Porn, drugs and gambling. The basic human guilty pleasures that helped the development of the Internet and are gradually gaining its place in the world of cryptocurrencies. Let’s leave the first two sides this time and explore the blockchain casino industry. What problems are they are facing and which projects in this area look promising?
The global gambling industry has revenues of $ 500 billion, and according to all available estimates, this number will grow steadily in the next years. However, Internet gambling is one of the sectors where the server-client relationship produces a very asymmetric position. Can blockchain help here?
Problems of Online Gambling
Like other similar (alcohol, tobacco, drugs), gambling suffers from the ills of excessive state regulation. This has two consequences.
First, there are fewer dominant companies in the regulated market that can afford costly licenses and specialized departments to oversee regulatory compliance. To some extent, such giants focus their efforts on satisfying regulators, not just their clients – after all, limited competition guarantees to the operators a particular market share that they will not lose. The result is a situation where the quality of the services provided is not as high as it could be in an open, competitive market.
Secondly, this highly regulated market creates illegal businesses that completely ignore licenses and regulatory requirements: illegal alcohol producers, non-stamped cigarettes, home cookers, unlicensed casinos. While the first three examples are actual goods, casinos can be directly offered online.
For both reasons, the transparency and credibility of online casinos do not reach a high level. Legal casinos use the services of specialized internal model auditors such as eCOGRA. However, it is still a relationship model based on trust – the casino client simply has to believe that the casino and the auditor are honest, and the systems are not set up for the casino.
Advantages of Blockchain Casinos
Therefore, blockchain casinos are starting to emerge that could elegantly solve these problems. Blockchain is a special kind of distributed decentralized database that keeps an ever-increasing number of records protected against unauthorized interference. The most common application of blockchain technology is to use it as a cryptocurrency ledger book (e.g. bitcoin) that stores user transactions. Combined with cryptography, you can ensure the anonymity of operations and prevent unauthorized transactions.
Using blockchain and Bitcoin transactions brings many benefits for players and casinos. In essence, the cost of opening a new casino can be lowered using modern technology (or outsourced to ICO investors), fairness can be ensured with blockchain transparency, clients can be people from worldwide, deposits and withdrawals can be made in cryptocurrency.
Also, most of the bitcoin casinos are regulated and tested by independent auditors. Which also means that players have to go through the KYC process. But on the other hand, these casinos like 7bitcasino offers certified games with fair random generator software. The operators can be held responsible for misdemeanour behaviour.