Recent advancements in technology have brought an entirely new level of safety and trust to the online gambling industry, most notably through a little thing called distributed ledger technology (DLT). Most people will by now have heard of Bitcoin and the technology which underlies it – blockchain, a specific implementation of DLT which has exploded in popularity lately.
Blockchain technology, in short, provides a way to ensure trust between two parties within a transaction without the need for any third-party intermediary. It means two people can send each other money safely and securely without the need for any bank or financial institution, and it’s impossible for either person to cheat the transaction.
So how does this equate to online gambling?
The beauty of blockchain technology is that it goes above and beyond simply transferring monetary funds. The development of smart contracts, made popular by the Ethereum blockchain, means any trustless agreement can be entered into and automatically verified without the need for external confirmation.
This ensures that the various interactions and activities involved with online gambling – such as dice rolls, roulette spins and the provision of winnings – can all be coded into an incorruptible, automated contract that neither player nor operator can manipulate.
The Features and Characteristics of Blockchain
A quick look into its core characteristic and additional features will reveal the undeniable benefits of blockchain for online gambling.
A blockchain ledger is completely transparent and easily viewable on the Internet by any who wish to explore it. Since it is impossible to hide a transaction on the blockchain, both clients and operators are far less likely to attempt to defraud it. The knowledge that whatever you are doing is being recorded in perpetuity on an immutable ledger is a strong incentive to behave in an honest manner.
Online casinos can either operate on public blockchains or integrate blockchain technology into their systems to provide customers with this level of transparency. An online casino that operates on a transparent blockchain will be more likely to attract customers by providing an added level of trust and peace-of-mind.
A public blockchain ledger is decentralized and immutable, meaning that no single person, company or entity has the ability to alter a transaction once it’s recorded. This is due to the fact that it is controlled and kept secure by thousands of computers around the world so that no single person computer could ever have enough power to change it.
The result is that everything recorded on the ledger can be trusted unquestionably and, potentially, used as evidence in the event of legal disagreement. The immutable nature of blockchain is what makes it ideal for an online gambling environment, where the need for trust is paramount.
Another impressive aspect of blockchain is its ability to be both transparent and anonymous at the same time. Each individual entities interactions with a blockchain are recorded in a transaction address made up of random characters and numbers. This ensures that no personal details such as your name, address or banking details are recorded on the ledger (unless you want them to be).
However, if you wish to prove that a certain transaction was completed by you, you are able to do so by providing evidence that the transaction is linked to a digital wallet address that you own. This means that you can use blockchain transactions to prove ownership of a specific asset or activity while ensuring any personal details are kept hidden from the general public.
These days, most cryptocurrencies like Bitcoin are quite easily traceable to the owner of a transaction, especially by authorities. However, certain private cryptocurrencies like Monero offer complete anonymity.
Using blockchain-based digital assets like Bitcoin to gamble online keeps your banking and personal details safe from the kind of data thefts that are commonplace these days. Users are able to purchase cryptocurrency once-off from a trusted source and then send funds to multiple websites without ever having to give out banking details again. This is additionally useful for online retailers like Overstock, many of whom are starting to accept payments in Bitcoin.
The more online operators that you give out your banking or card details to, the more chance of them being stolen. With cryptocurrency, all you need is your digital wallet address, which gives criminals no access to your funds nor any of your personal or banking details.
5. Speed and Affordability
Since transactions on a blockchain are automated and don’t require a third-party, they are both cheaper and faster. Traditional bank transfers often take days to clear and while credit card payments are usually quicker, they are also very expensive. Cryptocurrency users can transfer funds instantly to anywhere in the world at almost zero cost, simply by using the power of blockchain technology.
In the online gambling industry, this means no more exorbitant transaction fees or days waiting for deposits and withdrawals to go through. Simply transfer your Bitcoin from your digital wallet and you’re ready to go. When it’s time to cash out you can easily move your winnings off the online casino and back onto your wallet.