By now, you’ve probably heard at least something about blockchain technology. It’s all over the news and touted by many as a major breakthrough technology. Its most famous application to date and the one that introduced the innovation to the world in 2008 is in the cryptocurrency Bitcoin.
The biggest opportunity set we can think of over the next decade. –
Bob Grifeld, CEO NASDAQ
Although many people have heard the term, often from someone spouting how “this is going to change the world” and all the hyperbole that goes along with it, not many really understand what blockchain technology is.
In this article, we’ll give a brief introduction to what blockchain is and some examples of the potential applications of the technology that businesses around the world are currently exploring. We’ll then look at how blockchain is poised to shake up one industry in particular – the casino industry.
What is Blockchain?
Blockchain is a method of storing and retrieving data. It’s a database. But, it’s not just any old database. It’s distributed, meaning that anyone can access and update it, provided they abide by the specific blockchain’s ruleset.
Being distributed, a blockchain has no central point of authority. Typically, a central authority must update a regular database. If something were to happen to this central authority, the database would go down.
In blockchain ledgers, each of the participants keeps track of whether transactions follow the rules and these participants are incentivized in some way to support the network rather than subvert it.
Today, there are many different types of blockchains, some are private (not everyone can be a participant), kind of like the intranets of the late nineties, and some are public, like the internet itself. In this latter form, anyone can be a network validator, and it is this application of the tech that has people the most excited.
Depending on how a blockchain is coded, they can be incredibly secure. Take Bitcoin’s public blockchain, for example. To add transactions made by users to the blockchain, specific computer systems, known as miners, must compete at guessing trillions of random combinations of numbers and letters (a hash) every second. Since there is an economic reward for guessing the next block’s hash, it becomes a lucrative business to mine on the network. With every new computer system added to the network, it becomes more secure and the database more difficult to corrupt.
Other applications of blockchain technology are to prove the authenticity of a product or material. For example, a pilot scheme conducted recently saw Alaskan salmon fishers chip their catches and upload data about them to a blockchain. This would allow each handler along the supply chain to know that they were indeed working with authentic, line-caught Alaskan salmon.
There are many similar applications of blockchain technology that may well lead to increased efficiency in numerous industries. Basically, every time there is a call for a unique digital record of the authenticity of something, a blockchain can help out. This might be with real-estate sales, digital identity, tracking artwork, or any one of a number of different uses besides.
Blockchain in the Casino
So, we’ve established that blockchains are decentralized databases and can be immensely secure but how do these qualities apply in the casino setting and are they beneficial? Well, hardly surprisingly, the tech-savvy online gambling industry has been fast to start exploring the implications of the innovation.
Of course, one of the most important aspects of running an online casino is payments. How do you get money from the player to the casino and back again when they want to withdraw? How do you make sure that the player is happy enough with the transparency of the withdrawals system to trust it with their money? How can operators speed up transactions and reduce fees to make the service as competitive as possible?
All of these questions can be answered with blockchain technology. As mentioned earlier, blockchain is the innovation that makes cryptocurrencies possible and many casinos have already started accepting them for the clear advantages they present to some of their users.
We’ve listed some of those advantages below:
Fast final payments – Although rarely absolutely instant, cryptocurrency deposits at casinos are very quick. It is also really easy to deposit any cryptocurrency at an online casino. In around 10 minutes, you will usually be playing. The difference really makes itself known when it comes to withdrawals, however. Once greenlighted by the casino, in another 10 minutes or so and you’ll have your money back in your wallet. Such convenience has big implications for high volume players who might not feel comfortable leaving huge bankrolls at casinos but are forced to because of the two-or-more-day withdrawal time when using traditional banking options.
Once greenlighted by the casino, in another 10 minutes or so and you’ll have your money back in your wallet. Such convenience has big implications for high volume players who might not feel comfortable leaving huge bankrolls at casinos but are forced to because of the two-or-more-day withdrawal time when using traditional banking options.
Decentralized payments – since Bitcoin relies on an entirely permission-less blockchain, it doesn’t matter where either the casino or player are located. Bitcoin and other digital assets do not respect national borders in quite the same way that legacy banking options do. Using a VPN, players can play from nations where gambling is restricted too.
Requires much less information – For the security conscious that might not be happy with supplying an online casino with reams of personal data, cryptocurrencies offer a great alternative to VISA and Mastercard payments. When using cryptocurrency, none of your personal data is tied to your wallet. This also means that crypto casinos often ask for much fewer personal data when you sign up.
Games Built on Blockchain
However, it’s not just payments that blockchain technology is shaking up with regards to the casino industry. Other developers are actually looking at how such an immutable ledger can be used to provide greater security, transparency, and fairness for players.
Since a full record of data can be stored in an impossible-to-tamper-with-way using blockchain, games themselves can utilize this security model for very interesting results. In fact, the games can be made arguably fairer than they can in a real-world casino!
The idea is known as “provably fair” online gambling. Basically, if you know how to read a few lines of code, you can perform an entire casino audit yourself in seconds. You can check that the deck of cards you were just playing blackjack with does indeed have 52 different cards, 13 of each suit, or indeed that it was possible to win the bet you just placed on the virtual roulette table.
Casinos are just starting to make the first provably fair games and they are rather basic for now. However, just like the evolution of online gambling itself, their sophistication is sure to improve dramatically over the coming years.
Interestingly, although blockchain technology can be used to subvert current know-your-customer and anti-money laundering regulations that online casinos around the world must abide by, it could also be used to enhance them too.
There are various blockchain-based digital identity systems being developed around the world. Each hopes to create a secure way for people to prove who they are online. Perhaps most exciting of these is Microsoft’s ION project. The computing giant aims to build directly atop the Bitcoin blockchain, leveraging its immense security for its ambitious goal of creating immutable, secure digital ID documents.
Such a system would surely revolutionize the way the online casino industry functions and would likely lead to a much smoother customer experience — particularly when it comes to withdrawal! It’s all still very early in development at the moment but we expect to see such companies come to market with real working applications within the next five or ten years.