Blockchain, a kind of Distributed Ledger Technology (DLT), is an ingenious invention that's growing more popular by the day. It now forms the backbone of the new age of the internet. With it, digital information is stored securely while preserving the integrity of the data.
It works by combining two key elements that don't usually go hand in hand - transparency and security. The blockchain is distributed across a decentralised database with no single entity owner.
Essentially, a blockchain is a digital ledger of transactions. Each block contains an immutable set of data usually pertaining to a digital asset. Whenever the asset is traded, exchanged, bought or sold, a record of the transaction is added to the blockchain.
The data is time-stamped and bound with cryptographic principles creating the chain. The stored information is then available for everyone to track in real-time. No third party involvement is needed in any area.
Bitcoin first introduced blockchains for cryptocurrency use. However, in recent years several other industries have found value in it. For instance, online sports betting platforms have begun utilising the technology in a variety of ways.
In this article, we’ll explore crypto blockchain betting. We'll also take a closer look at the pros and cons of using this technology in the gambling industry. Furthermore, we'll decipher if it's the future of sports betting.
What Is Blockchain Technology Good For?
The reasons behind the rapid take over of blockchain technology since its launch are plentiful. One of the biggest benefits is that it carries no fees for public user transactions. However, the most advantageous factor of blockchain is its impenetrable security.
To understand how it achieves this, you must first learn more about its inner workings. Blockchains need no handling as the system is fully automated. When one person creates digital data, a block is formed with a time-stamp beginning the process.
The block gets verified and logged by thousands of computers and distributed on each participant’s ledger. It then gets added to the chain before being stored across the internet with its unique record.
To summarise, the information that's added and stored by blockchain technology is decentralised. In other words, it isn’t kept in a particular location or owned by anyone specific. This makes it public and accessible to verify, but impossible to copy, edit and hack.
When applying blockchain technology to betting, the process is the same. It begins when new data, like your wagers, are created and require storage.
- To start, you'll make a wager on an upcoming sports game at your preferred online sportsbook. A block is born holding this information.
- The network of computers then verifies the information, and your wager is confirmed.
- Your bet is bound to the block, with all the relevant information such as the time it was made and its value.
- The block will also receive a hash. This is a unique record that makes it easily distinguishable from all others.
What Are Three Advantages of Blockchain Technology in Sports Betting
There are many benefits for all that use blockchain technology. Below we’ve outlined three key advantages for both the punter and the operator.
In 2018, controversy hit the gambling world. A famous sportsbook experienced an error in its odds calculating system. As a result, the sportsbook refused to pay out a substantial winning wager which caught the attention of the media.
However, if the operator had utilised a blockchain, everything would’ve been recorded in plain sight, and the bettor wouldn't have had to rely on this attention to receive a payout.
Thanks to this revelation, blockchain betting sites have now become favourable. Punters value them as more trustworthy over traditional operators that use private databases. If you need to dispute a payout or review your wager for any reason, you can easily view it via the blockchain.
A private database also leaves room for hidden error. Mistakes may happen due to human inputting or technical issues. Whatever the reason, blockchain dramatically reduces the chances of this happening. A colossal network of computers must verify the authenticity and correctness of the information. Therefore, it’s quicker and easier to spot a mistake.
Sportsbooks that utilise blockchain technology come with a range of security benefits. For instance, they’ll store all the betting blocks in chronological order with the hash. Once you add a block to the chain, it's almost impossible to alter the content without the hash changing. If this happens, it’s, therefore, an obvious anomaly in the set of data, and easily flagged.
To pull off this scam, you'd also have to change the following blocks as they'll hold the old-style hash. For a sportsbook or person to pursue this type of complicated activity, it would mean more money and time than its worth.
Also, cryptocurrency ownership is expanding throughout the world. Through the use of blockchain, sportsbooks can offer a wider variety of payment options. Non-fiat currency boasts the high levels of security and accessibility people are demanding nowadays.
Can the Blockchain Be Hacked?
As we've mentioned above, a blockchain is almost impossible to hack without high cost and effort. However, hacking isn't impossible. Even so, advanced technical know-how and precise execution are required. As a result, the blockchain community can identify such illicit activity and stop it in its tracks.
One of the ways in which hackers are operating is by becoming an inside threat. They take control of multiple nodes in the network that verify the data or buy stakes in specific blockchain systems.
From here, they then start a ‘Sybil attack’, which means they trick the blockchain by using false identities. If a single person controls numerous nodes, they can disrupt and manipulate the information. They can also flood the network with suspicious transactions to relay valid transactions.
However, the majority of blockchain systems expect this type of attack. They have methods in place to deter this behaviour and recognise these kinds of users. For example, Bitcoin uses a ‘Proof of Work’ algorithm. It ensures those that hold the nodes are also spending and participating in Bitcoin.
Most Famous Betting Sites Which Use Blockchain Technology
Blockchain technology has revolutionised the inner workings of the gambling industry. As a result, various betting sites now boast blockchain and cryptocurrency transactions.
One of these is 1xBit. The sportsbook is a cryptocurrency-only operator that supports over 50 different types - the largest amount available on the market.
It also stands out from the crowd for 100% anonymity through encrypted transactions. Moreover, the operator has received praise for the quickest withdrawal times in comparison to its competitors.
Another famous betting site jumping on the blockchain bandwagon is 888Sport. While it only currently accepts Bitcoin, it’s known for its plethora of sports betting markets and fully-fledged online casino. It’s also licenced by the UK Gambling Commission, so the site is completely legitimate.
Other popular sites incorporating blockchain technology include Sportsbet.io, 22Bet and 1XBET. However, this list is by no means exhaustive, and you can find plenty of other safe and secure sites with blockchain betting.
What Are the Disadvantages of Blockchain Technology?
The technology, of course, like anything else, has its cons. For instance, the transition from old systems to this new way of working can be costly for companies. Staff may need retraining, and additional specialists might be required to make the shift. Punters will find that they, in one way or another, will be contributing to making up that difference.
In the gambling industry, a significant disadvantage is the volatility of cryptocurrencies. An unstable value means higher risk, which might deter punters. Despite this, though, blockchain betting sites are still gaining traction.
Blockchain mining is also highly competitive. Those that use ‘Proof of Work’ may find the process inefficient. It requires a lot of effort, and there can only be one winner. Furthermore, the ledgers can grow considerably large. This leads to lost nodes once a blockchain becomes too big without ample space to download and store.
Another serious downfall is the number of scams that have emerged since this tech took off. 2018 saw a significant rise in betting-related initial coin offerings (ICOs). Many of these were proven to be black holes for transactions. These types of scams have given blockchain a bad name in the eyes of some.
Is Blockchain the Future for the Sports Betting Industry?
Blockchain technology has helped eliminate the many limitations of traditional sportsbooks. The sites are experiencing a never-before-seen simultaneous growth of company revenue and client profit. Additionally, they're helping the industry regain trust in an era where scams and hacks have become all too frequent.
Blockchain ultimately cuts out the middleman. It gives the power back to the consumer. The decentralised system means no unnecessary fees for third-party services and complete transparency. Combining these points with the high-security factor ticks all the boxes for what consumers want.
While blockchain technology isn’t fool-proof, its pros far outweigh its cons as it continues to gain traction across industries. In this digital era, we’re bound to see a steady rise in the number of blockchain betting sites on a global scale.