The integration of blockchain technology with online gambling is both an opportunity and a threat to the new era of iGaming. Many analysts see crypto casinos as the pioneers of a new wave of online gaming, while others remain sceptical.
Decentralized ledgers and smart contracts offer a new way of doing things; more secure and more efficient, on paper. By 2024, the global online gambling market is projected to reach $92.9 billion, and some part of this forecasted growth is attributed to the crypto casino taking off.
Key cryptocurrencies like Bitcoin and Ethereum are the bread and butter of these platforms, though many are beginning to offer alt coins too. However, crypto casinos are often crypto casinos, in that they don’t accept traditional fiat payments (though there are some exceptions). This is because it’s more than just offering another payment options; it’s about building all processes from top to bottom on the blockchain.
The use of blockchain means that each transaction and game outcome is recorded on an unalterable ledger, providing a robust level of trust between players and casinos. The money can be traced all the way to the wallet, meaning it’s a fully transparent system that can still offer anonymity.
Decentralized Gambling: A New Paradigm
At the core of this new paradigm are smart contracts, which are self-executing agreements that automate game logic and payouts. These contracts can lead to greater efficiencies for the player and operator, but also when it comes to payments – without a Visa/MasterCard intermediary, there are fewer fees (which the operator usually covers). This cost saving can be passed on during games and payouts, indirectly.
The concept of provably fair algorithms is at the core of decentralized gambling. This allows players to independently verify the fairness of each game outcome using cryptographic techniques. It should, in theory, make it easier for regulators too when auditing and overseeing the fairness of games. For example, casinos provide a hashed seed number that generates bet outcomes, which players can later use to check the game’s fairness. This transparency builds trust, ultimately, in an industry that is often lacking in trust.
Compared to traditional online casinos, decentralized platforms offer several advantages:
- Enhanced security through blockchain’s immutable ledger
- Reduced operational costs, potentially leading to better bonuses and higher payouts
- Faster transactions and withdrawals
- Increased privacy through pseudonymous accounts
Crypto-Powered Advantages for Players
If nothing else, crypto casinos are now a way for crypto enthusiasts to join in. However, the adoption of cryptocurrencies in online casinos is far greater than catering to a small subsection of society – it has revolutionized the player experience, particularly with cost-efficiency.
Bitcoin transactions typically complete within 10-60 minutes, while Ethereum transactions can be even faster. However, while casino deposits used to be slow, it’s a myth that crypto transactions are faster than Visa and MasterCard. What is true, though, is sometimes the casino is slow to show these funds as available right away.
Transaction fees are also lower. Some online casinos may charge up to 5% for deposits and withdrawals, though many incur the cost themselves (but this is still passed onto gamers in other ways). With lower fees, regardless of who is paying them, there will be better game payouts as a result.
Innovative Crypto-Based Games
Perhaps the biggest potential is for NFT-based games and a growing ecosystem. These games allow players to own and trade unique digital assets, creating a new asset of value in online gambling. It may come through as loyalty rewards, for example, while others directly offer NFT slot machines where players can win rare, tradeable NFTs.
Another trend is the integration of decentralized apps (dApps) that enable peer-to-peer gambling without intermediaries. These dApps leverage smart contracts to ensure fair play and automatic payouts. In theory, it could pitch two people against each other to gamble without a house edge (or a small fee by the dApp provider).
Regulatory Landscape and Compliance Challenges
Crypto casino regulation is in an interesting state, with jurisdictions like Malta and Gibraltar leading the way. Current regulation efforts focus on security and consumer protection, because it’s such a new technology with fast-moving threats.
The central challenge for crypto casinos is implementing robust Know Your Customer (KYC) measures. Despite the perceived anonymity of cryptocurrencies, legal crypto casinos are still required to verify user identities. This is an issue for customers wanting to remain fully anonymous, though it’s not a problem for those who simply want deposits to not be on their bank statements.
There are still crypto casinos that do not adhere to KYC regulations. However, these are unlikely to have a license with highly reputable licensors, meaning that the entire operation is a grey area. Ultimately, users need to take more care of their own due diligence than normal.
Final Word
Ultimately, in this early life-cycle, users are encouraged to not keep vast sums in their casino accounts. More responsibility is also placed on the user and their understanding of wallet safety rather than fiat banking, which is somewhat taken care of for you.
