Are cryptocurrencies the future of online gaming?
The adoption of cryptocurrencies as an alternative payment method has only continued to rise in the past few years. With the introduction of blockchain technology adding an extra level of protection and transparency to each transaction, popular cryptocurrencies like Bitcoin, Dash, Dogecoin and Litecoin are gaining ground amongst internet savvy shoppers and vendors around the globe.
Blockchain’s ability to automatically verify and record high volumes of secure transactions digitally, without the need of a centralized platform or supervision, makes it a very attractive option for dozens of different industries.
By this time last year it was estimated that over 150,000 merchants worldwide accepted Bitcoin, the world’s most popular cryptocurrency, as one of their payment methods. This list includes major retailers like Amazon, Wal-Mart, Ebay, Expedia, Microsoft, Apple and even coffeehouse giant Starbucks.
The videogame industry has also embraced the use of cryptocurrencies to purchase and trade all sorts of in-game items and gold in MMORPG or MOBAs. With community in-game trading markets becoming one of the fastest growing trends in video games, cryptocurrencies became the perfect solution to ensure fast, secure transactions.
But perhaps the industry that has seemed to embrace to Bitcoin and other cryptocoins the most is the online gambling world – also known as the iGaming industry. With clients known to value their privacy and the security of their transactions, and popular casino operators like VikingSlots looking to protect themselves from client’s reversing their payments, the marriage between iGaming and Cryptocurrencies seemed destined right from the start.
History of Cryptocurrencies
While Bitcoin was the first cryptocurrency to enjoy widespread recognition, it was certainly not the first of its kind to come to existence.
In the early 90s, American cryptographer David Chaum would use a blinding formula he had created to make transactions untraceable to banks to create DigiCash. The first blinded internet coin, DigiCash garnered a huge amount of media attention and sparked up interest from many companies including Deutsche Bank and Microsoft. The latter wanted to add DigiCash to every Windows PC, offering $180 million to make this happen, but Chaum thought the offer was not big enough and walked away. Digicash eventually declared bankruptcy in 1998.
By then however, there were thousands of startups off the heels of DigiCash that were trying to facilitate the sort of hand to hand safe and private exchanges that DigiCash had promised. PayPal came into the market to fill that void, allowing person to person transactions and finding a limitless market in the EBay community. While PayPal seemed more interested in being regulated than in being decentralized and anonymous, this would leave the door open for other solutions trying to enhance privacy in peer to peer transactions.
That was exactly what Nick Szabo was attempting with bit gold, a currency that required users to solve a proof of work, which would then be cryptographically chained together and published via a distributed property title registry.
Cryptocurrencies’ real breakout moment would come however when in 2008 Satoshi Nakamoto published a paper describing the protocol for a decentralized Bitcoin, later launching the first Bitcoin client in 2009 and issuing the first bitcoins. By 2011, other popular cryptocurrencies such as Namecoin and Litecoin had also launched to great acclaim. You can easily Buy Litecoin.
Today the market has well over 700 types of legal cryptocurrencies being traded at any moment, although not all of them have gained the kind of popularity that Bitcoin has gained as they don’t bring much to the table in terms of innovation.
Advantages of using Cryptocurrencies for iGaming
The iGaming industry has been slowly adopting the cryptocurrencies like Bitcoin for some time now, with a large amount of Bitcoin exclusive casino operators emerging in the past few years.
During this time, larger established operators had been somewhat reluctant to add Bitcoin to their supported currencies as they feared regulatory complications arising, and did not see the need to poke the hornets’ nest and possibly compromise the steady profits from their existing client bases using regular currencies.
The mindset towards cryptocurrencies, however, has begun to change with the United Kingdom Gambling Commission recently approving Bitcoin for online gaming. With more and more players flocking to Bitcoin casinos, it’s hard for the gaming establishment to continue to ignore the benefits of using Bitcoin over every other method of deposit currently available, for both players and operators alike.
The first one is perhaps the most important: Security. As far as online transactions go Bitcoin transfers are without a doubt the most secure you will find anywhere. While credit cards and easily be stolen or counterfeited, Bitcoin wallets require not only your login information but also need to be activated from the physical device that your wallet is located on. With Blockchain proving to be unhackable so far, it would be practically impossible for anyone other than the Bitcoin owner to make any transactions.
The security aspect is not just for the players, but for the casino operators as well. Since Bitcoin transactions are considered indisputably secure, once a transfer is completed there is no way of performing a chargeback. This protects casino operators from dishonest players who lose their bets and then claim their card was stolen and chargeback the funds.
Equally as important as the security offered by cryptocurrencies is the anonymity factor. Cryptocurrencies are completely decentralized, meaning that there is no banking institution behind any of the transactions. This allows for players to move their funds back and forth without it being tracked by any banking or government institution, allowing them complete anonymity in their transactions. It also allows players to fund their accounts without needing to give out sensitive information like credit card numbers or linking their bank account in any way.
Bitcoin casino operators themselves do not even need to concern themselves with having a central bank account anywhere in the world. Some operations have managed to structure themselves in a way in which operating expenses can be covered completely in Bitcoin, including payroll and payments to affiliate companies.
Another big advantage of using cryptocurrencies is the immediacy of the transactions. While most payment methods will require anywhere from a few hours to days to clear, cryptocurrencies will reflect instantaneously. This not only allows you to deposit faster, but in many cases will also allow you to withdraw without a waiting period, as the casino operators doesn’t have to wait for a chargeback period to expire.
Finally, cryptocurrencies are known to have some of the smallest transaction fees in the market. This is a great advantage for players as deposit and withdrawal fees affect the overall house edge and chances of winning in the long run. Bitcoin casinos have also been known to offer larger deposit bonuses to their clients, an advantage they can afford as they also pay less fees themselves than they would if they were processing credit card transactions or having to reimburse Western Union or Bank Wire fees.
Is the widespread use of Cryptocurrencies inevitable?
The way the tides are turning in favor of enhanced security and privacy, it is hard to imagine otherwise. The introduction of blockchain had definitely been one of the biggest game changers the financial markets have seen in the past decade and while it’s taken a while for the world to catch up, it seems inevitable that most industries turn in this direction – particularly the gaming world.
Perhaps the only potential downfall to cryptocurrencies like Bitcoin has been their previous tendency to fluctuate wildly in value, making them a highly volatile option in the minds of many. However, with the coin growing more and more stable each day, there is every reason to believe that cryptocurrencies might be the best bet the casino industry ever made.