Almost 15 years after the famous Pizza Day (when a guy bought two pizzas with BTC 10,000), the world is taking cryptocurrencies very seriously.
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It doesn’t mean they can’t be used for fun, though, and crypto casinos are here to prove it.
Back then, cryptocurrencies were for tech crazes only, not to mention they were nearly worthless. However, much has changed in the past 15 years.
At first, it seemed like another payment method, but it didn’t take long for the online gaming industry to realize its potential.
Even the US government is considering creating a strategic reserve of cryptos.
Integrating cryptos and blockchain with online casinos opened broad avenues for innovation.
The Rise of Crypto Casinos
Bitcoins and blockchain were released at the same time, back in 2009.
It took only three years for the first crypto casino to come up: Satoshi Dice, named after the “creator” (or creators, who knows).
It didn’t receive much attention outside the crypto niche but was a groundbreaking development and the first day of a new era in the online casino industry.
For once, it gave crypto owners a new utility for their tokens, which, by then, wasn’t accepted in many places yet.
Satoshi Dice pioneered the “provably fair” concept by integrating blockchain technology into its system.
Naturally, innovations didn’t stop there. Crypto casinos began to gain traction around 2017 when cryptocurrencies were globally accepted.
Tokenomics was already a well-developed concept, and online gambling platforms were already using their latest features.
Tokenomics is the term that describes the dynamics of token economics.
In fact, cryptocurrencies were such an innovative asset that they deserved an economics of their own.
In online casinos, tokenomics is the science behind new ways of rewarding players and keeping them engaged, but there’s much more to it.
Playing With Tokens
Integrating cryptocurrencies and blockchain in the online casino ecosystem was already a huge step.
Yet, online casinos went further and started creating their own “proprietary tokens.” Unlike cryptocurrencies, which are widely accepted and completely decentralised, proprietary tokens were created to be used in more restricted environments as an alternative payment method.
Companies like Air Asia and Mitsubishi have created tokens for customers to buy their products and services.
The same logic has been applied to online casinos.
For instance, Bitcasino.io has created the bitcasino coin for promotions and rewards.
Meanwhile, players use it for gambling and to access exclusive offers.
It doesn’t mean they don’t have real-life value, though.
Bitcasino coins can be exchanged by Bitcoin or Ethereum.
This means that online casinos have a new play-to-earn logic: players can be rewarded with these tokens and convert them into money later.
So, winning a bet is no longer the only way of making money on online gambling platforms.
However, developing proprietary coins and setting up a tokenomics model can be very complex and expensive, so not many casinos have them.
NFT casinos work pretty much in the same way: they reward players with proprietary NFTs that can be cashed out in specialised marketplaces.
None of this would be possible without the seamless integration of blockchain, cryptos, and other tokens into the online casino industry.
Such integration still brings other benefits, like increased privacy, security, and accessibility.
Blockchain technology uses heavy encryption, and it’s nearly impossible to tamper with.
Game-Changing Advantages
Undeniably, crypto gambling has transformed the industry.
Apart from exclusive games and juicy reward schemes, cryptocurrencies allow seamless cross-border transactions.
It’s a huge advantage over fiat currencies for gamblers and providers.
For instance, if someone from India wants to play in a casino that doesn’t accept rupees, it would be necessary to buy a different currency to play.
Exchange operations are much more expensive than crypto operations, which cut out the middleman, and funds go from one account to another nearly unchanged.
Blockchain technology also adds an extra layer of privacy.
Digital wallets already allow operations where disclosing banking information isn’t necessary, but cryptocurrency operations are completely anonymous.
Blockchain is an immutable ledger that allows users to verify the outcome of each bet.
Indeed, it’s a very transparent system where anyone can attest to a casino’s fairness, building user trust.
Additionally, it opened space for provably fair technology, with SHA-256 encryption algorithms already used in the Bitcoin market.
Simply put, these algorithms ensure operators don’t have any power over the results, which are determined at the very moment players place their bets.
Challenges Ahead
The crypto casino market is expanding quickly, going from a revenue of USD 50 million in 2019 to USD 250 million last year.
Despite their popularity, such platforms are also dealing with some growing pains.
Firstly, the global regulatory landscape for traditional online casinos is already quite complicated, and rules can vary wildly from one jurisdiction to another.
The situation is even more chaotic for crypto casinos operating in a mostly unregulated market.
The same technology that provides privacy and safety by keeping operations anonymous can also be used for money laundering, tax evasion, and other financial crimes.
Important regulated markets, such as the UK, have plenty of regulatory concerns regarding those casinos, making it more difficult to legalise them.
In countries like Brazil, cryptocurrencies have simply been banned as payment methods for online casinos.
The volatility of crypto assets also poses a threat for gamblers and providers.
Horror stories of Bitcoin crashes and smaller cryptos vanishing into thin air keep many players sceptical.
It partially explains why this industry is still much smaller than traditional online casinos.
Shifting from a regular to a blockchain-based platform requires considerable investment from providers, as they need to set up reliable payment gateways and reinforce their cybersecurity.
The Future of Crypto Casinos
Digital technologies evolve at neck-breaking speeds, so innovations won’t stop there.
Crypto casinos with VR and AR games are already a reality, but they’ll likely gain much more space soon.
Not only have online casinos developed to this point, but VR and AR devices are also getting cheaper and much more accessible, meaning that it’s a growing trend in this market.
Tokenized assets will become more common, creating engaging loyalty programs with rewards that can be exchanged for real cryptocurrencies and cashed out.
Proprietary tokens will also allow players to use their assets across different platforms, adding a portability feature to bankrolls that would never be possible with fiat currencies.
Even though not many casinos have proprietary tokens today, this situation will likely change soon, given their popularity.
Crypto casinos are also becoming more socially engaging, promoting much more interaction among players and strengthening their communities.
Gambling is no longer a solo experience: players can compete against each other, share their results and achievements, and exchange gaming recommendations.
Additionally, these platforms are getting more socially responsible, investing in energy-efficient blockchain systems, environmentally friendly practices, and strategies for problem gambling prevention.
Some of them already use AI-backed systems to identify early signs of addiction in players based on their gaming habits, proactively offering support channels and self-limiting tools.
Compliance remains challenging for this industry, but operators are finding new ways to get over it, using AI-powered tools to track player behaviour and enforce KYC (Know Your Customer) and AML (Anti-Money Laundering) protocols.
Such tools can also streamline reporting processes and use predictive algorithms to identify potential breaches or threats.
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