iGaming blockchain projects is FunFair, which provides a ready-to-go white-label online casino platform. Operators simply have to add their branding, and they can start marketing their online casino. FunFair also allows operators to choose games from various developers that can be deployed on their online casino.
The entire platform runs using a “smart contract,” which means the whole process is decentralized, and no centrally controlled entity stores the funds. It also leads to lower commission costs for the operator and faster transaction speed.
Additionally, white-label solutions for sports betting like Bethereum bring the benefits of using a blockchain to sports betting.
- Better payment processes
When compared to traditional financial transactions, cryptocurrency transactions are faster and cheaper. By switching to cryptocurrency payments, the operators lower the cost of handling payments. Simultaneously, the players get a more convenient way of depositing and withdrawing, leading to a win-win situation.
Cryptocurrency regulation and emerging markets
One of the significant benefits of using cryptocurrency payments is that it allows people to deposit money quickly, mainly if the online casino is located offshore and doesn’t support any convenient traditional payment option for the player.
In countries with an unregulated online casino industry like India, many highly-ranked online casinos allow payments to be processed via cryptocurrency.
However, given the nature of cryptocurrency, it is likely that cryptocurrency would be regulated if not outright banned in the emerging markets. Ironically, these markets stand to gain the most from cryptocurrency payments as international transactions usually carry a hefty fee and take a long time to be processed.
Regardless, it is pretty clear that blockchain and cryptocurrency will play a much more significant role in the iGaming industry over the years to come.