When the history books come to be written about our very peculiar times, there will be a significant sub-plot running alongside the epic narrative of the coronavirus pandemic. Namely, the rise of cryptocurrency. All these years after Satoshi Nakamoto’s original white paper introduced the concept of Bitcoin and changed our way of thinking about money, crypto has finally come of age as a mainstream method for doing business around the world.
Perhaps the most significant signal – at least in the eyes of ordinary folks – has been PayPal’s support of cryptocurrencies, with the company recently announcing that users can make payments using Bitcoin, Litecoin, Ethereum, and Bitcoin Cash. The currencies are converted to fiat money by PayPal, so transactions aren’t limited to vendors who accept crypto.
PayPal CEO Dan Schulman didn’t mince words regarding how significant a step this is, saying that “enabling cryptocurrencies to make purchases at businesses around the world is the next chapter in driving the ubiquity and mass acceptance of digital currencies.”
Anyone involved in the world of iGaming will naturally speculate what the impact will be on the industry. Online sportsbooks and casinos have always been early adopters of online payment technology for pragmatic reasons: their customers like to see various secure payment options on offer. At the same time, debit cards and bank transfers have long, convenient ways to fund betting accounts. The use of e-wallets like Neteller and Skrill, along with prepaid cards and “pay by phone bill” systems (where the gambling deposit is added to the customer’s next phone bill) have all been highly popular.
It’s therefore not surprising that cryptocurrency transactions have been going on at iGaming sites for quite some time. We’ve seen the rise of a brave new generation of crypto casinos which are built around blockchain technology, offering a trailblazing way to play slots and table games like roulette and blackjack online. Such casinos use provably fair algorithms, which allow for a fully transparent randomization process for each game.
In very simple terms, the outcomes of games are generated and securely encrypted before bets are made. Then, after the end of the session, players are able to unlock the data to confirm there was no interference at any point. This removes the risk of any unscrupulous manipulation of the results. And, as everything is recorded on the publicly available blockchain ecosystem, players can go back at any time to verify the integrity of the results.
As Tornike Razmadze, CTO of crypto casino Fortunejack.com has put it,
“Fairness and transparency are watchwords for this latest evolution of gaming, wherein the process of drawing numbers and making payouts is demystified, at least to the extent that a player can verify that they were not unduly disadvantaged or, even worse, swindled.”
As a result, crypto casinos don’t require audits by third-party companies to ensure they’re operating a fair enterprise. This contrasts with traditional online casinos, which use random number generator (RNG) software to determine the results of online casino games. When gambling at these sites, the golden rule is to always stick to operators who are licensed and regulated by respected authorities like the UK Gambling Commission and the Malta Gaming Authority. Their seal of approval confirms that the RNG software is independently audited to ensure fair play. Without such confirmation, players will have to go on trust alone.
While crypto gambling sites do have attributes that many users like – such as the provably fair algorithm and the ability to make financial transactions anonymously on the blockchain – the fact remains that the vast majority of gamblers around the globe remain with traditional online casinos and sports betting sites. Some of these gambling operators do accept, say, Bitcoin payments along with debit cards, e-wallets, and so on, but right now, it’s still far from a mainstream way to make deposits and cash out winnings.
It’s telling, for example, that the UK Gambling Commission still sounds a note of caution regarding the rise of cryptocurrency betting. The regulatory body cites “associated risks” such as the fact that “there is no central authority that supports the value of digital currency” and – more ominously – the “history of hacking, theft and other criminal activity associated with digital currencies.”
Of course, crypto enthusiasts may well find this kind of finger-wagging unintentionally amusing, pointing out that the lack of a central authority is a feature, not a bug. There’s no denying, however, that such sentiments do reflect an inevitable wariness among gamblers who’ve yet to start using the likes of Bitcoin and Ethereum.
So how will things unfold from this moment on? As we’ve already touched on, if there’s one industry that’s always eager to take on new payment technology, it’s the gambling industry. Now that the world has seemingly crossed a certain threshold of mass crypto acceptance, with everyone from Elon Musk to Snoop Dogg. Proclaiming their enthusiasm and companies from PayPal to WeWork supporting crypto transactions, it stands to reason that more and more players will be using Bitcoin and other currencies at traditional gambling sites.
This will beg a second question: how crypto-specific gambling sites will fare in the new normal. Will their popularity boom as gamblers become used to using digital currencies, or will the traditional gambling sites maintain their hegemony in the industry? All bets are, indeed, off when it comes to the future of online gambling.