John Caldwell, director of advocacy at the CasinoCoin Foundation, talks us through the basics of blockchain and how it can transform the casino sector.
It is fair to say the words “blockchain” and “cryptocurrency” have become eye-rollingly ubiquitous over the last couple of years. But in the 18 or so months since Bitcoin hit global headlines for an incredible price spike which saw people handing over $20,000 for a single unit of the digital currency, a huge amount of work has been taking place to build genuine, real-world use-cases for blockchain technology.
One of the most active areas is the gaming industry, where this technology is emerging as a disruptive force both online and on the casino floor. Many in the gaming industry have confessed to me that they’ve nodded along to presentations about the revolutionary power of blockchain without really understanding what it all means.
With this in mind, the following is the first in a series explaining blockchain technology and cryptocurrencies, beginning with the basics.
What is a cryptocurrency?
A cryptocurrency is essentially digital currency; a way to efficiently transmit value or store securely as an asset. Thousands of cryptocurrencies exist, but by far the most established – not mention valuable – is Bitcoin.
One term you will likely hear in relation to cryptocurrencies is “fiat money” or “fiat currency”. Put simply, fiat money is another term for money as we know it: the US dollar, the euro, the yen, etc.
Cryptocurrencies differ from fiat currencies like the US dollar in a number of ways. Typically, there is a finite number, with no possibility of minting or creating new ones. This is the case with Bitcoin, for which the total supply is capped at 21 million.
They tend to be governed in a decentralised fashion. This means, among many other things, there is no central bank with the power to mint additional coins. And they are tracked via decentralised ledger technology (DLT), commonly known as a blockchain.
So, what is a blockchain?
A blockchain is a digital ledger that can record transactions in a way that is both verifiable and permanent. In the case of Bitcoin, it is a list of all transactions since the creation of the cryptocurrency in 2009. Blockchains use cryptography to secure these transactions and ensure they cannot be changed by hostile third-parties. This is achieved by decentralising the ledger; Bitcoin operates on a global, peer-to-peer network, rather than a central server. This means that no single person can change the ledger to suit their personal agenda. To incentivise a diverse network, Bitcoin is “mined” by those using computers to verify and confirm transactions, with Bitcoin given as a reward to those who solve ever-changing cryptographic problems.
What are the benefits of cryptocurrencies and blockchain technology?
There are a number of benefits to this new approach to currency. As mentioned earlier, cryptocurrencies are not governed by a central bank, and are usually finite in supply. In many cases, they can be held and transferred by anyone with a cryptocurrency wallet, without the need for a bank account. This means transfers are typically faster and cheaper than sending fiat currencies.
For retailers, they solve the chargeback problem. The nature of the blockchain makes chargebacks impossible, significantly cutting back on the cost of fraud. Wider blockchain technology also has a number of far-reaching potential uses, particularly in the field of data collection and transmission.
Why are people in the gaming sector particularly excited about this technology?
Gaming has been at the forefront of the rise of cryptocurrencies. Indeed, not long after the creation of Bitcoin, people were using it to gamble online. For the gaming sector, the blockchain offers huge potential for growth for a number of reasons. For operators, it allows for the creation of currencies and tokens specifically tailored to their needs. This could include anything from a digital gambling chip to a loyalty reward coin.
But we are only just starting to scratch the service of what is possible. At CasinoCoin, we are building blockchain-based systems that will do everything from simplifying the on-boarding process, strengthening KYC, AML and RG protections, and capturing unprecedented amounts of data directly from the casino floor.
There is no doubt that within five years, every major gambling operator and supplier will have some type of blockchain-based system built into their operation. Now is the time to prepare.