Cryptocurrencies like Bitcoin and Ethereum have seen adoption increasing at an exponential pace in the last 12 months. But there is one aspect they have been used in for a long time now, Gambling. Crypto gambling has been one of the earliest use cases for cryptocurrencies.
History of crypto gambling
In August 2011, the poker gambling site Switchpoker.com began to offer their users the option to use Bitcoin (BTC) on their platform. The company was also the creator of the first real money poker applications for iOS users.
The next significant entrant in the crypto gambling market was an early adopter and famous Bitcoin advocate, Erik Voorhees. In April 2021, he launched Satoshi Dice. This site became hugely popular immediately after the launch. At one point, it was responsible for 50% of all the transactions on the Bitcoin network. It was sold to an anonymous user for 26,315 BTC in July 2013. Even though at the time their valuation would be $11.5 million, currently that would be worth nearly $1.5 billion. This gives an idea of the popularity of this website.
Around that time, the first crowdfunded crypto casino, Just Dice, sprang into existence. Although just after a month, the platform 1,300 BTC due to a slip up by an individual on the interface. This incident had a considerable impact on the crypto gambling industry at the time as it revealed the lack of proper security measures that existed at the time. Thus the need for licensing and regulations arose in this community.
In February 2014, the first licensed Bitcoin casino was called Bitcasino.io. It earned a license from the Curacao Gambling Licensing Authority. Till this point, Bitcoin was the only cryptocurrency that was used for gambling. Later in August this year, Cryptogames was launched, becoming the first instance of other cryptocurrencies being used in the gambling industry. Although, Bitcoin is still the top choice of crypto used for gambling.
The following month, the industry saw the launch of one of the most innovative gaming platforms, FortuneJack. It is regulated by the Curacao government. The creators of the platform have more than 20 years of experience in the world of crypto gambling. Even though they plan to introduce the usage of fiat currencies on the platform soon, currently, several cryptocurrencies can be used on the platform. These are Bitcoin (BTC), Bitcoin Cash (BCH), Litecoin (LTC), ZCash (ZEC), Dogecoin (DOGE), Monero (XMR), Ethereum (ETH), Tron (TRX), and Dash (DASH). For free play, the platform uses FortuneJack’s token (FJC), which has no real value and can be reset anytime.
Since the launch of FortuneJack, several other crypto gambling websites have established themselves in the market, such BitStarz, 7Bit Casino, Stake, Cloudbit, mBit, Sportsbet.io, and Bitcoin.com Games.
Crypto Gambling vs. Fiat Gambling
Even though gambling and online gambling platforms have been around way longer than crypto gambling platforms, the usage of blockchain technology is a revolutionary advantage for crypto gambling. It is the future of online gambling. There are many advantages of crypto gambling over fiat gambling; the significant ones are explained below:
- Better privacy: Crypto gambling doesn’t require gamers to add banking details like account information and credit card numbers to their accounts for either withdrawal or deposit funds.
- Anonymity: The lack of the need to associate banking information to the platform’s account ensures that complete user anonymity is maintained while betting funds on these websites. Since the use of Bitcoin is not 100% untraceable, highly private coins like Monero (XMR) are often used in crypto casinos.
- Faster transactions: The use of blockchain technology ensures faster transactions like deposit, withdrawal, and the betting itself. Gamers only need to wait for the platform to confirm the withdrawal, after which it can be tracked on the blockchain using any of the several blockchain explorers.
- Lower Fees: Since there is no involvement of banks, any transaction/processing or third-party fees are eliminated, thus enabling cheaper transactions for gamers.
- Fairness & Transparency: Using models like “Provably fair,” many crypto gambling platforms ensure complete fairness and transparency for results in the various games, ensuring that the platform itself can never take unfair advantage of the gamers using the platform. It ensures that the game results are random and not rigged by the platform itself at any point.
- Better odds: Crypto gambling platforms often offer the lowest level of house edge amongst other fiat-based gambling platforms. The house edge in the gambling world ensures that the “House Always Wins” in the long run, thus ensuring that every gambling firm is always profitable. The House edge ratio for usual online casinos is between 1% to 15%, while crypto casinos offer the low range of house edge between 0.5% and 3%. In fact, a crypto gambling platform called Zeroedge.bet offers 0% house edge as a feature to their gamers.
- Lesser legal restraints: Since online gambling is banned in many countries, so entailing that many interested gamers are not able to gamble on fiat-based gambling platforms due to the involvement of banks. Gamers in such countries can use cryptocurrency-based platforms to keep themselves anonymous and yet bet on their favorite games.
- Bonuses & Promotion: As many new crypto gambling websites are opening up, primarily due to the increasing adoption of crypto, these websites often run various bonus and promotion initiatives for gamers signing up on their platform to offer a lucrative proposition for them to bet more funds.
Cons of Crypto Gambling
Despite the various advantages that the use of cryptocurrencies and blockchain technology ensures for both the gamers and the team of the crypto gambling platforms, there are a few risks that a gamer should be aware of as well before indulging in gambling activities on such platforms:
- High volatility: Due to the high volatility in the price of cryptocurrencies, gamers can often see their winning inflate or deflate depending on the market price of the cryptocurrency used to bet on games.
- Low familiarity with crypto: Despite the enormous spike in adoption of cryptocurrencies by retail consumers, the usage of cryptocurrencies when compared to fiat currencies is still very low. Thus many gamblers might not be familiar with using different cryptocurrencies and might find the change challenging to accommodate.
- User Anonymity: Even though within the crypto community, anonymity is treasured, for regulators and lawmakers alike, it might be perceived as a problematic factor as there are chances of illegal funds being channeled into some of these platforms that lack user verification.
The cryptocurrency markets are expanding rapidly currently, this will lead to a rise in crypto gambling platforms and retail adopters of digital currencies. Platforms like FortuneJack, Sportsbet.io, CloudBet, BitStarz will further the industry by being at the forefront of the scene and gaining the trust of gamers all around the world.