To fully understand blockchain gambling safety, you must understand a bit about blockchain. One of the most common Google searches relating to cryptocurrency is “what is blockchain technology, and how does it work?” A lot of people assume that blockchain and cryptocurrency are the same.
This is understandable, given the strong links between the two. After all, blockchains are known for their essential role in crypto systems. They help maintain a secure and decentralized transaction record. However, it is important to note that these digital ledgers have many more uses outside of crypto.
Even so, the use of blockchain in gambling is growing as bettors continue to seek anonymity and security in their transactions. This desire and benefits, such as higher withdrawal limits, ensure that crypto betting has incredible potential.
However, there’s little doubt that the industry hasn’t yet taken off as many people expected. This is so even though the uptake of digital currency among gamblers is increasing. While some people are eager to move into this brave new world, others remain hesitant.
This is an issue that also affects blockchain technology as a whole. One would expect the future of blockchain to revolve heavily around finance. However, as is the case with the gambling industry, too many businesses are holding back. Why? Much of the issue surrounding an unwillingness to commit funds relates to trust. The lack of a third-party facilitator, such as a bank, remains a bugbear for many people.
Are bettors (and businesses) right to show such trepidation, or are their fears unfounded? This article investigates the perception of blockchain gambling and provides a dose of reality.
Cryptocurrency Gambling and Blockchain Gambling Safety – The Perception
Trust is the single biggest issue that could damage the future of blockchain technology within the gambling industry. The use of cryptocurrency within the UK is growing, and it is a nation synonymous with gambling. However, despite the security benefits of blockchain-backed crypto, relatively few Britons use digital currency for gambling. This is likely because they are unsure about blockchain gambling safety.
A YouGov survey found that only 17% of adult online gamblers in the UK would consider using crypto when placing bets. They cited trust as a big issue. Approximately 54% of those surveyed admitted that they didn’t trust cryptocurrencies. And 52% of respondents said they didn’t believe the use of blockchain in the gaming industry had staying power.
The above survey is indicative of what the general public feels about cryptocurrency. A survey by Insider Intelligence found that 32% of American adults don’t invest in crypto because they don’t think it is legitimate.
Meanwhile, in May 2022, Morning Consult released data showing that trust in crypto amongst the American public was at -38 points!
This distrust is based on different things:
- Massive Crashes: Despite the glorious peaks of the crypto market, it has also had many notable crashes. Then there was the fiasco involving the Terra blockchain platform, which resulted in its currency, LUNA, becoming worthless almost overnight.
- Bad Actors: There are countless tales of people stealing huge amounts of crypto and vanishing; a lack of regulation aids and abets them.
- Complexity: Few people understand blockchain technology or cryptocurrency. Unfortunately, this lack of knowledge can cost you a fortune. It is easy to make an error when sending funds, and as crypto transactions are irreversible, you could lose your money forever if you make a tiny mistake.
- Volatility: Even when there aren’t crashes, it is very risky. It is typical for even the largest cryptos, such as Bitcoin, to rise and fall 5-10% in a day.
- Misplaced Wallets: If you misplace your private key, you no longer have access to your funds, and it becomes incredibly hard to retrieve them.
Cryptocurrency Gambling – The Reality
Yes, it is true that blockchain gambling projects aren’t perfect, as the above issues demonstrate. While there are plenty of misconceptions surrounding blockchain in gambling and in general, there are problems that companies need to address.
It is not 100% Secure
It is possible to tamper with blockchain, and attacks sometimes succeed. Blockchain requires validation by users to stay secure. However, if the attacker holds the majority of users, this malicious entity can interfere with the verification process. Hackers can create fake identities or take control of over half the network.
Investor Errors
Human error remains among the biggest sources of blockchain vulnerability. Investors new to blockchain make mistakes in interacting with it. By doing so, they leave themselves open to phishing attacks or accidentally give away their private key.
Scammers
The crypto world is rife with scammers, and the fledgling cryptocurrency betting industry is a prime target. Betting sites may appear overnight and promise significant bonuses for registering. However, they could freeze your account and confiscate your funds for no particular reason. Then, they vanish into the ether, taking your money with them.
Volatility
The cryptocurrency market remains volatile, so the value of your winnings could go down as well as up. Say you deposited $1,000 worth of Bitcoin into a crypto betting site on 12 November 2021 and didn’t place any bets. About seven months later, your BTC balance would have been worth under $350.
However, Blockchain Gambling Projects Have Immense Potential
While it’s clear that several issues must be ironed out, it is equally apparent that the future of blockchain is bright. Blockchain tech companies are working hard to improve, and perhaps one day, the advances will be so obvious that the general public will finally show more trust.
In any case, here are a few advantages of using blockchain in gambling.
1. A High Degree of Safety
While blockchain isn’t 100% safe, it isn’t a million miles off. Once held and written into the blockchain, transactions can’t be changed or erased. Furthermore, developers are looking to blockchain to help ameliorate the scalability and security issues linked with the Internet of Things (IoT).
IoT devices are often easy targets for cyber criminals due to their many vulnerabilities. Using blockchain, it is possible to create better levels of encryption, ensuring it is almost impossible to overwrite existing data records. Therefore, using blockchain in gambling could lead to greater security of funds.
Incidentally, blockchain technology is deemed safe enough for Estonia to use it to secure the health records of the nation’s population!
2. Anonymous Play
Cryptocurrency doesn’t provide 100% anonymity since it is possible to trace transactions. However, you can quite easily place bets using digital currency without your bank knowing. It takes a lot of effort to identify transactions on blockchains, and unless you’re engaging in criminal activity, the authorities are incredibly unlikely to check.
A case in point is the story that law enforcement caught a Manhattan couple in possession of $3.6 billion in 2022. They were charged with money laundering in connection with a hack on Bitfinex, a Hong Kong cryptocurrency exchange. However, it is important to note that the crime happened in 2016, meaning that law enforcement took six years to catch them! The process involved tracking the BTC through a highly complex web of transactions across several countries.
3. Crypto Exchanges Make It Easier to Access Your Funds
Thanks to legitimate crypto exchanges like Binance and Coinbase, it no longer takes hours to learn how to buy and sell crypto! Furthermore, it is relatively simple to access your funds.
On Binance, for example, you can log in using your phone number or email, password, and mobile device. Two-factor authentication and a robust verification process provide a decent initial security level. Once on the exchange, you can buy, sell, transfer, or trade crypto at your leisure.
Yes, you must take care with transfers, but you should begin with tiny amounts until you’re confident in the process. There is also plenty of helpful information regarding crypto transfers online.
4. Suitable for High Rollers
Blockchain gambling projects should excite you if you’re fed up with bet size restrictions on fiat-accepting sites. In 2022, Drake placed a $1.26 million bet on the Super Bowl using Bitcoin; try doing that with a fiat platform!
5. The Gaming Industry Is Pro-Blockchain
Back in May 2019, before the crypto betting boom began, video game executives were asked about the possible impact of blockchain on their industry. Almost one-quarter said they believed blockchain made the game more secure. Interestingly, almost one-fifth of the executives said that the technology built consumer trust!
Today, game developers are even more aware that blockchain can boost security for players. Remember, all data can be stored on a decentralized network. Consequently, it will become harder and harder for hackers to create fake accounts or otherwise tamper with the game.
Blockchain Betting – Is It Worth the Extra Work?
If you want faster and larger transactions, anonymity, lower fees, and greater security, the answer is ‘yes.’ Businesses must put in lots of effort to properly implement blockchain technology. Therefore, when you find a crypto betting site that falls into this category, you should take advantage of its effort. Follow the right protocols and realize that blockchain betting is much more secure than fiat-accepting platforms.
Plenty of work needs to be done to improve the reputation of blockchain gambling projects in the eyes of the public. Hopefully, blockchain tech companies can rise to the challenge.