Safe gambling: is it an oxymoron that rivals the English literary canon’s best or a concept whose legitimacy is looming on the horizon? The answer is not so simple, but given the ongoing furore about blockchain technology, we thought we’d dismantle the contradiction.
Anywhere you look on the internet these days, talk of bitcoin, blockchain, crypto this and crypto that floods interactions between companies, professionals, governments, and regular folk whose curiosity is sparked by these exotic words.
But the fact remains that despite the many evangelists mushrooming on the net, there's an equal and opposite movement of scams and misinformation clogging people’s minds on the subject. Few understand what blockchain and cryptocurrencies really are.
The prophets of technology are right, however: blockchain and crypto have the potential to transform the world and usher in a new era of the way we transact with… everything.
Here's a contemporary leader’s gushing definition:
Rometty has gone on to say that blockchain will do for the supply chain what the internet did for information. If that real-world example doesn’t get you excited, you might need to check your pulse.
But how will this vision be translated into action, you may ask? What gives this chained block or block of chains (depending on how you look at it) its disruptive power and the ability to change the world?
Here’s a fitting introduction from the founder of Ethereum, Vitalik Buterin:
No one better than Buterin can wax lyrical about the beauty and benefits of decentralisation. Vitalik has been active in the bitcoin community since its early years, contributing to the development of the Satoshi Nakamoto invention before he even reached legal age.
The programmer was fascinated by the cryptocurrency but dismayed at how its framework was so limited and wasn’t programmed for useful applications beyond bitcoin.
It’s the world’s first blockchain platform that supports the creation of decentralised apps serving any purpose imaginable.
In short, Ethereum is the culmination of Vitalik’s years of studying bitcoin from a participatory angle.
Entrepreneurs have been snowballing ventures such as cashback on unused SMS bundles sold back to businesses at a profit (think Birdchain) to slots, blackjack, roulette and other casino games that are “provably fair” (more on this later).
Bitcoin was the first means of transferring value across the blockchain. The value happened to function like a fiat (traditional) currency does without a central bank or financial institution in control of its movement.
Instead, bitcoin was regulated by its network of users. It’s no surprise that Nakamoto unleashed his creation onto the world immediately after the Great Recession of 2008.
The globe experienced economic decline the likes of which shattered the previously held assumption that large entities were “too big to fail”.
So Nakamoto envisioned a virtual currency that would give back the power to the people.
Thus we have somewhat of a chicken-or-the-egg scenario, where bitcoin as a cryptocurrency preceded interest in the blockchain that supported it.
It’s a bit like the development of the internet, if search engines were normalised before the system that gave rise to them in the first place, and without which they couldn’t exist.
Now that Dapps (decentralised apps) are breaking into the mainstream, a world free from the exploitative grip of middlemen seems plausible.
And given the current technological state of late capitalism, decentralised applications on the blockchain are rewriting the way the world transacts with itself.
Technology always outpaces society in its steps towards progress, and we’re living in a very interesting time in this regard.
Even though the internet revolutionised the way we live and work in a way we could’ve never imagined 50 years ago, it also created a kind of universal fallout.
With greater efficiency came greater inefficiency (the saturation of markets and overwhelmingness of choice, first brought to light by Barry Schwartz in his 2004 book The Paradox of Choice – Why More Is Less).
With abundance came insufficiency (the increase in retail products and brands available online sank jobs – you only need to look at a case study of the rise of Amazon to get the picture).
With global platforms came global monopolies (Google, Facebook, Airbnb and the other web giants are classic examples of a company solving a widespread problem and annihilating competition through astronomical success).
As time goes by and the growth loopholes of the internet gape back at us, Dapps are uncovering innovative ways in which to sew the gaps – mostly for the benefit of the user.
One of the major obstacles to this oncoming evolution is that the technology remains obscure to the users it’s trying to help.
Back to the pursuit of safe gambling: what exactly is meant by this phrase?
The definition of gambling inherently embraces risk for the promise of a reward, so to the observant reader, it sounds like a fallacy.
That’s the pure understanding of gambling. But with middlemen in the mix, things get murkier.
Gambling has historically been purveyed by gambling establishments.
Unless you’re having an informal punt with friends, chances are you’re going to your local betting shop or having a go at your state-run lottery.
And these middlemen have their own interests at heart: namely, profit.
Safe gambling has been assimilated with responsible gambling by casino operators. But these two concepts couldn’t be more different.
Responsible gambling is placing the onus on the player to gamble responsibly by sticking to limits, seeking help if it turns into a vice, etc. Much like responsible drinking, responsible eating and just about any other indulgent, entertaining activity known to mankind.
Safe gambling is the premise of a safe, secure platform you can trust for gambling. It means that the house isn’t pulling some strings behind the scenes to tweak the outcomes of your betting.
No inflating the house edge or introducing complex conditions for bonuses and withdrawing winnings that take the pleasure out of the experience.
As things stand now and the way they’ve been run for hundreds of years, it’s hard to trust gambling establishments.
When casinos made the shift to online operations, the newfound freedom and increased competition prompted them to tip the balance in their favour.
Casino bonuses and their wagering requirements are living proof of this.
Most of them are designed to encourage players to part with their money in exchange for bigger rewards or bankrolls to play with.
But the fine print can be a labyrinthian affair with impossible hurdles that stop you from getting your hands on what was promised.
When it comes to slots, we’ve always had to trust the game’s mechanics to deliver a fair outcome.
Whether it’s a machine in Vegas or a jackpot slot in an online casino, you can’t really know if the random number generators (RNGs) are operating faultlessly. Bad losers are wont to proclaim them “rigged”, and they’re only machines, after all.
Table games like blackjack, roulette, craps and baccarat also rely on RNGs in online casinos, unless you’re playing with a dealer in a live casino.
Once again, there’s an element of blind trust in the transaction between the player and the casino that not everyone might be comfortable with.
So far, this problem of trust has been mediated by:
But the bad losers may be right in some cases. Rigged online casinos do still exist and lure players in (but they’re certainly not going to make their way into Bojoko!).
Blockchain technology solves this problem and goes a step further.
With the decentralised applications and smart contracts of blockchain, players can verify the outcomes of casino games themselves. No need to place your faith in regulation, RNGs and reviews.
You can now take matters into your own hands.
Using the cryptographic system originally pioneered by bitcoin, “codes” are used like keys to ensure the bet outcome presented by the casino matches your key for the bet.
This gives users total control of their gaming. And that’s the general idea behind blockchain, Dapps and smart contracts.
Every user on the blockchain can see all the transactions recorded on the public ledger – including bet outcomes for casino games, in this instance.
And no foul play can take place when everything is available for everyone to check.
They generally are, if you apply due diligence.
The only change brought about by provably fair gaming is that they’re now 100% safe, guaranteed by none other than yourself. That’s the big draw of blockchain.
Let’s explain the difference.
In the average online casino, things like a valid gaming licence issued by a reputable regulatory body, RNGs with certification and regular audits, and player reviews are generally enough to ascertain a base level of safety.
This is sufficient for most players. The fact that an online casino is regulated and can lose its licence or have its business shut down if it doesn’t play by the rules is as much peace of mind as the average person needs.
But the contemporary user is becoming ever more discerning.
While the practices mentioned above are overseen by trustworthy bodies, they still don’t constitute complete fairness and transparency to smart gamblers.
Also, these practices are still largely centralised (meaning they’re controlled by a middleman whose transactions are “invisible” to the user).
And as we’ve seen, public trust in institutions and establishments is in decline.
That’s why verifying the outcome of a slot spin yourself is much preferable to many players than trusting a casino’s RNG to not cheat. Same goes for a blackjack hand, roulette spin, craps and any other casino game.
Although quality casinos are already safe, provably fair casinos are the safest there can be.
Provably fair gaming sounds pretty cool. But how does it actually work?
The principles underlying the technology are the same thing that’s brilliant about bitcoin. Let’s go over these quickly so you get a basic grasp of what we're talking about:
So, picture a provably fair casino game. The game interface would look something like this for a provably fair slot:
A few pointers for the terms used:
SHA256 seed = the casino’s own secret seed number
Client seed = the player’s seed number
Server seed = the server’s seed number
This is what happens when you play the game in the provably fair mode:
There are slight variations in how provably fair casinos and games execute this sequence of events, but the gist remains the same.
All this programming speak might still be tough to understand for some, so this is the best real-life analogy we’ve come up with.
Imagine you’re in a casino gaming floor with a string of vending machines connected to each other and regular slot machines scattered around.
The vending machines are not controlled by the casino. They run independently of the establishment.
Before you start betting, you get a scratchcard from the casino reception desk.
This scratchcard has a secret number created by the casino behind its metallic strip.
You can’t see it yet, but it’s there. And nothing and no one can meddle with it now, because it’s in your hands. This is the casino’s signature, key, fingerprint… Call it whatever you like.
Then you go to any one of the vending machines, which gives you another scratchcard.
But this one’s a bit special. It’s a “build-your-own” scratchcard, since you’re the star of the show in this set-up.
It comes with a random number pencilled on it, but you can erase it and write another number if you want to be extra sure it’s a totally random number.
And if that’s still not enough, you can rub it off again and pencil in a harder number. Repeat for as many times as you like.
Once you’re happy with the randomness of it, the vending machine prints a metallic strip on top of your creation. That’s your scratchcard with your secret number for the bet.
Then you feed the casino’s scratchcard and your own to the same vending machine.
The machine reads what’s under the metallic strips and creates a new scratchcard combining both these values, plus an additional string of random numbers.
By the way, all this activity isn’t just recorded by the vending machine you’re dealing with.
It’s registered and stored by all the other vending machines connected to it, so anyone who’s using vending machine B can still see what vending machine A has been up to.
And because all of them are interconnected and there are others in other parts of the world which are also connected to this network, the system can never go down.
So you take the super scratchcard and proceed to a slot machine to make your bet. The slot machine is programmed to generate a number for each spin, like a bet ID. This is shown on the slot machine’s screen.
The slot machine pulls data from the casino reception desk about the secret number used for the scratchcard, which becomes part of the bet ID.
It also pulls data from the vending machine to include the number on the scratchcard you created, plus the random number added to these to form the super scratchcard number.
It’s finally time to scratch your supercard!
This is where the “provably fair” magic happens: the numbers on the super scratchcard and the bet ID on the slot machine screen have to match.
What’s crucial is that the bet takes place after the casino hands you the scratchcard with the secret number.
So if the casino decides to cheat and modify the number given to you on the scratchcard in the time it takes you to make a bet, it’ll change the bet ID shown on the slot machine.
And you’d only have to look at the super scratchcard in your hands to verify that the bet ID is false. This invalidates the bet.
Meanwhile, the vending machines have been monitoring all this stuff in the background.
With the power of all of them stacking the evidence in your favour (and the power being distributed amongst countless vending machines under no single ownership), you can get your invalid bet refunded from your vending machine straight away.
No need to walk up to the casino reception desk and demand a refund against their will.
In a nutshell: go fair or go home.
Since it takes a core developer’s skills to follow this process closely behind the stage and truly confirm there are no kinks in the tapestry, and because online casinos and gaming sites are still centralised, this sphere of safe gambling is still imperfect.
The good news is that this network of smart vending machines all around the world is blockchain, and it already exists.
The bad news is that this method of verifying the fairness of every bet outcome is slow, cumbersome and rather inconvenient.
It’s an inefficient mode for playing slots and would disrupt the flow and enjoyment of even the slower games like blackjack, roulette, baccarat, poker etc.
Very few gamblers would sacrifice the smooth entertainment on offer by reputable, centralised online casinos and their streamlined gameplay for a choppy experience that requires fact-checking with every single bet to work perfectly.
But like the infant internet, or a financial system still in its embryonic stage, provably fair gaming is comparable to a cluster of young cells with the potential to be moulded into an optimal new version of the systems we have in place now.
And as we all know, nothing is perfect in real life.
We’d love to see provably fair casinos embracing the concept and working on improving accessibility for the regular Joe.
It’s important to remember that the larger the number of users there are on the blockchain to verify its transactions and the more diverse those users are, the more robust and safer it becomes.
Our hope for the development of this safe gambling stratagem is that the industry develops Dapps and plugins specifically for speeding up the process, but blockchain also has some way to go in terms of speed and scalability to reach these heights.
Unless more than 50% of the blockchain is taken over by users with a collective unethical motive, the network singularly benefits from a democratic mindset. We’ll give a concrete example of this later.
While governments and corporations around the world are still biting their nails about bitcoin and blockchain, Malta has been taking a trailblazing path to adoption and implementation.
Learn more about Malta’s ongoing regulation of the blockchain and cryptocurrency markets.
There are user-friendly tools available that allow regular folk to apply the provably fair concept.
You may be prompted to input seed numbers for your bet in the game screen itself, or use an extension of the game interface to tally up the codes correctly.
With bitcoin as a predecessor, blockchain-based gambling can turn a transformative wand on casino banking too, of course.
You need to convert to cryptocurrencies to switch to provably fair gaming. Fiat currencies are centralised and don’t have the right make-up for this.
But provably fair casinos would cut the payment providers out, so you’d just show up and play with your crypto funds instead of transferring money with a credit card or e-wallet. That’s game credit made even easier than it is.
There aren’t many gaming sites that offer the real deal of provably fair gaming at the moment, but we know that’s going to change.
As we shift towards a more user-centric approach in business and society as a whole, players are on an unprecedented track to gaining more knowledge and awareness than ever before.
They can now certify that products they make use of on the market are providing tangible value to them in a transparent way via smart contracts on the blockchain.
The former work of the casinos and regulators is effectively outsourced to the user. And users in numbers, grouped in like-minded communities, are leveraging their weight in this yet-to-be-configured world.
That’s a bold leap to make for players who are set in their “passive” ways of gambling online, but the rewards to reap are highly worth it.
It’s quite a feat to come up with a blockchain hall of fame, or in humbler terms, acknowledge all the people involved in the turn of this technological tide.
The first person – or ghostlike presence, shall we admit – to take credit for safe gambling is Satoshi Nakamoto.
Nakamoto invented blockchain to serve as the public transaction ledger for the cryptocurrency of his own making, bitcoin. This was 10 years ago, in the ripe, formative years of the new millennium.
Then came the bitcoin community, which pulled in software geeks and developers from all over the world to contribute to the bitcoin protocol on the blockchain.
And that’s where the darlings of decentralisation come in. Anyone with the skill and the will could partake in this global effort, so that’s how blockchain can’t be touted as the brainchild of just one proponent.
Community and code are everything in blockchain – without them, everything would fall apart in a second.
The movement quickly proliferated, and in 2013, Vitalik Buterin’s belief in blockchain’s readiness for the real world prompted him to break with the community and establish his own springboard for the blockchain use cases that had haunted his imagination.
Fast forward to today: the financial, healthcare, e-commerce industries and others are already on the blockchain bandwagon.
Audio and education are also reporting big blockchain disruption this year, and the list of contenders for this privilege never seems to end.
Ethereum sparked the second revolution in the crypto space.
There’s no counting the number of start-ups and ICOs that have lifted the future from its murky portrayal in sci-fi to the waking present, which turns our little daily pains into a well-oiled community machine with crypto users as its true cogs.
Each of these sectors have their own leaders pushing for innovation. These will help prop up safe gambling as a legitimate activity that beats its former centralised self by legions.
It’s reassuring to know that blockchain gambling won’t be operating within a vacuum. Society will be well on its way to shifting to this modus operandi when safe gambling goes mainstream.
As for the critics of blockchain and decentralisation, the brains behind Ethereum himself gives a knock-out answer: