Widespread curiosity around cryptocurrencies has fluctuated in recent years, culminating in a colossal rise in the price of Bitcoin in 2017. In recent weeks, however, the public's gaze has turned to cryptocurrencies as Bitcoin recovers again. At the time of writing, the world's most (not) famous cryptocurrency is worth nearly €20,000 per coin, an all-time high, compared to €400 five years earlier. That's a 50-fold increase in half a decade, gains traditional brokers and fund managers could only dream of. People have always been drawn to 'get rich quick' propositions, which is exactly what Bitcoin represents to many whose interest it has piqued. In fact, the phenomenon has made a privileged few very rich. And it could be argued that that same spirit is what has also drawn us to the game quest since time immemorial: the ability to turn everything red and potentially walk away with double the money. Crypto investors typically enter the game with profit in mind, while most players know the odds are in the house's favor, but overlapping attitudes towards risk suggest a kinship between the two. In this context, it is easy to understand the emergence of hundreds of crypto casinos in recent years, which allow customers to place bets and withdraw winnings in cryptocurrencies instead of regular fiat money (eg dollars, pounds, euros, etc. ). By using cryptocurrency, bettors can maintain their financial privacy and can also be sure that the games are not rigged, since the betting logic is stored on a blockchain, the underlying technology. However, this new breed of casino also incorporates many criticisms directed at the cryptocurrency industry in microcosm: they are experimental, highly risky, and unregulated. So are casinos and cryptocurrency a match made in heaven or a disaster waiting to happen?
![Bitcoin]()
(Image credit: Shutterstock / REDPIXEL.PL)
What is the goal of crypto casinos?
Companies that have sought to apply blockchain (which can be thought of as a distributed database of transactions) to a gaming context are generally reaping a number of apparent benefits. To fully understand them, it is important to understand the basic qualities of a public blockchain:
- Decentralization: no entity is responsible for giving the green light, verifying and processing transactions (exchange of data or value)
- Immutability - Once a transaction has been verified by consensus voting and stored on chain, it cannot be changed, deleted, or tampered with.
- Auditability - Although network participants remain anonymous, all transactions are open to public scrutiny
While these inherent features open a number of doors, the transparency built into blockchain systems is likely to be a particularly attractive proposition for players, who can be sure that the code underlying casino games is unbiased and programmed as-is. . has to. “This means that players can verify that game results have been fair in real time and have not been rigged by the casino or a sportsbook,” said Lars Rensing, CEO of corporate blockchain company Protokol. "The technology provides a permanent record of verifiable and immutable transactions, which means that companies using blockchain can demonstrate a fair system for placing and claiming bets."
![Blockchain]()
(Image credit: Shutterstock/phive) Many crypto casinos are also built on top of the Ethereum blockchain, known as the world computer, which offers the ability to code into "smart contracts," a type of agreement that is resolved automatically when certain criteria are met. full. “Smart contacts mean that betting companies can automate a number of processes, including payments, which prevents intermediaries from authenticating transactions. This creates a more efficient and secure system, while reducing the costs incurred by intermediaries,” Rensing added. However, for various reasons, crypto casinos haven't really taken off. Despite the rise in popularity of cryptocurrencies and the benefits of blockchain, browsing crypto casino websites (many of which appeared after the 2017 Bitcoin bull run) is like walking through a graveyard. Looking at a small sample of ten crypto casinos, three were inactive (Bet King, Tombola and Unikoin), one had a broken website (Let's Bet) and another was on trial for its €38 million crowdfunding ICO (CashBet). The painted picture is of an industry in decline, rather than a sharp rise. But why?
A regulator's nightmare
While the idea behind crypto casinos may seem healthy at first, a number of problems soon arise. The most important of these: the need for comprehensive regulation. In the UK, as gambling law academic Richard Williams explains, regulators are unlikely to consider licensing crypto casinos, due to the difficulties surrounding AML (anti-money laundering) and KYC ( know your customer). “The adoption of cryptocurrency as a payment method for GB-licensed gaming operators has been limited. The Gambling Commission's license conditions require that gambling payments originate from a regulated payment service provider, so direct cryptocurrency payments other than through regulated wallets are not permitted," Williams said. , who represents a firm called Keystone Law "Due to its historical association with money laundering and dirty money (eg Silk Road), regulators will always be more cautious with cryptocurrency as a method of payment." However, according to Oliver Scholten, a PhD researcher at the University of York (UoY), the licensing issue is a secondary issue.The enigmatic nature of cryptocurrency and the technology behind it, he says, makes the classification of makes decentralized casinos a nightmare, not to mention regulation."Decentralized gaming applications are as powerful as they are dangerous. They introduce decentralization (and therefore decentralized responsibility) into a previously centralized industry. ""Also, since the game uses cryptocurrency and not fiat currency, it is not clear if it is legally played in different jurisdictions and therefore even needs a license first. location."
![Criptomoneda]()
(Image credit: Shutterstock) This regulatory ambiguity leaves room for services that exist on the fringes of the law, based in territories with loose restrictions, meaning that certain controls imposed by law for standard casinos are often not enforced. performed. “In a normal online casino, players usually have to verify their identity. This protects young people by restricting minors' access to the platforms and helps prevent financial crimes and the like,” Scholten added. “In decentralized gaming applications, players generally do not need to verify their identity. This is a problem because it overrides all protections provided by auditing. Furthermore, since blockchains are distributed among all network participants in the world, there is also no single point of failure that a regulator could target in an attempt to bring down an offending service. While the website you can go offline or geo-restrict the casino, neither strategy is particularly effective or sustainable.Equipped with a simple VPN, determined crypto holders living in heavily regulated countries can use these platforms however they want, regardless of their age.All of these factors are factored into They combine to make crypto casinos a bit of a wild west and the path to legitimacy for these services is unclear, to say the least.
Where are all the players?
Another problem that crypto casinos face is demand, or rather the lack of it. A bit of research shows that even crypto casinos that achieve a respectability badge don't enjoy a particularly good user base. According to figures from State of the Dapps, only two fully decentralized gaming apps currently enjoy a daily user base of 50 or more customers, and only seven attract more than ten people a day. Scholten and UoY's research also suggests that crypto casinos host non-human players (i.e. bots), which may exist to "artificially inflate the perceived popularity of apps." This means that part of this already small user base can possibly be considered fake. Question marks over the legitimacy of crypto-casinos aside, one of the main reasons players have not flocked to these platforms is perhaps that there is little point in playing crypto. currency as participation. The volatility of the major cryptocurrencies today (with the exception of stablecoins) means that they are much more of an asset than a utility. Daily price changes mean that investing in cryptocurrency is a gamble in and of itself, no matter what the most effusive Bitcoin evangelists say. For this reason, it is very risky to trade Bitcoin or Ethereum (unless you can be sure of a drop in value), when a rise in price could make your bet far more valuable than it otherwise would have been. . According to UoY's research, the most "heavily involved" punters bet 1,000 ETH (the cryptocurrency of the Ethereum network) on average over a 35-day period, which is equivalent to almost €600,000 at current market rates. But if the value of ETH increases by just €10 the next day, an additional hypothetical value of €10,000 would be added to the player's losses.
A minority demand
The blockchain community has long been accused of creating solutions to solve non-existent problems. In the case of crypto casinos, the problem is at least material: players want to be sure that online gambling is fair and they want the necessary confidentiality to play anonymously. However, as has become a common refrain when it comes to crypto projects, a mountain of regulatory hurdles stands in the way and the very nature of cryptocurrency means that it cannot be used as a gamble. viable. In an industry where the odds are already conspiring against the customer, only a small minority will be willing to double down on the risk. For now, therefore, it appears that crypto casinos will remain the exclusive domain of the immeasurably rich and uncontrollable.