How Blockchain Technology Can Transform the Landscape of the iGaming Industry
The current worth of the global iGaming market is estimated to be somewhere in the ballpark of $46 billion. As this whopping number will only continue to grow in the future, iGaming industry can comfortably be described as one of the most lucrative markets in the world.
What’s interesting though, is that this estimated value does not take into account unregulated sectors.
By some estimates, black and grey iGaming markets are worth up to 10 times more than the regulated sector. Unfortunately, both governing bodies and bettors suffer from such a huge amount of unregulated platforms; the former from the inability to collect taxes, the later from being totally unprotected while taking part in games.
One of the most promising solutions to bridging the gap between legal and illegal iGaming markets lies in blockchain technology. Adoption of blockchain would greatly benefit players, operators and governments, which is rather exciting as being beneficial for all major parties within an industry is a rarity for blockchain use cases.
The History of Blockchain Within the iGaming Industry
While blockchain technology may still be in its developmental stages, it’s no stranger to iGaming.
Cryptocurrencies have already established themselves as a great option for gamblers participating in unregulated games. In fact, since 2013, approximately 50% of all Bitcoin transactions were related to gambling.
The reason for this is quite simple – cryptocurrencies are not bound by governmental laws, which makes them a natural fit with the unregulated iGaming sector. Since placing bets is still outlawed in a lot of countries, cryptocurrencies give people a way to gamble in places where it’s banned to do so.
Up until this point, betters have turned to blockchain-based platforms for gambling out of necessity. Now, however, comes a time when we use the same technology to create the best option on the iGaming market, hopefully revolutionizing the entire sector in the process.
Main Benefits of Using Blockchain in the iGaming Industry
There are a lot of ways the decentralized, immutable and transparent qualities of blockchain technology can improve the current state of the iGaming industry. These are the most prominent ones:
Undoubtedly the biggest challenge of every iGaming business today is the question of trust. This applies to both regulated and unregulated platforms.
With a blockchain network in place, there is full disclosure of both gambling odds and subsequent results of placed bets. The fairness of the games is guaranteed by smart contracts – due to their underlying logic, every bet becomes subject to automated digital agreements, making it impervious to fraud from staff or customers alike.
If the gambler gets the bet right, the platform automatically delivers the winnings to his wallet. If he’s wrong, the system transfers the placed bet to the operator’s wallet. No need for a supervisor to get involved at any point.
In addition, a blockchain system keeps a detailed, immutable account of all games played and bets staked, as well as their results. It also keeps track of the amounts that were won and paid out to winners. This means that players have unrestricted access to the transaction history to confirm that the operator paid out all that was due, as well as check that the odds were not manipulated.
Such transparency would eliminate a lot, if not all, of the trust-related issues synonymous with iGaming platforms.
Easier auditing processes for regulators
While regulating current iGaming platforms can be a genuine nightmare, the introduction of blockchains would turn the job of monitoring betting and gambling operators into a breeze.
Due to the aforementioned transparency, keeping an eye on whether the rules have been followed or not is something a regulator can easily do. In fact, a blockchain platform can do this job on its own – after all, blockchain was invented with the purpose of being able to self-govern its own network. All a regulator would need to do is give the records a quick skim and the job would be done.
Furthermore, there’s no way to alter the data once it’s been added to a blockchain. Gambling operators can’t change the information after the fact, so there’s no danger of someone “cooking the books.”
Better payment solutions
The ability to gamble with cryptocurrencies or blockchain tokens solves most problems associated with the online usage of traditional currencies. Unlike trades involving FIAT, crypto transactions are incredibly cheap and are performed extremely fast.
It should also be noted that failed transactions in a blockchain environment are basically unheard of. As long as the user plays by the rules, there’s no way a deposit or a withdrawal can be turned down by the platform.
Furthermore, collecting winnings could be performed in several ways. You can transfer funds directly to your wallet, sure, but you can also send them to other gambling platforms that accept cryptocurrencies in a matter of seconds. You can even trade your tokens for other types of cryptocurrencies or even tokenized real-world assets.
Stronger security due to DApps
The more complex a digital environment, the bigger the chance a cybercriminal can find a backdoor and hack the network. Luckily, blockchain-based platforms take the opposite route as they’re (at least theoretically) as simple as it gets.
Most iGaming operators already running on the blockchain are fully Decentralized Applications (also known as dApps). dApps rely on the usage of the aforementioned smart contracts, simple if/then instructions programmed within the blockchain. These can be as simple as the following smart contract logic: “IF user bets on outcome X, and outcome X happens, THEN pay out his bet x2. IF outcome X does not happen, THEN no payout.”
As you can imagine, this is an extremely hard piece of code to cheat, if not literally impossible. Add to this that all rules in a DApp are totally public and that everything’s run on a decentralized peer-to-peer network, and you’ll see just how little room there is for cheating. Entire internal workings of a casino can be based on smart contracts and DApp logic. This includes payment environments, RNG (Random Number Generating) processes, bonus handouts, etc.
Since almost half of the top 100 dApps are betting-related, it comes as no surprise that the iGaming sector keeps being mentioned as one of the primary use cases for the blockchain in 2019. This trend will undoubtedly continue in 2020.
EOS and TRON have dominated the iGaming dApps sector to a point they legitimately solidified themselves as main competitors to Ethereum. Together, they make up 74% of the top 100 dApps categorized by daily volume and user base, according to DappRadar info.
Live streaming authentication
Manipulations and thefts of online identities happen all the time, so authenticating someone’s identity is a major concern for online platforms of all kinds. With blockchain authentication, however, it becomes easy to determine if the digital user really is the person they are claiming to be.
In a blockchain environment, only the user has access to their private data. Manipulating the data is impossible due to blockchain’s immutability, and accessing the information can’t be done without a private key. This makes it very easy to authenticate the ownership of the streaming data.
After the streaming is wrapped up, a file hash is generated and stored in the blockchain mapped with the publisher’s address. The streamer is the only one validating who gets to view or download the info, placing an impressive layer of security on the data streamed over the IPFS network and making the process of authenticating the user’s true identity simple.
Affiliate tracking platforms
Blockchain-based iGaming applications will open up a lot of opportunities for new affiliate platforms to emerge. As B2C business models, scaling iGaming networks can greatly benefit from affiliate tracking software that secures thousands of end-users at a rate far greater than where the current adoption of blockchain tech sits.
Yet again, smart contracts play a huge role here. They set a trustless tone to relationships between brands and affiliates by allowing automated, instant payments for completed transactions. Since there’s no reason to distrust affiliate parrings, this could turn out to be the most cost-effective method of gaining traction in the iGaming sector.
Besides bringing a lot of adopters early on, affiliate tracking networks could also help developers identify features that end-users ascribe most value to. Having access to such valuable insights is a massive game-changer, which makes us believe a lot of affiliate networks will arise as blockchain-based gambling platforms become more commonplace.
Sublime protection of personal data
Blockchain technology provides what can easily be described as the best security currently available in the digital world. This is, of course, primarily due to high levels of encryption and decentralization.
In a nutshell, blockchain networks have no single points of failure and are next to impossible to hack. This reflects extremely well on gambling platforms as there’s no way for someone to get their hands on your data and, by extent, your money.
Unlike current centralized systems, blockchain-based iGaming platforms don’t require you to occasionally reveal your credit card numbers, address, etc. You have to authenticate your identity only once when becoming a part of the platform. From that point on, all the private information will be cryptographically protected and extremely resistant to any type of security breach.
Decentralized game servers
Whether on cloud or not, all traditional iGaming platforms own or control servers that store the game technology, commands, history logs, player data, deposit information, etc.
Obviously, this is far from an ideal situation for users. Not only are all the info and funds only a single hack away from being compromised, but all of the control over the games is in the operator’s hands. Who’s ensuring betters that that power will not be used to tip the scales once in a while?
On the other hand, blockchain iGaming platforms do not own or control the network in the way centralized systems do. Instead, the information is stored on a decentralized network of nodes where control over the uploaded data is completely democratized. No nod has more control over data than the other, and the entire platform is considerably more secure and fair as a result.
Low fees and easy cross-border payments
Being entirely independent of banks, blockchain platforms don’t fall victim to slow processes characteristic to traditional iGaming platforms. Transactions do not take days to finish but are a matter of minutes at most.
Additionally, the costs of withdrawals and deposits are also far lower than with any FIAT currency as no one is taking a hefty fee whenever there’s activity on the account.
Since blockchains and cryptocurrencies know nothing about geography, iGaming platforms running on distributed ledgers open up online gambling to everyone regardless of where they live. Furthermore, exchanging tokens with someone on the other side of the planet will take the same amount of time and effort as dealing with the person sitting next to you.
The Future of iGaming Will be Shaped by Blockchain Technology – and Vice Versa
There’s a general consensus that blockchain and iGaming are as good of a fit as any other potential use case of this groundbreaking technology.
Once widely adopted, blockchain will completely revamp the entire iGaming industry, improving on nearly every one of its current facets. Blockchain also promises to unite both legal, gray and black iGaming sectors under a single silo, giving birth to a record-breakingly lucrative market.
However, it’s important to note that the impact of deploying blockchain solutions to iGaming will not only turn out well for the gambling industry. The sheer size and popularity of the iGaming sector will ensure that an uptick in blockchain-based solutions in this area contributes significantly to mass adoption of blockchain technology in other industries.
From that perspective, it’s clear that both blockchain and iGaming stand to make massive leaps forward if they work off each other – who knows, maybe in a few decades this pairing turns out to be a pivotal moment for both industries.