Lately, the term 'blockchain' is widely used in the context of gambling. The Slotegrator company, which is an aggregator and the leading provider of the software from renowned gambling developers, overviews the cryptographic system in detail.
- What is blockchain technology
- How blockchain works
- Blockchain technology advantages
- Blockchain technology applications in the world
- Blockchain in online casino
- Successful experience in using blockchain technology in gambling
- Pros and cons of using the blockchain in gambling
- Blockchain technology prospects
The experts explained why the future belongs to this system and why it is evolving in the gambling business so fast, as well as named its pros and cons. Furthermore, analysts have provided examples of successful blockchain technology applications in various Internet gambling projects.
What is blockchain technology
It is believed that the widespread introduction of blockchain technology will change the whole world. Let’s consider this phenomenon and its features.
The term blockchain consists of two English words "block" and "chain" that perfectly reflect the system's concept. There are blocks of encrypted information lined up in a sequential chain. In turn, this information chain is not hosted on one server, but is available on all computers connected to the network, thus providing data decentralization.
In other words, blockchain technology is a well-structured, decentralized database with transaction chains that are protected by cryptographic encryption. The access to this information is organized in such a way that data theft or fraud is almost entirely excluded. Moreover, thanks to the blockchain decentralization, it cannot be changed, hacked, faked, or any ways controlled.
The blockchain technology does not require any intermediaries. Data is transmitted over a peer-2-peer protocol from user to user. Each transaction member has information about other members, as well as the access to the entire history of transactions committed in the system.
This diagram shows how the blocks linked in a chain. Complex mathematical algorithms, as well as validation of each system member provide this process. Each block has its own unique signature and time tag, so every new block attachment automatically triggers the register update.
How blockchain works
The functionality of blockchain technology is based on the full transparency of performed operations, which cannot be updated by unauthorized members.
To visualize and understand how blockchain technology works, you can refer to a DNA structure. It also has so-called "information block chains" or DNA cells. After committing and confirming any operation in the blockchain system, a new block is added to the chain, which, parallel to DNA cell, contains information about the entire network.
Consequently, the blockchain technology excludes the possibility of an unlicensed block addition or removal, as this will immediately affect the entire system.
The principle of the blockchain technology operation consists of several steps:
- When someone intends to make a transaction, the system receives a notification and triggers the process of encryption.
- A new unique block containing a time tag and information about the previous block is formed.
- Further on, there is a validation procedure that confirms the transaction and the user status. To that end, all members of the system receive a new block and add it to the database.
- When the new block is validated, it takes its unique place in the chain and joins the system fully.
- At the end, the entire chain is automatically updated and all the updates are recorded in the register.
Blockchain technology advantages
Blockchain technology is a fundamentally new approach to storing important data. Previously, all transaction data were recorded on the servers. However, any server is vulnerable: It can be hacked, blocked, or faked.
In the blockchain system, the information is distributed among a number of computers, which can even reach millions. This way, it is almost impossible to break all nodes at once and change the data. As there is no centralized repository of information, the data remains invulnerable. For that very reason, blockchain technology has great prospects for exploitation.
There is one more advantage of decentralization. It is virtually impossible to take control of the blockchain system. It means that any regulators cannot influence the transaction formation.
Another undeniable advantage of blockchain technology is that all data introduced into the network are completely transparent. Each user has access to the information about all the transactions.
The blockchain technology allows conducting transactions without any third companies. Banks and payment systems are not needed as the authenticity of transactions are verified by the system itself.
Automatic encryption provides a high-security level of transactions. Hashing guarantees transaction inconvertibility and the digital signature along with two kinds of keys make the information inside the blocks completely inaccessible to outsiders.
Thus, blockchain technology turns out to be highly beneficial.
- data security;
- impossibility to modify recorded data.
Blockchain technology applications in the world
Today, there are already successful examples of the blockchain technology application in different spheres. The chains of information blocks can complete various tasks. It can be applied for:
- monetary transactions;
- commercial transactions;
- confidential information transfer;
- data management;
- sensitive document archiving;
- social sphere;
- postal services;
- multimedia dissemination;
- protection of intellectual property rights;
- and many other things.
Blockchain in online casino
For any gaming house, the blockchain technology brings a good reputation, transparency, and security, as well as risks reduction and revenue increase. Let us take a closer look at the most important problems this technology can solve in today's gaming business.
It happens that the player deposits money to online casino through bank card (VISA, MasterCard, American Express), and then gambles them away. He may apply to the bank for return of lost funds. If the player gains the case, the operator will not get a profit at best, or will be liable to a fine at worst.
Another security risk: When accepting payments through classical financial instruments, it is likely that money of a criminal origin will be transferred to online casino. In this case, there may be problems with criminal legislation and charge of fraudulent activity.
Blockchain technology exclude such security threats for the online casino. It provides stability, inability to retract payment, and confidence in the non-criminal origin of the funds.
It is another key aspect of gambling. Today, many gambling authorities have adopted appropriate legal regulations to control the financial transparency of casino transactions. This is done in effort to combat money laundering.
The second key issue is the transparency of bets. Many online casinos have the ability to act in non-transparent ways against players. This casts a shadow on the reputation of the entire industry. It is often very difficult for honest gambling houses to prove that they are not deceiving their users.
Therefore, for the casino, the use of blockchain technology is a guarantee of full transparency and crystal honesty with respect to the player, as well as proof of the absence of any criminal or fraudulent activity.
Ultimately, risk exclusion and financial transparency have a huge impact on the reputation of gambling, which directly affects income growth. The client base will increase, as any player chooses to deal with an honest, reliable gaming facility.
So today, all online casinos, lottery operators, and bookmakers, using blockchain technology, are eager to demonstrate their transparency and accountability to prove their integrity in relation to players.
In this way, they show that they do not interfere in processes based on luck and good fortune, so that they gain a strong competitive edge over competitors.
Successful experience in using blockchain technology in gambling
Today, Internet gambling is a global market with more than $30 billion capitalization and an annual growth rate of about 10%. Currently, over a hundred well-known online casinos have turned to the use of cryptocurrency and blockchain technologies. In 2016 alone, the total casino bets in cryptocurrency exceeded 1.5 million BTC.
It is therefore bold to note that a competitive environment dictates the conditions and the need for gambling institutions to use different innovations.
Blockchain technology is now being used successfully in famous gambling projects such as:
- gambling server Etheria;
- eSports platform First Blood;
- CoinPalace casino;
- dice casino Etheroll;
- Edgeless casino;
- Rollin casino;
- Gambling project Ethereum Jackpot;
- Popular gambling online game VDice;
- Trueflip lottery;
- Wager,the betting site.
The latter is successfully using its own blockchain network to create a decentralized platform for sports competitions.
Some online casinos, which work with various cryptocurrencies, allow users to finance themselves and gain profits out of gambling activities. This system is called ICO, Initial Coin Offering that is a primary placement of the coins (tokens). In gambling, it was developed with a help of Ethereum cryptographic platforms (Jefirium).
A vivid example of blockchain usage is a popular vDice online casino, which is a kind of classical gambling with SatoshiDICE bets and implemented as a Jefirium's smart contract. The initial coin is a token called vSlice. Developers have created a system in which any player can receive automatic dividends from profits in vSlice tokens generated on the vDice platform.
Pros and cons of using the blockchain in gambling
With the introduction of blockchain technology in gambling, players and operators have received a number of advantages:
- All transactions performed in the game are automatically recorded by the system, allowing transactions to be as transparent as possible.
- The blockchain system is decentralized, and it is almost impossible to crack.
- All data placed in blockchain cannot be backdated.
- Using cryptocurrency allows a player to make a deposit and gain profit anonymously, without having to provide documents, and some online casino platforms do not even require an account to be created.
- In the case of payment transactions in cryptocurrency, the commission tends to be much lower or non-existent.
- When using cryptocurrency, there are no restrictions on gambling.
However, there are also substantial drawbacks to the undeniable advantages.
One can include scalability. Today, blockchain cannot handle a huge amount of transactions in a short time.
The second complication is the problem of storing and synchronizing the transaction database on each computer on the network. The base will increase daily, requiring additional capacity and consuming large amounts of electricity.
The third drawback is the use of cryptocurrency. Today, working with them as a means of payment is very risky because of the very high volatility and legislative constraints in many countries.
Blockchain technology prospects
The world is moving on, progressing and constantly changing. The challenge for any business is to respond quickly to these changes with maximum benefit.
Blockchain technology is already operating throughout the world in various industries. And that's reality. It has shown itself to be the best way to exploit business development.
Blockchain continues to gain popularity and universality. And this is the future. Therefore, in order to keep pace with the times, it is simply not possible to remain aloof from these processes.
As already mentioned, blockchain technology has become a solution pressing the urgent problems in the gambling industry. It has recently begun to be actively introduced in various gambling projects, where it has already proved to be as the best possible way. Undoubtedly, the blockchain provides enormous advantages for the further development of gambling.
Therefore, the specialists of Slotegrator, who have many years of experience and a deep understanding of the market, have no doubt that blockchain technology is the future of all gambling industry.