The cryptocurrency market offers huge opportunity for those who are able to spot trends and get in early
Any mention of crypto immediately raises alarm bells, and quite rightly so. In 2017, the price of Bitcoin increased from $800 to over $20,000 in just a few short months, leading to mass hysteria and enviable tales of rags-to-riches. We all know how that story ended.
However, for those working closely with the technology, the price volatility of Bitcoin and other cryptocurrencies has been nothing but noise – a distraction from the hard work that was being conducted at the lowest layers of the blockchain stack.
This article hopes to trigger a double take. Cryptocurrency betting has a future that is far removed from the price volatility and hopes of overnight riches in recent years. This market’s future is about a wholesale shift in how operators, players and affiliates interact, dramatically improving trust and opening the door to a new paradigm of online gambling.
The rise and rise of stablecoins
It all starts with the “stablecoin”. Forget the price volatility of Bitcoin – that’s not good for gambling. Nobody wants to deposit at a casino, double their balance, only to find out they’re down because the price of Bitcoin dropped by 60%.
Stablecoins are fiat-pegged (i.e. USD-pegged) cryptocurrencies that inherit the properties of crypto (fast, low-cost, private and global). And so far in 2020, the total dollar value of stablecoins has increased from $4 billion to $9 billion with daily trading volumes in the tens of billions. It’s fair to say that the use of stable-cryptocurrency is growing.
For most people however, the properties of crypto – fast, low-cost, private and global – have little benefit over existing payment rails. So why would someone who doesn’t care for these so-called “benefits” ever bother using a stable cryptocurrency?
By now, you’ve probably realised that crypto gambling is having less and less to do with Bitcoin by the day. While there are still literally hundreds of Bitcoin casinos available, the idea that this is all that crypto-betting has to offer is an outdated one. Ethereum is a blockchain similar to Bitcoin but with one key difference, it enables the operation of smart contracts.
A smart contract is just a fancy term for software, however the key difference between a smart contract and a piece of software is that smart contracts live on a distributed blockchain, not on a single server or home PC.
Distribution is the key term here . It means that the code is near-impossible to hack as an attacker would need to access every single computer running the Ethereum blockchain (which is currently in the many thousands, each at various locations around the world).
This means that when you send a transaction to an Ethereum smart contract, you are guaranteed that it will execute exactly as described without any interference from a middleman. This has huge implications for betting.
PoolTogether, a “no-loss lottery”, is one of these decentralized apps (DApps) that uses Ethereum to take (stablecoin) deposits and pay out winnings. There is no book-keeping needed as that is all done on the Ethereum blockchain, and at no point does PoolTogether hold user funds. Instead, the blockchain itself holds funds and pays out exactly as specified in the smart contract (software).
As a user, I can buy a ticket in seconds using a “crypto-dollar” and immediately be in with a chance of winning the weekly prize – all without the need to trust anyone with my money.
If Ethereum is so great, where are all the casinos?
Ethereum is currently undergoing a major network upgrade that is due to begin its phased launch in Q3 2020. One of the key motivations for this upgrade – dubbed “ETH 2” – is to increase the capacity of the network. As it stands, if you want to spin the reels on a smart contract slot, you’ll need to wait 15 seconds for the result and it’ll cost you anywhere from 5 cents to in excess of a dollar – depending on network traffic. This is obviously a terrible user-experience, and in Ethereum’s current state a smart contract casino simply could not be ready for the mainstream.
While other technologies have been created to help tackle this problem on the existing version of Ethereum (most notably the state channels developed by FunFair ), without the improvements expected in ETH 2, the market cannot thrive.
So, you’re telling me crypto isn’t dead?
Despite the proclamations of many unfamiliar with the topic, crypto is not dead . Although there are still some technology and capacity hurdles to overcome, when you consider blockchains for their tech as opposed to an obnoxious “get-rich-quick” scheme, it’s far easier to see how cryptocurrencies could dramatically improve the online gambling sector.
Regulators don’t know it yet, but decentralized blockchains and thoroughly audited smart contracts provide an unprecedented opportunity for improving the safety for players. Operators will also be able to significantly reduce their costs, passing on their savings to players in the form of a lower house edge and better promotions – something that is already being seen in Bitcoin-operated casinos.
As a gaming affiliate, the cryptocurrency market offers a huge opportunity for those who are able to spot trends and get in early. Whether it’s the rise of stablecoin gambling or the introduction of smart contract and Ethereum casinos, the correct pick could see an affiliate riding the coat-tails of a market that expands by many orders of magnitude in a very short period.
Better yet, the transparency that cryptocurrency betting offers also provides enormous oversight for affiliates themselves. Payments can be made instantly and automatically on every player bet, with each bet’s value and the commission being paid on a public blockchain that can be verified by you, the affiliate.
While the vast majority of us have been distracted by the media chatter about Bitcoin price movements, an enormous amount of research has been unfolding behind the scenes.
Gaming affiliates would do well to watch this space closely.
About SiGMA Digital Summit:
The SiGMA Manila expo might have got postponed to May 2021 but that won’t stop SiGMA Group from bringing gaming scenes closer together. From various gaming sectors to an outstanding line-up of speakers we’ll be having a look at how the main markets across Europe and Asia will adapt and thrive. SiGMA Digital, in partnership with ICE Asia, AIBC and MGS Entertainment Show will take place on the same week of the original show dates, 8 – 10 June 2020. Register now to be part of this global digital revolution!