If there is one thing that we should thank the creation of blockchain technology for, it is decentralisation. Removing the necessity to use and pay for third party intermediaries not only reduces costs and increases efficiency, but perhaps, most importantly, it removes the need to trust the person or company you are transacting with. One such industry that has been crying out for a trustless eco-system is that of the online gambling space. Blockchain-based casinos now make it possible to engage in trustless gambling, subsequently putting control back into the hands of the player.
If you are interested in learning about how the trustless gambling experience works at an Ethereum casino, then we would suggest reading our informative article. We have covered how Ethereum betting sites ensure that you no longer need to trust that the casino is playing fair, all of which can be independently verified at the click of a button.
Before we delve into the fundamentals, let us briefly explore the current state of play in the traditional ‘fiat’ casino arena.
Traditional online casinos: Can they be trusted?
When we refer to ‘fiat’ casinos, we are simply talking about conventional online casinos that accept real-world payment methods such as a debit or credit card. Online fiat casinos have been around since the mid-1990s, subsequently allowing players from all over the world to gamble from the comfort of their home. Whether its slot, blackjack, roulette or video poker, online fiat operators make it super easy to gamble without ever needing to visit a land-based casino.
However, the key problem here is trust. How do you know that the games you are playing are actually fair, and not rigged in favor of the casino? The simple answer to this is that you don’t. There are no safeguards in place to settle the concerns of players, not least because they are simply forced to trust that the casino is operating legitimately.
This inability to make casinos accountable for the gaming outcomes they produce is nothing short of unethical. After all, you are expected to deposit your hard earned cash with the platform. As a result, it comes as no surprise that we hear time and time again about online casinos shutting their doors down without notice, taking player funds with them along the way.
Getting paid by fiat casinos
While we are on the discussion of payments, it is important to note that trust also needs to exist when depositing and withdrawing funds. For example, how do you know that when you enter your debit or credit card details in the platform that the casino will keep them safe? Well, you need to trust them. And how do you know that the casino is actually going to credit your deposit, or that they won’t attempt to take additional payments further down the line? Once again, this is built purely on trust.
However, an even more alarming reality is with respect to withdrawals. How many times do we read about online casinos refusing to pay-out to their players? The overarching problem is that the online casino holds all of the cards. If they do not want to pay you your winnings, you are essentially left in limbo. Therefore, you need to trust that the casino is going to act in the right manner and pay you what you are owned.
While a significant number of online fiat casinos are now in full possession of a gaming license, this does not really seem to be having much of an impact. The reason for this is that national gambling regulators are often funded by the very casinos that they are tasked with overseeing.
All in all, seasoned players that want to gamble online in a safe and secure environment need an alternative. That alternative is the era of trustless gambling in the form of an Ethereum casino.
Funding your account with a trustless gambling operator
In the previous section we discussed how you need to trust a fiat casino to keep your sensitive financial details safe. The reason why it is unsafe to use your debit or credit card as a means to deposit is simple: you need to enter your card details directly into the online casino’s website. In order to facilitate the deposit, you will need to enter your full 16-digit card number, expiry date, and CVV. If these details were to get into the wrong hands, then the bad actor would be able to use your card with ease.
On the contrary, Ethereum casinos facilitate a trustless deposit process. Why? Well, because you are never required to enter any financial information directly into the casinos website. Instead, you are required to transfer funds from your private wallet, straight into the unique wallet that is attached to your Ethereum betting account.
Not only does this prevent your financial details from getting into the wrong hands, but it also acts as trustless funding process. The reason for this is that each and every transactions processed by the Ethereum blockchain is available to see on the public ledger. As such, as soon as you make the transfer, you can prove that the funds were sent.
The future of online wagering?
While it is true that the funding process needs to operate in a trustless manner, it is equally important that players are able to trust the games that they play. We mentioned earlier that traditional fiat casinos offer no safeguards for the player to verify the legitimacy of a game. In order to counter these risks, Ethereum casinos offer a transparent feature called ‘Provably Fair’.
In a nutshell, Provably Fair ensures that beyond all reasonable doubt, each and every gaming outcome is true and fair. Whether its a single hand of blackjack or spin of the roulette wheel, Provably Fair makes sure that the outcome is truly random, and thus, completely trustless.
In order to generate a gaming outcome, the Ethereum casino will take and combine two encrypted seeds. One seed is generated via the player, and the other from the casino itself. This process guarantees that the outcome cannot be predetermined by neither the player or the casino, and that it cannot be amended.
In fact, the random generator is so advanced that the odds of predicting the outcome is beyond the realms of any computing device available in the modern world. It is all good and well to discuss how Provably Fair ensures that players can gamble in a trustless eco-system, but how do we know that it actually does. Well, much in the same way that the Ethereum blockchain is publically transparent, each and every transactions generated via the Provably Fair protocol is available to view at the click of a button.
Without getting too technical, it is possible to ascertain whether or not the casino has implemented Provably Fair into the outcome of a particular game by validating the seeds used. If you were to check this for yourself, you would be able to instantly recognize if something was untoward.
It is important to note that while the Provably Fair protocol is in fact transparent, in effect, it does not need to be. This is because, as we discussed earlier, it is virtually impossible to tamper with the outcome. This is the same way that it is all-but impossible to tamper with the Ethereum blockchain. Even if you could, the bad actor would not be able to get away with it, as each and every transaction that goes through the blockchain is publically available.
As a result, all you need to do when using an Ethereum casino is to make sure that the game you are playing is facilitated by Provably Fair technology. If you ever have your doubts, and you do not quite understand how the trustless gambling phenomenon works, your best bet is to ask for assistance in a public forum like Reddit. While we discussed how the deposit process operates in a trustless manner at an Ethereum casino, we are yet to discuss how this works when it comes to withdrawing your winnings. When you withdraw funds from a traditional fiat casino, you need to wait for the verification team to process the request on your behalf.
Not only does this take time, but you need to trust that they are actually going to pay you. We have come across countless horror stories where players have still been waiting for their withdrawal request to be processed by a casino for months on end. While the casinos in question are not technically refusing to pay the player per-say, they are effectively doing so by leaving the withdrawal request pending.
This is where trustless Ethereum casinos are different. Instead of having your withdrawal request processed by a human payments team, the process is achieved autonomously. In other words, as soon as you make the withdrawal request, the funds are automatically sent to your private Ethereum wallet. There can be no ambiguity when it comes to receiving your winnings, as if there is ever a delay, you can simply request the blockchain transaction ID.
However, this should not be necessary, as Ethereum transactions take no more than 16 seconds to process, meaning that by the time you log in to your wallet, the funds should have already arrived. As great as the trustless gambling phenomenon is, we are far from reaching its true capabilities. In the very near future, we are likely to see the role of the third party gambling platform become redundant. At present, we require a third party casino to facilitate our bets. Without them, you would not be able to gamble online, not least because you would have no one to pay you out. However, there are certain platforms now working to achieve a decentralised gaming experience.
Instead of needing a third party casino, players gamble on a peer-to-peer basis. In order to achieve this, each and every transaction is facilitated in a decentralised manner, fully supported by smart contract technology.
Let us say for example you wanted to place a $1,000 bet on a blackjack hand. Instead of placing the bet directly with a casino, the bet could be backed by 10 players – each of which lay down $100. As the blackjack game in question is supported by a smart contract, everything is facilitated autonomously.
For example, the gaming outcome would be determined by Provably Fair, and the payout process would be backed by the terms set out in the smart contract. If you won your bet, then each of the 10 players would have their $100 stake sent directly to your private wallet. If you lost the bet, then your $1,000 stake would be distributed to each of the 10 players that took your bet. Continuing on with the discussion on the future of trustless gambling, it is important to recognise that the phenomenon would benefit both the player and those that choose to bankroll the bet. In order to understand why, we need to rewind slightly.
When the provably fair protocol determines the outcome of a particular game, it takes into account the underlying house-edge. For example, if the casino decides that they want to install a house-edge of 0.5%, then this is subsequently built into the smart contract that governs the Provably Fair process. What this means for the casino in question is that effectively, they are guaranteeing that they will always make a profit. While their gambling-related revenues will go through peaks and troughs, over the course of time the house-edge will always ensure that they remain in profit.
As a result, instead of a third party company benefiting from the house-edge, the trustless gambling phenomenon will allow everyday consumers to. This will attract a significant following from the online crypto community, not least because it offers the chance to make a guaranteed long-term profit. This will subsequently ensure that the trustless gambling environment also attracts a substantial amount of liquidity, ensuring that the player is also able to have their bets accepted. First and foremost, as the trustless gaming will likely make third party operators all-but obsolete, casino games can benefit from a lower house-edge. This is because those bankrolling the game will have virtually no overheads to contend with. This means that they can still make money by bankrolling bets, albeit at a lower house-edge. From the perspective of the player, this means that they will stand a greater statistical chance of walking away a winner.
On top of being accustomed to a lower house-edge, players will also be able to say goodbye to limitations. Fiat casinos are notorious for limiting player accounts when they go through a period of winning, subsequently rendering the account useless. However, as trustless gaming in a world of decentralisation will see player bets bankrolled on a peer-to-peer basis, there is never any concern with limits. As such, players will be able to bet as much as they want.
At the other end of the spectrum, players can also bet as little as they want. This is because the Ethereum blockchain allows tokens to be fractionated, meaning that low-stake players are also catered for. Once again, as the entire process will be facilitated by smart contract technology, it makes no difference how much or how little is being staked, as the bet is being bankrolled by multiple users.
The era of trustless gambling: The Verdict?
In summary, the online gambling industry has never been as exciting as it now is. Ethereum casinos have subsequently removed the need for players to trust the operator. This starts at the very offset with the withdrawal of funds. There is no need to enter sensitive financial data into an Ethereum casino’s website, so the player no longer needs to concern themselves about privacy.
In terms of the actual gaming outcome itself, Ethereum casinos utilise Provably Fair technology. This innovative piece of technology guarantees that each and every gaming outcome is true and fair, meaning that the threats of rigged casino games are a thing of the past.
When it comes to player withdrawals, Ethereum casinos also ensure that this is facilitated in a trustless manner. No longer do players need to wait for a human payments team to authorise a withdrawal request, as Ethereum casinos process this cash-out autonomously.
As good as all of this sounds, things are only going to get better. In the very near future, we expect trustless gambling to go to a whole new level. In fact, it is reasonable to assume that the growth of blockchain and smart contract technologies will make the role of the third party casino a thing of the past. Instead, the entire online gambling industry could one day be controlled by everyday consumers.