The online gambling market is one of the fastest-growing on the planet. Facilitated by the availability of mobile Internet devices and improvements in smart technology, more and more people are going online to place their bets.
It’s then perhaps unsurprising that online gambling is often mentioned in conjunction with one of the fastest-growing new technologies, blockchain. What exactly is blockchain? And why is it being touted as a way to revolutionize the online gambling industry?
What is Blockchain
Blockchain comprises ‘blocks’ of digital information, stored in a public database (or ‘chain’). It is revolutionary because of the public nature of the information stored in each block — what is stored on the blocks is available for everyone to see. The technology is also highly secure because the ‘chain’ is connected to a network of computers, all of which must be verified as legitimate to connect to the chain. This network is then responsible for verifying all additions and changes to the chain.
In order for a block to be added to the chain, four things have to happen:
- A transaction must occur — e.g. an online purchase.
- The transaction must be verified by the network of computers.
- The transaction must be stored in a block.
- The block must be given a hash — a unique identifier used in blockchain.
Blockchain is secure because of the verification process. If a hacker were to attempt to change a block within the chain, then a new hash would be generated. This would then mean that the block next to it also had to be edited, and so on. This would be completely impossible because the network would never verify this kind of mass change.
A well-known saying when it comes to gambling is ‘the house always wins’. There is a conception, fair or not, that gambling can be unfairly weighted towards the ‘house’ or the person placing the bet.
The public nature of blockchain transactions and the fact that they are verified in a decentralized way, mean that using blockchain in online gambling will increase trust. If, for example, someone placed a bet using a sportsbook and lost, they could check the chain for every transaction that the provider had participated in. It would soon become apparent whether or not the provider was acting unfairly. This transparency would mean that unscrupulous providers would be forced to amend their policies, and honest providers would benefit from being seen as more trustworthy.
Low fees and easier cross-border payments
Using blockchain to place bets online means that consumers do not need to go through their bank. This in turn means lower fees, and a much simpler process for making cross-border payments.
For example, if you wanted to place a bet in another country you would not have to pay a transaction fee to convert your money into the local currency and back out again — you would simply complete the entire transaction using blockchain.
The verification process and transparent nature of blockchain make it incredibly difficult to carry out any fraudulent transactions, which is great news not just for the online gambling industry but for any industry that chooses to utilize blockchain technology.