Trust is an issue in society and when money is involved trust, or lack thereof, can be a roadblock to completing a transaction. In today’s world very few transactions take place that don’t have a middleman who supposedly provides this critical element of trust. However, a problem arises since now this middleman needs to take a cut in the form of a fee for performing their service. Wouldn’t it be great if their was a better way to interact with an unknown peer and not require the services of a middle man?
The Smart Contract
Introducing the smart contract. A smart contract helps two individuals exchange money, property, or anything of value in a transparent manner. The very nature of the smart contract provides for the trust parties need to engage with an unknown counterparty. In the world of wagering nothing could be more important.
In today’s world if two parties want to make a wager they need to go through an intermediary. As always, there are exceptions to this rule. However, for a majority of cases the middleman is required. The two individuals wishing to place a wager will outline the terms and place the necessary funds with the middleman. Once a triggering event as outlined in the terms is met the winning party will be paid, less a fee. In some industries this process is streamlined and has been refined over many years. In other areas the process is less clear.
With the advent of blockchain technology and the smart contracts they enable this tedious process with unnecessary fees and lack of transparency is removed. Now individuals can simply fund a smart contract, set the terms and rest easy knowing that the winner will be paid fairly. But how exactly does this work?
The below chart shows a high-level walk-through of a smart contract process for a P2P wager. Naturally, the code underlying this process is more complex and many factors must be taken into consideration.
Smart Contract Benefits
Below we take a quick look at just a few of the many benefits of smart contracts.
1. Autonomy
The two parties to the wager create the terms themselves. No third party is required. Since the contract will execute as stipulated by the code the possibility that a corrupt third party would favor one over the other is eliminated.
2. Trust
Records on the blockchain are public and immutable (cannot be changed). Every individual can review the outcome of historical wagers and review the code underlying the smart contract.
3. Speed
No waiting days for settlement and then a few more days to transfer funds. Smart contracts execute as soon as the triggering event takes place. The only delay that may occur is when the network is experiencing higher than normal traffic.
4. Accuracy
No third party to misinterpret the terms or the outcome. Both parties agree before funding the smart contract or they decide not to participate.
Smart Contracts and Peer-to-Peer Esports Wagering
Thus far we have discussed smart contracts and their benefits. When it comes to esports wagering the benefits of smart contracts cannot be understated. The esports industry is growing at a rapid pace. New players are joining the ecosystem every day. Similar to other sports, the participants want to create wagers. However, the options open to them are limited. Today, they can place wagers on matches between other teams that are usually made up of professionals.
What if players want to wager between each other in 1 vs 1 matches? They would need to figure out a way to connect with other players, agree on terms and then find someway to ensure the counter party will pay if they lose. Thanks to the Ethereum blockchain and smart contracts, this process is now simplified and takes only a matter of seconds to execute.
To create a wager a player only needs a few pieces of information. The game they want to play, the amount to wager and the terms. Once the wager is created they can find a counter party in either a friend or a complete stranger. Once the opponent funds the other side of the wager the match can begin.
It is not improbable to think that the esports community will rally around the benefits of smart contracts. Gamers tend to be more tech savvy than the average person and they have been dealing with cryptocurrencies, tokens, and virtual assets long before Bitcoin. With new technology enabling peer-to-peer wagering gamers now have an opportunity to place bets with friends or try their luck at making a living from something they love without being a professional.
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At Pay2Play we realize that sometimes the best wager is the one a player places on him or herself. Leveraging smart contracts players are able to create wagers with friends or complete strangers and game on knowing the winner will be paid fairly.
