How blockchain and cryptocurrency technology could revolutionize online gambling

Abstract

Blockchain technology is an innovative framework that has the potential to transform transactions and revolutionise how we interact and do business with one another. The technology behind cryptocurrencies such as bitcoin, blockchain enables a record of transactions in a secure, protected ledger with a distributed, networked database structure, which is secured by hashing power. This allows transactions without any intermediary which are permanent, unalterable, anonymous but transparent and ‘trustless’ – occurring without the possibility of interference. Online gambling is the most rapidly growing mode of gambling; however, players are subject to regulatory restrictions, fraud and cheating by other players and disreputable operators, and reliant on third-parties to ensure that games and monetary transactions are fair. These systems, checks, and balances increase the cost of online gambling for consumers and operators and reduce options. Here, we show how blockchain technology and cryptocurrencies have the potential to transform the gambling industry for players, operators, and regulators. We have reviewed the relevant literature to provide an overview of the potential impacts of this new technology as it is rapidly developing. Gambling sites can accept cryptocurrency, allowing players to operate outside of regulatory jurisdictions as cryptocurrencies are not reliant on regulated payment providers. Cryptocurrency also allow funds to be directly transferred to and from operators, removing the necessity of creating an account and verifying identity. Games run on blockchain systems are provably fair, ensuring outcomes are determined as intended and without interference. Outcomes and transactions are verified, ensuring payments are directed to players or operators as appropriate and all records are transparent ensuring fairness. For players and operators this creates many options for online gambling; for regulators, it may enhance the ability to oversee online operators, or remove the need for regulation altogether. Blockchain technology is not yet at a point where it may be readily adopted and used widely. However, the transformative potential of this technology makes it essential that stakeholders start considering the ways in which the gambling field may be altered and what appropriate responses are required.