Blockchain, cryptocurrency, smart contracts…what does it all mean?
With both speculation and enthusiasm about blockchain, it’s difficult to understand what is actually means, how it’s changing things and how it affects industries that deal in trade – such as gambling.
We take a look at the basics of blockchain, how it applies to online casinos and where it fits in the traditional online gambling space.
Blockchain is a digital technology first invented in 1992 to allow the trading of cryptocurrencies on the internet.
However, a blockchain itself is not a cryptocurrency, which is where people have trouble understanding its purpose, or what it actually does.
Blockchain is a system that takes the form of a very big book, or ‘ledger’ which records transactions that take place over a platform.
Essentially, this ledger is a ‘chain’ of ‘blocks’, as the name suggests. The chain, in this instance, is a network of computers that are created and linked together by the blocks, which hold the data of transactions.
These transactions are encrypted from top to tail, meaning you can’t change them – not easily at least. They are permanent and verifiable from the moment they are created.
As such, a blockchain and its complete history is effectively owned by all computers on the network, distributing the blockchain as an open, transparent ledger across the network.
The technology has people very excited. Not only about its offer of true fairness and the fact that it’s relatively low risk, but also because anyone, even you and I, can create a blockchain.
With the online gambling industry due to blow past $50B revenue this year, the demand for more transparency over knowing which gambling platforms are safe is booming, a demand that blockchain-based platforms can meet.
Blockchain and gambling working together would bring an added element of trust for users, as all parties involved would benefit from the permanent data in the ledger, giving transparency at the level of transaction.
Blockchain gives peace of mind to players of where their funds and bets are going, and that their results were generated fairly. This is done especially with the enforcement of a smart contract.
Take for example Sp8de, a gaming ecosystem built upon a blockchain, where gambling operators can build their games. For operators to use Sp8de, they must use a smart contract, which sets down the rules for when, why and how new blocks (bets) are created in the chain (casino), and ensures that each person in the smart contract upholds their end of the deal.
It’s the same as a bookmaker, but with an added level of permanent fairness, while still staying parallel to traditional gambling.
Although it’s miles more secure because of its infrastructure, blockchain technology still has teething problems, just like any new technology.
In this case, it can mean slower transactions for players, as a blockchain depends on every single computer in the network to double-check transactions. It’s like being in traffic and waiting for every car to start driving again after a green light.
On the other hand, if a blockchain is especially small, the cost to run it will be higher than if it was a scalable platform. This means that a small blockchain will only be able to handle so many transactions per second, making it more expensive to run.
Despite the first few roadblocks faced, blockchain casinos are on the rise. Complementing the traditional online gambling industry, their offering of true fairness and basically zero house edge is attractive to many.
We’re sure to see many different and creative uses of the technology in gambling.
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