Since the emergence of Bitcoin in 2009, the expansion of cryptocurrencies and their applications has been virtually unstoppable. From cryptocurrency payments and Decentralized finance (DeFi) to NFTs (non-fungible tokens) and entire apps built solely on the power of blockchain — the building block of the technology, digital currencies are shaping the world of payments.
It seems that few industries have benefited more from cryptocurrency than the gambling industry. In fact, 4% of all gambling activity involves cryptocurrencies. The crypto gambling market is currency valued at a whopping $250 million.
In this article, we explore the impact of cryptos on the land-based and online gambling market and deliver a verdict on its future potential.
Traditional Gambling Practices and Challenges
Before online gambling hit the ground running, brick-and-mortar casinos had been running the show. Players who wanted to play casino games had to go to Las Vegas and Atlantic City and wait in lines for the slot machines, blackjack, and poker tables.
Moreover, whenever you were out of chips, the casino’s equivalent of cash, you had to go to the casino’s cage to exchange fiat currency to get more chips, which could cost you a place at the table.
The rise of online casinos has put everything at warp speed. These online gambling platforms deliver an endless choice of slots, blackjack, and roulette games, all of which are available on demand. E-wallets, prepaid cards, and online banking systems facilitate payments, making deposits and withdrawals much faster, but these payment methods have their limits and restrictions.
Namely, online banking transfers, especially wire transfers, can take several business days to complete and usually incur high banking fees that can go up to $50 or more. Furthermore, e-wallet transactions are regularly the target of hacker attacks, especially when users do not use strong passwords to protect their accounts.
Then again, players almost always need to pay fees, especially for withdrawals or depositing into e-wallets.
Ultimately, online gambling with fiat currencies faces a lot of geographical restrictions. Legally speaking, players from countries that have not yet regulated online gambling are prohibited from using these traditional payment methods to gamble online.
The Emergence of Cryptocurrency in the Gambling Industry
Blockchain technology saw the light of day in 2008 and became the foundation of cryptocurrencies — digital financial assets that empower fast and safe payments in many industries, including the world of gambling.
Blockchain represents data blocks linked together in an unalterable network or a chain. The information on the blockchain is stored in a one-sourced decentralized environment powered by thousands of computers that make up the structure of the blockchain, which shun away the traditional hierarchical systems known in the financial systems.
Online casinos at CasinosBlockchain were quick to implement the nascent technology and leverage its advantages as early as 2014. First of all, by integrating cryptocurrencies into their payment systems, online casinos allowed players to retain anonymity when gambling because there was no need for them to share personal details to complete the payments.
Moreover, the very transparent nature of blockchain brought about an additional layer of security to their transactions. Namely, as a decentralized method, crypto payments were recorded on a public ledger, i.e., blockchain, so each transaction was visible in the blockchain. Furthermore, the transactions were encrypted alongside all previous and future blocks in the chain, making it almost impossible for hackers to alter the data.
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Finally, the crypto casino transactions could be processed within minutes, even the cashouts, which wasn’t the case before.
Benefits of Cryptocurrency in the Gambling Industry
Regarding payments, there’s not much you can’t do with crypto. From diversifying stock portfolios to buying a cup of coffee in El Salvador, cryptocurrencies, especially Bitcoin, can help you go a long way.
Online casino layers who opt to use cryptocurrencies to fund their gaming adventures are already making the most of technology. First of all, as decentralized digital currencies are not controlled by any government system in the world, cryptocurrencies give players a way to fund their accounts with sites that would generally be impossible using fiat currencies.
Secondly, payments through Bitcoin, Ethereum, Doge, and other coins are almost instant, including cashouts, which is unrivaled by any fiat method. The fees associated with crypto transactions rarely exceed $1, making them much cheaper than traditional remittances.
In the end, players using Bitcoin and other cryptos do not have to share sensitive banking details with operators, which allows them a greater sense of security and anonymity.
Regulatory Considerations and Challenges
Despite their many advantages, cryptocurrencies are not legal tender in any but El Salvador. In fact, even though many countries worldwide have regulated cryptocurrencies as digital assets subject to law and tax, they still won’t let you gamble using cryptos.
If we take Malta, for example, we can see that even a country that’s a gambling hub in Europe has only recently released the legal framework that would allow operators to accept cryptocurrency payments. However, as a part of the regulation, players will still have to go through the KYC policies, which essentially beats the entire point of using cryptos to remain as anonymous as possible.
Potential Future Developments and Impact
The world of cryptocurrency gambling is evolving quickly. Nowadays, we see entire online casinos built as decentralized applications (dapps) that run on blockchain-operated smart contracts — software that runs on blockchain.
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Also, we are seeing a growing number of online casinos that use NFTs as a way of rewarding loyal players or giving them access to exclusive game portfolios. Additionally, the entire concept of Metaverse gambling is made possible through the use of cryptocurrencies, making digital currencies the future of such a gambling environment.
Final Thoughts
Cryptocurrencies have reshaped the gambling market by bringing new and faster, more secure ways for processing payments. Cryptos are borderless and decentralized, allowing operators a genuinely global reach.
As state regulators become more open to the prospect of making cryptos legal tender or at least a legitimate way of holding assets, more online casino operators are going to turn their focus to digital currencies and build entire sites solely based on cryptos.
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