Blockchain - a smart innovation of betting

Blockchain - a smart innovation of betting

The industry of betting is rapidly evolving, and as pretty much everything today, it’s going online. This affects the markets’ dynamics bringing out challenges that have been associated with the industry since its inception, and uncovering new ones that derive from going online and global. In order to tackle and overcome these challenges, both, bookmakers and players, need to open up to new technologies and innovation.

Slow, expensive and unreliable

One of the most pressing issues for online bookmakers is - trust: every participant of the betting process is forced to put a lot of trust in intermediaries. Players must trust the providers to deliver their money to the betting company also known as the operator, operators are trusted to place bets according to the players choice and then to deliver all winnings back to the player, again using third party payment solution providers. The operators themselves are forced to trust information providers (sportsbooks) with the delivery of correct and up to date information about events. By default everyone has to put a lot of trust into their employees and colleagues. This makes for a fragile chain, any link of which may turn out to be weak and let an error through into the system.

Moreover, the gaming industry is prone to attract scammers, chasing every opportunity to make a quick profit. For instance, some bookmakers postpone payouts or split them up in miniscule amounts over a very long period of time. The cause of this is that bookmakers are not forced to have collateral that will support every payout that they may need to facilitate. As a result, some players’ funds are held hostage. These bookies cast a dark shadow on the whole industry.

Another major problem is caused by exorbitant transaction costs. Market analysis have shown that in 2017 over 80% of business owners were unsatisfied with the available payment solutions. The gaming industry as a whole is considered to be very risky by both banks and payment gateways, the fees are therefore very high. Bookmakers also have to deal with postponed payouts, daily or monthly transaction limits, chargebacks. These risks are factored into the bookmakers business model and result in lower odds for players. Moreover, the players are also affected by the limitations enforced by PSP’s on bookmakers, in some cases payouts are delayed for weeks, making it impossible for players to keep on betting. All sides suffer and profits are lost by both the players and businesses.

Blockchain - revolutionizing the betting industry

Blockchain technology may well revolutionize the betting industry as we know it, bringing transparency and security. By utilizing blockchain the market will eventually become decentralized and democratized, costs and fees for transactions will become significantly lower, bookmakers will be protected from chargebacks, while players will no longer face the risk of not receiving their payouts whenever they place a bet on the winning result.

Blockchain is essentially a method of publicly storing data in a distributed ledger. Making it impossible to change said data without anyone noticing. Any change undergoes a rigougus checking process with the help of cryptographic keys and includes the full history of prior changes. Every user has the ability to obtain a complete copy of the blockchain, but may only change what they have access to.

Unconditional trust - a thing of the past

By utilizing blockchain in the betting industry, trust is no longer an issue, any action, event, is retracable to it’s origination and openly available to the public for review. Blockchain will simply not tolerate or allow any form of freud. Whenever players win a bet, they may rest assured that their prize will be delivered and as soon as it is they are free to do with it what they please, every bet is ensured by the collateral that a bookmaker provides. Bookmakers in turn, knows for a fact that if a bet was made, that bet will remain within the event and will not be pulled back by a chargeback service.

The ability to track any action within the ecosystem makes it completely transparent. By embracing the new technology, bookmakers may steer clear of any intermediaries, whose work they cannot control. The whole process becomes transparent and increases trust in the eyes of the players. The blockchain also reduces the probability of encountering human error, and even if those errors occur, the system will reduce or diminish the possible blowback by providing necessary corrections.

Instant and inexpensive transactions

The absence of PSP’s and other intermediaries currently facilitating transactions has a positive effect on the cost of transactions. Blockchain supports an internal currency and thus requires no additional payment solutions. This drastically reduces transaction costs, and bookmakers will be able to provide better odds, attracting more players and increasing their margins.

Instant two-way transactions are made possible by blockchain core technology that solves the double spend problem without any third party intermediaries. Nowaday, players must deposit their funds to a personal account on the betting platform, and while deposits are pretty much instantaneous, withdrawals are not. Moreover, the betting company remains at risk that the client will request a chargeback if they lose. With blockchain, users make bets straight out of their personal and secure wallets, this transaction is irreversible and chargebacks are made obsolete. When the player makes a correct bet, and wins, his winnings are automatically transferred back to the wallet. Think of it as though you would make a bet right from your bank account and would receive your winnings in the form of a deposit to said bank account.

Innovation will change the betting industry for the better

Blockchain delivers numerous advantages, solves some of the toughest problems of the industry, democratizing and securing betting for everyone. In order to transition to blockchain, a business would have to spend time and money on R&D. However, there is another way, by joining PROOF OF TOSS, a bookmaker will gain access to an open source solution, a new user base which consists of blockchain enthusiasts and become part of the ecosystem which provides all of the aforementioned solutions at zero added cost. The benefits PROOF OF TOSS brings impact both bookmakers and players.

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Publication date: 
02/15/2018 - 20:15

The views and opinions expressed in this article are solely those of the authors and do not reflect the views of Bitcoin Insider. Every investment and trading move involves risk - this is especially true for cryptocurrencies given their volatility. We strongly advise our readers to conduct their own research when making a decision.