Why Quanta? #2: Why Choose The Lottery?
Quanta is a lottery game provider utilizing blockchain technology. With this being said, why did we choose lottery games? This point is explained through the following three viewpoints.
- Public interest and social significance
- Development of blockchain industry
- Lottery industry development and potential for business success
1) Public interest and social significance
The lottery is one of the oldest games in the world, and it is an extremely rare entity that has survived many centuries and accumulated recognition in the history of humanity.
There are various theories as to its origin, such as the first Roman emperor started it with the purpose of securing financial resources 2200 years ago, and China created it as a means to fund the construction of the Great Wall during the Han Dynasty, and so on. However, problems started appearing several centuries ago.[1]
Securing public interest for the game started becoming difficult with the change of time, and fraud and illegal lottery being rampant. With Europe in the center, the lottery reached an unfortunate age where it was near extinction. After that, the lottery started to be used once again for the purpose of acquiring war expenses for World War I and securing the post-war reconstruction budget. Throughout the centuries, the reason for public interest has not changed.[2]
The development of blockchain technology has great potential to be used to solve social issues, as described in the previous section. It can be used to secure public financial resources, and it is highly compatible with lottery tickets, which have the property that part of the income is used for social welfare resources.
As mentioned above, the lottery is a highly public-friendly game by nature. The rate at which public interest corporations run and buyers participate in the lottery for charity tends to be higher than other games.[3] The World Lottery Association spent around $76 billion, or about 30% of $261 billion in 2015, for charity.[4] A fund managed by the National Lottery in the United Kingdom donates lottery proceeds to charities and projects such as healthcare, education and environmental protection. There have been 530,000 projects supported so far, and a total of £38 billion (about $ 49.2 billion) spent on charity.[5]
As mentioned above, new technologies have the potential to solve problems that human beings could not overcome in the past. The match between new technology and highly-utilized lottery may not only clear the technical issues, but also the ability to make an international contribution.
2) Development of blockchain industry
The contributions to the versatility of the blockchain itself is also a big motivation. Quanta is built on the Ethereum blockchain. As previously pointed out, Ethereum’s technology is under development and has not reached the point of making the power of Blockchain known.[6] On the other hand, it goes without saying that many projects have challenged this problem, and technological innovation is taking place on top of that challenge. Blockchain, a non-centralized, tamper-proof, highly transparent, and very secure technology has been widely used and has a lot of potential for leaps and bounds. However, in order for this technology to spread throughout society, to be integrated with traditional businesses, and provide better solutions, it is necessary to prove that the existing technology is exemplary, and should be released to the world.
The Blockchain market is expected to grow from $1.2 billion in 2018 to $23.3 billion in 2023, according to a ReportLinker study.[7] It is calculated to grow by an average of 80% every year. It is well known that it is expected to be used in areas such as simplification of business processes, improvement of transparency and universality, reduction of operation costs, and substitution to logistics systems.
On the other hand, the current situation is that it has not kept pace in terms of legal maintenance and compliance, and there are still many technical issues. An understanding of the blockchain itself is not yet sufficient. In particular, there is a large lack of understanding of the blockchain mechanism in areas other than the financial industry. We would like to introduce the key points of future development.
(1) Interactivity
Strengthening collaboration among organizations will be key to future development. The blockchain’s greatest innovation comes into play when all opportunities, risks, and values are shared by multiple organizations on the same network. Currently, each group is trying to create a separate network, and it is likely to be less efficient than the existing scheme without maximizing its original value.
(2) Cultural penetration
The blockchain’s change in business model and operation is overwhelming, and it will revolutionize even the digitizing industry. It has been estimated that a blockchain is about 80% business process change and 20% technology implementation.[8] The technology can be seen as too innovative and it encourages anxiety. With this in mind, it needs a more delicate way of communicating to marketers and the market.
(3) Cost-effectiveness
The productivity gains that a network of blockchains that have reached “critical mass” can give are immense. However, the cost is high to realize a high-speed and effective peer-to-peer network. For bitcoins, the total running cost associated with verification alone is estimated to be $600 million a year. It goes without saying that the network effect will show its true value when it is maximized, but it is necessary to carefully consider whether it is cost effective before introducing it. It can lead to increased costs and reduced network effectiveness.
Being in a challenging industry, Quanta aims to contribute to the overall success of the blockchain industry by creating business use cases with technological innovation while complying with existing laws. Along with the governments of emerging countries, we are working on use cases of blockchain lottery commercialization, and conducting demonstration experiments of new technology through projects from Quanta. We are trying to solve the problem that the blockchain industry has, by creating a case of “Global Blockchain Business”.
3) Lottery industry development and potential for business success
According to the Global Lottery Market Report, the current global lottery market is worth over $250 billion and is expected to reach $377 billion by 2019. EMEA (Europe, Middle East, Africa) has gained nearly 40% share of the whole. A high growth rate of nearly 10% is predicted each year, and further growth in emerging markets is expected, especially in developing countries. Social media has been contributing significantly to market expansion in recent years.
According to Global Betting & Gaming Consultants, global gambling revenue is $435 billion. In Africa where Quanta has positioned as a key region, the overall contribution is only 1.5% but it does have the largest year-to-year comparison growth rate of 7.8% from 2016 to 2017.
The development of the lottery also includes the possibility of further business success by introducing new technology as well as the industry-wide development brought about by blockchain technology. As mentioned above, the growth in gaming revenue in the African region and its growing population will boost the potential for business success.
The population on earth is expected to increase by 33% or 1.9 billion towards 2050. Half of them are to be in nine underdeveloped countries, five in Africa.
Africa’s GDP for the same period is projected to surge from $2 trillion to $29 trillion. The internet penetration rate is also significantly lower in Africa compared to other regions, with 51% in South Africa being the largest, 49% in North Africa, 39% in West Africa, 27% in East Africa and 12% in Central Africa.
Each one of these data is considered to be a growth rate of the business, and in particular, it is believed that the lottery that has introduced innovative technology has even greater potential.
Lotteries are sold everywhere in the world, including the most developed and poorest countries. If Blockchain lottery technology is accepted, it indicates that there is a widespread market in the world. In this sense, Quanta is keen on making lottery tickets with Blockchain.
[1] IBTimes, Lottery Facts and Myths: History of Lotto, From Roman Empire To Powerball 2016, https://www.ibtimes.com/lottery-facts-myths-history-lotto-roman-empire-powerball-2016-2264499
[2] Roger Munting, The Revival of Lotteries in Britain: Some International Comparisons of Public Policy
[3] John Morgan, Martin Sefton, Funding Public Goods with Lotteries, https://faculty.haas.berkeley.edu/rjmorgan/lotexp.pdf
[4] UNDP, Financing Solutions for Sustainable Development — Lotteries -, http://www.undp.org/content/sdfinance/en/home/solutions/lotteries.html
[5] The National Lottery, https://www.national-lottery.co.uk/life-changing/where-the-money-goes
[6] Coindesk, How Will Ethereum Scale?, https://www.coindesk.com/information/will-ethereum-scale/
[7] ReportLinker, https://www.reportlinker.com/p04226790/Blockchain-Technology-Market-by-Provider-Application-Organization-Size-Vertical-and-Region-Global-Forecast-to.html
[8] Deloitte, https://www2.deloitte.com/content/dam/Deloitte/uk/Documents/Innovation/deloitte-uk-blockchain-key-challenges.pdf
