This year marks a decade since Satoshi Nakamoto published his now-legendary white paper that put forward the idea of cryptocurrency – transactions that occur outside of regulations by banks and governments.
As the value of Bitcoin has sky-rocketed over the past 12 months, many other people across the world are getting wise to the main benefits of cryptocurrency – that it’s accessible, recognised and cheap to use (with no transaction fees).
The Problem of Cryptocurrency in Gambling
In the beginning, online casinos were willing to take a punt on cryptocurrency. In fact, Bitcoin-supported online betting site SatoshiDice was at one point making half the total transactions on the entire Bitcoin network. That was a flash in the pan, and didn’t develop much further. And it’s for good reason.
Gambling is highly regulated. In the UK, the Gambling Commission has warned players about digital currencies – and has implemented rigorous regulation that basically makes it impossible for them to be used to gamble.
According to the Proceeds of Crime Act, casinos must adhere to anti-money laundering measures such as:
- Identifying and verifying customers
- Keeping a record of bookkeeping and training
- Implementing relevant policies and procedures
- Reporting anything suspicious
- Managing regulatory risks
All casino operators must have policies in place to investigate their customers’ source of funds and be able to verify every customer’s income.
That’s a problem with cryptocurrencies – there’s no transparency, so online casinos can’t be 100% sure who they’re dealing with.
The UK Gambling Commission has so far taken licences away from five online casinos that weren’t playing by the rules – so it’s clearly taking its responsibilities seriously.
For these reasons, it’s unlikely that any reputable virtual gambling operator will ever accept Bitcoin as a payment method. For example, if you log onto sites such as 777 online casino, you’ll see only robust means of paying. There are just too many potential pitfalls of allowing cryptocurrency.
Or are there?
Edgeless Casino – A Decentralised Gambling Platform
Edgeless casino is the world’s first blockchain-based casino. It was founded on the principle of preventing online casinos from “cheating” against their own players, by offering games with a 0% house edge, underpinned by the Ethereum blockchain technology. Instead of cash, gamblers use EDG tokens to gamble in Edgeless casinos.
In theory, Edgeless casino players could play endlessly and earn or lose the same amount of money as the house in the end. There would be no zero on the roulette wheel, no house edge in blackjack or any other casino games – so players stand a greater chance of winning.
What’s in it for Gamblers?
Smart contracts are at the heart of the Edgeless casino offering. They’re effectively a contract made between two people or entities that don’t need third-party validation. Instead, it uses a cryptographic code to fulfil this. Below is a list of smart contract benefits from the world of online casinos:
- Transparency – Blockchain technology assures users that the online operator is playing by the rules. Casinos cannot withhold information about how their gaming algorithms work if a smart-contract is used, because users can access all the data held by the casino on win ratios.
- Peer-to-peer gambling – Smart contracts would allow gamblers to find other players to use a betting exchange with pre-defined rules without having to break any regulatory rules.
- Fairer stakes – There are almost always transaction fees included when gambling online, whether that’s in depositing or withdrawing money. However, these fees are lower or zero on cryptocurrencies – meaning players won’t be forking out as much.
- Instant withdrawals – Edgeless casino offers instant money transactions without any fees, so players can make deposits and withdraw winnings whenever they want.
- Value appreciation of EDG tokens – The EDG tokens gamblers possess could appreciate in value, just as Bitcoin has done. This could potentially earn players more cash. In fact, the tokens jumped 500% in value since they started trading in March 2018.
What’s in it for Edgeless Casino?
It’s almost gospel that ‘the house always wins’ when it comes to gambling. So how does an online casino stay in business without a house edge?
Well, many games are based on chance. For example, there’s no way you can become super skilled at roulette and win most of the time, so that game will still be based largely on chance and luck.
However, skill games such as blackjack and poker will offer Edgeless casinos their revenue streams, and they’re both infinitely more popular than roulette. In these games there is an element of chance, but also a certain element of skill.
Players will make mistakes – and they’ll never be as good as a computer system, so human error will always be present. With this in mind, the Edgeless casinos will have a natural edge of 0.83%.
Low marketing costs
That’s smaller than the 1%-2% edge that regular casinos have. But where Edgeless casinos do have an edge over other online casinos is in their marketing. The 0% edge is a big selling point, which gives them stand-out in a crowded market, and means they can possibly afford to spend less on marketing because they have a clear USP.
With the decreased marketing costs, coupled with the expected participation levels, Edgeless casinos should be able to make very healthy profits and could even eclipse traditional online casinos.
Sports betting and crowdfunding
Edgeless will also profit from sports betting, which will give it a 4% ROI from money wagered in its settings. There’s also a crowdsale that aims to raise 50,000ETH to fund the Edgeless casino bank. When it comes to its bankroll funding proportions, 60% is provided by Edgeless and 40% by the community, which breaks down at a ratio of 60 million:40 million in EDG stakes. Of course, this amount has the potential to rise with the increasing value of EDG tokens.
What’s Been the Media Response to Edgeless Casino?
Here’s what the media have had to say on the growth of Edgeless casino:
“Online gaming has exploded and is on its way to becoming an American past time, while circumventing issues traditional casinos have had to face. With the solutions proposed by blockchain-based platform Edgeless, the problems that have plagued the industry would be a thing of the past.” – Los Silva, ETHNews.
“Perhaps the key benefit of Edgeless is complete transparency, which will be optimised when Edgeless joins the Ethereum network later this year to all but eliminate the possibility of cheating, in an environment where large schools of thought have arisen among online players regarding how to gain advantage in the online domain, as a sort of algorised form of card-counting, which is virtually impossible with gains minimised in a decentralized network such as Ethereum.” – Curacao Chronicle
What do Online Casinos Make of Edgeless Casino?
It’s clear that there is going to be huge competition between online casinos and their Edgeless counterparts. Many reputable online casinos say they will not be adopting Edgeless technology for their site.
Their reasons for this are that they intrinsically do not believe it to be sustainable, or as transparent as it seems. Almost everyone knows how traditional casinos operate, but some feel that Edgeless casinos will be profiteering from misinformation.
Edgeless will tell its consumers that there is a 0% house edge, encouraging them to spend more money and bet more recklessly, whilst keeping quiet about the 0.83% house edge that they will be making on sports betting and skill-based casino games.
Regulation regarding online gambling has long been in place, and is aimed at protecting consumers. However, with Edgeless casinos, there are doubts over the regulations that would be in place.
So let’s wait and see how Edgeless casinos pan out before rushing to join them.