Cryptocurrencies in the gambling industry: Pros & Cons
Cryptocurrencies have become a global phenomenon, which continues to conquer the world every day and gains more and more followers progressively. Nowadays, even the largest companies in the world can’t ignore the influence of the blockchain anymore. The decentralized form of cryptocurrencies gives financial institutions something to think about.
After becoming a traded commodity among millions of investors, miners, buyers, and sellers, cryptocurrencies have recently begun to impact the gambling industry as well, with Bitcoin and Ethereum being the major cryptos.
Crypto gambling has many advantages across the board. Its beneficial for players, cost-effective for operators and innovative for game providers. Let’s dive into some details.
Transparency and Funds Safety
Throughout the years, casinos have been accused of cheating and using tricks against their customers, keeping gambling enthusiasts away and creating a false perception of the casino being “the bad guy”.
If the players think that the odds are stacked against them, casinos inevitably lose clients. Furthermore, it has always been difficult to audit casinos from the user’s perspective. Even though a legally operating casino is absolutely trustworthy, the users have no choice to verify everything themselves.
With blockchain technologies, the entire gambling industry becomes 100% transparent to all of the involved parties. Crypto gambling certainly increases the safety factor and provides more privacy to all players. The main insurance points are the facts that the player’s money never ends up on the casino’s wallet and the distributions of winnings are outside of the casino’s control. All the bets are made according to the smart contract instructions.
Low House Edge
The house edge is the percentage of the profit that casinos expect to make over the long term of a game being played at their site. Nowadays, it varies from approximately 1–15% depending on the game type. The main reason for its high percentage is that casinos have to cover different expenses such as customer service, payment to merchants, regulation fees, transaction costs, licensing fees, etc.
Blockchain-based casinos have the power to minimize the House Edge. Since the blockchain technology is automated and humans don’t interfere with its functions, the charges related to gambling transactions can be significantly decreased. Therefore players can maximize on profits.
In the centralized online gambling, the player has no choice but to trust the operator to distribute all the winnings. However, in the case of decentralized gambling, the player is not forced to trust anyone. MetaMask crypto wallet extension is used while gambling, and the casino funds are vivid and transparent for everyone so blockchain-based gambling platforms can guarantee the player that they will always be able to receive the amount of money they won, regardless of shape and size.
No Third-Party Intermediaries
Cryptocurrencies negate the need for a bank or a credit card because the blockchain provides all the verification, security and risk mitigation required with the help of smart contracts. All deposits and withdrawals are processed independently and executed via smart contracts. Likewise, the distributions of funds and winnings are also governed by the code, eliminating any need for a middle-man.
Surely, the technology is still new and it does have a couple of disadvantages as well. Let’s look at the most prominent ones.
The price of digital currencies fluctuates every day depending on the market demand. Cryptocurrencies are unpredictable and lack stability. Veteran cryptocurrency investors are well aware of this fact, but why is the crypto market so volatile? Well, firstly cryptos don’t have intrinsic value, that is; they don’t sell a product, they don’t earn revenue or employ people. They don’t possess any dividends. Consequently, it is hard to value them.
Secondly, the cryptocurrency market lacks regulatory oversight, meaning that no government, financial institution or other entity currently controls or regulates the crypto market; hence it becomes an ideal system where price-setting monopoly or other authorities can’t intervene the laws and forces of supply and demand.
So we can conclude that gambling with cryptos is risky because of the volatility. However, you can increase the currency’s cost as you gamble with it. When the demand for certain cryptocurrency increases, its price tends to follow suit, something you wouldn’t get from using the traditional fiat.
Usually, to start a game on the blockchain, every player needs to pay a small fee — gas cost, which is equal to the GWEI cost on the Ethereum chain. You can find information about GWEI here.
Gas is the name of the execution fee that senders of transactions need to pay for every operation made on a blockchain. For example, you pay a gas cost, when you withdraw your money from the casino, or when you want to exchange your crypto into fiat. Miners decide the fee. Who are miners? Miners validate new transactions and record them on the global ledger ( blockchain ) while competing to solve a difficult mathematical problem based on a cryptographic hash algorithm. They even can prolong the process of the transaction, if you provide less than a certain gas price.
The gas cost differs depending on the speed of transactions. There are 3 choices of speed:
SafeLow (< 30m)
Standard (< 5m)
Fast (< 2m)
Overall, blockchain-based casinos are still in their infancy. However, we can’t reject the fact that advantages prevail and their numbers continue to increase. Cryptos are a kind of renaissance in the gambling industry with a number of benefits for all involved parties. There is no doubt that the blockchain-based breakthrough solutions will continue to increase in their shape and size driving to high revenues.
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Utilizing Ethereum’s second layer scaling technologies, our solution enables decentralized, provably fair gaming and verifiable RNG across all verticals. Also, it minimizes transactions costs, eliminates latency and lag and boosts scalability indefinitely by moving the actual gaming process of the main chain.
Our technological breakthrough enabled the birth of a fully decentralized casino where players can enjoy multiple games simultaneously, just like they do in centralized casinos, today!
Also, they have the option to play all decentralized games directly through their wallet.
Fasttoken mobile app serves as a wallet for all ERC20 tokens, allows fiat to cryptocurrency exchange and mimics the utility of MetaMask for both mobile and desktop gaming.