Many cowboys dotted the industry landscape, but over time sheriffs moved in, and order in many towns was established.
Now we are at the dawn of a new wild west era in online gambling: the era of cryptocurrency. Only this time the west is just as wild.
However, because of the decentralized nature of cryptos, you’ll need not only the help of a few sheriffs, but thousands and thousands of deputies as well to ensure order.
Crypto by its nature has certain advantages for both operators and customers over traditional funding methods. Things like no chargebacks, fees that approach zero and fast transactions that don’t necessarily require all the processes that current payment solutions have are achievable.
Blockchain technology, by definition provides a level of transparency and clarity that customers will definitely appreciate and operators can take advantage of in new ways.
Sure, you hear frequent stories of crypto thefts and other dodgy activity in the crypto space. Much like the early days of online gambling, any time you connect large amounts of currency with a developing technology, shenanigans will ensue.
But, a lot of the design of crypto is focused on safeguarding against shenanigans. That doesn’t make headlines though.
Deposits and withdrawals can still be a very disconnected process in the regulated gambling world, even in the most mature jurisdictions. That is to say nothing of chargebacks.
With crypto, chargebacks are a non-issue. Each transaction is placed onto the blockchain and can’t be reversed.
This gives reassurance to both the customers and operators.
Additionally, crypto transactions can be nearly instant. That means once you initiate a transaction on a blockchain, it is visible to all parties and provides a traceable trail.
“Transparency” is a word you hear a lot when discussing cryptos and blockchain, and with good reason.
Each transaction on any public blockchain is visible to anyone who knows how to view it.
The last bit of that sentence is key when thinking about how to use blockchain in gambling or any other industry.
For better or worse, we’re still right in the middle of the wild west phase of crypto. This wild west is a little different though. When is the last time you heard ‘Oh look, the guy that robbed the bank just took some of that money and spent it at the saloon’?
That’s exactly what happened recently. Some of the coins hijacked in the Veritaserum theft were cashed out. So, we know the what and the how around the coins; we just don’t know the who.
The ‘who’ is the central issue we must address for crypto to be a long-term success in the gambling world. The good news is the blockchain can be built specifically for this purpose.
If you’ve paid any attention to the early developments of crypto in the gambling space, you are probably familiar with the phrase “provably fair.”
While the industry has made great strides as it relates to public perception of fairness of games, in most cases, customers are still asked to take a leap of faith every time they click a button.
To this day, this leap of faith is a barrier to entry to many when it comes to putting their hard-earned cash into play online.
In a ‘provably fair’ model, you can set part of a seed (a string of text) before you bet to be presented with a hash (another string of text) that can only be created with your seed and a seed provided by the operator to result in the hash. This is slightly oversimplified, but basically:
Seed A + Seed B = hash
The hash is an alphanumerical string that represents your roll/spin. The mechanics of this are beyond the scope of this article, but suffice it to say that if the gaming platform tried to alter the outcome, it could not because it showed you a string of characters before you played the game, and that particular string can only have a single outcome.
There is a terrific layman’s explanation of this at this Reddit post.
So the fairness of the game can be checked at any time by anyone that knows how to view it. The customer can see for themselves with certainty that the outcome was legitimate and the only possible outcome.
Crypto solutions for gambling that include built-in KYC (know your customer), AML (anti-money laundering), responsible gambling and other regulatory-friendly features are essential.
These solutions are necessary for crypto to focus on regulated markets, an essential piece for long term success.
The crypto community likes to be in control of its cryptocurrencies. It is one of the key reasons the original Bitcoin was created in the first place, to give control back to the individual.
When considering the crypto community as potential new customers, operators should consider the mentality of control versus viewing crypto as a way for customers to remain anonymous or avoid any type of central banking or regulatory authority.
The only way for a sustainable, long-term approach to the use of crypto in the gambling business is by working solely in regulated markets. This will be a long journey, but just as the online gambling business has emerged from the shadows (in New Jersey, Nevada and beyond in Europe), so must the use of crypto in gambling.
That’s why we’ve recently established The Double C Foundation. It is a non-profit entity with offices on the Isle of Man designed to educate, promote, and technologically facilitate the use of crypto in the commercial gambling industry.
Education and a mindset of compliance are essential elements of a successful future between crypto and gambling.
There are a world of new customers out there, as well as existing customers who would like a payment option that addresses many of the challenges they still face today. As blockchain and crypto technology continue to develop, this will only create a better environment for both customers and operators.
Gambling is often on the leading edge technologically. Crypto should be no different.
However, it’s important to think technological and regulatory safeguards first. In order to do that, the industry needs to educate itself about the technology and the potential new customer base that comes with crypto by providing not only education, but a solution that can be implemented in a legal and regulated way.
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