Can iGaming Drive the Mainstream Adoption of Cryptocurrency?
Those who are passionate about cryptocurrencies and the underlying technology of the blockchain are more excited than ever as more blockchain projects turn into real-world applications. One of these is known as iGaming or online gambling.
There are lots of ways the decentralized, immutable, and transparent qualities of blockchain technology could improve the existing iGaming industry. In addition, approximately one year ago, the Supreme Court of the United States struck down a federal law that banned gambling on sporting events.
The lifting of the legal prohibition in the U.S. means the iGaming sector is ripe for disruption by Blockchain projects.
Bitcoin + Gambling = Big Business
The world’s regulated gambling industry is estimated to be worth $468 billion in 2019. This translates into $62 per year for every person in the world. Incredibly, this figure accounts for only regulated gambling revenues. By some estimates, black and grey market gambling is worth up to 10 times the size of the regulated sector.
Cryptocurrencies — in particular, Bitcoin — have a special relationship with gambling. Already in 2013, approximately 50% of Bitcoin transactions were gambling-related. This is due to the nature of the gambling industry and how the features of cryptocurrencies fit into it.
First of all, Cryptocurrencies make it a lot easier to access the unregulated gambling market. Gambling is outlawed in most of Asia, as well as in many countries elsewhere in the world. The most common form of this regulation is to make it illegal for banks to process transactions for gambling companies. Thus, cryptocurrencies give people who want to gamble in countries where it is banned a way to do so.
There are benefits that cryptocurrencies can bring to regulated gambling markets as well. For one thing, there are those who simply do not want to put gambling transactions through their bank account. Second, cryptocurrencies let customers deposit and withdraw gambling funds more easily than with banking options.
Finally, and perhaps most importantly, blockchain technology can be used to show that games are provably fair.
These factors suggest there is an important role for blockchain technology in both the regulated and unregulated gambling space. This role will only expand as gambling moves online and access to the internet increases.
“iGaming” is using the internet to bet money on the outcome of an event or a game, basically, it means gambling on the internet. The most common iGaming activities are poker, online casinos and sports betting. Currently, casino games and sports betting make up the largest share of the market. Smaller areas of iGaming are lotteries and prediction markets.
The value of the iGaming sector is startling. it is already worth more than the entire regulated gambling industry. In 2017, the global iGaming market was valued at $533 billion USD and is predicted to be worth 1 trillion USD by 2021. This growth is being spurred by new technologies and increased access to the internet, particularly through mobile devices, which make it easy to access online gaming worlds.
Faireum’s Cross-Chain Solution
Faireum is a public blockchain with a set of protocols focused on the iGaming industry. It is planning to capitalize on the untapped potential for cryptocurrencies in this sector. Faireum’s whitepaper promises its protocols that will create an ecosystem of provably fair interoperable online casinos, with a focus on transparent betting. It will support an array of gaming options, including lotteries, sports betting, casino games and digital games. It will also offer integrated B2B solutions to provide a flexible score and online chip system for online games.
To achieve this, Faireum is planning to use cross-chain technology. Cross-chain technology facilitates interactions between different blockchains. It is a mechanism that lets the chains interact and in essence function as a single chain. Smart contracts can also be deployed across different blockchain networks. Cross-chain technology will let Faireum integrate multiple cryptocurrencies and enhance scalability by leveraging the combined throughputs of different blockchains.
Augur and Gnosis
Currently, the two top players in the blockchain iGaming market are Augur and Gnosis. Both projects are building prediction markets on top of the Ethereum blockchain. Augur was the first to launch and currently has a market cap of $175 million USD. Gnosis has a market cap of $133 million USD.
However, neither are pure betting companies nor do they support the full spectrum of iGaming options. Both are based on the Ethereum ERC-20 standard and lack cross-chain functionality, which carries certain disadvantages. There has also been a rapid growth of dApps for iGaming on the EOS platform. However, the same problems exist. Players can only bet with native tokens: ETH or ERC tokens on Ethereum-based platforms or EOS and EOS tokens on EOS-based platforms. There are no dedicated protocols to define and host games on either network, and neither Ethereum nor EOS offer built-in enterprise solutions for online games. For example, both lack Random Number Generator support.
Faireum claims to have recognized these weaknesses and is using cross-chain technology to address them. The Faireum protocol supports any type of game format and it will be more user-friendly. Users will be able to just download the Faireum app to their mobile phone or access the platform through a browser to play games instantly.
WaykiChain’s Sidechain Ecosystem
Faireum is not the only blockchain project that is hoping to capitalize on the potential of the gambling sector. Another hoping to take advantage is Waykichain, a Hong Kong-based startup that is creating a “backbone infrastructure” for blockchain 3.0. To attract users to is network, WaykiChain has launched a betting/prediction dApp call WaykiBet.
The core purpose of WaykiChain is creating a dApp development infrastructure with various real-world applications. Its architecture is based on a decentralized and secure public chain with sidechains. Each dApp built on WaykiChain will have a unique sidechain with independent application data, while a public main chain acts as a backbone for sidechains designed for very different use cases.
Thus, a key difference between Faireum and WaykiChain is that for the latter, gambling is simply a convenient use case to showcase the functionality of the network. It is banking on the fact its gambling dApp will attract new users to the network to let it expand its business model to other markets.
In contrast, the Faireum blockchain is dedicated specifically to iGaming and does not have plans to expand beyond this sector. This means that Faireum has some features that could be very attractive to the iGaming sector that WaykiChain lacks. Some examples include special wallet encryption support for cash management and high-level random number generator functions support. At the same time, however, Faireum is a much more limited project than WaykiChain in that its blockchain infrastructure is not designed to support dApps tailored to markets other than gambling.
There is no doubt that many projects have targetted gambling and online gaming as an important threshold use case for cryptocurrencies. The potential for these markets to embrace cryptocurrencies and blockchain technology is high. Moreover, the size of the gambling and iGaming sector means that if blockchain-based options do receive a lot of uptake in this area, it will contribute significantly to the mass adoption of cryptocurrencies and blockchain technology generally.