Online gambling is big business. The market value of online gaming is forecast to reach over US$ 56 billion by 2018. That represents an over fifty percent increase in less than a decade.
Digital tokens remain a small, but growing section of this business. As far as Bitcoin is concerned, gambling is very big business.
Until 2013 there was little else you could do with bitcoins. There were alpaca socks, Satoshi Dice, and the Silk Road.
Satoshi Dice was the largest bitcoin gambling game at that time. A clever blockchain based betting game, it counted for up to half of all transactions on the Bitcoin network at one stage in Bitcoin’s evolution.
Since then many more mainstream industry players have added Bitcoin to their platform. Software producers, realising the potential of digital tokens for digital gaming, quickly moved to start building for this new, interesting, open and secure platform.
Bitcoin is the only token that has managed to bridge the gap to mainstream gaming in any meaningful way.
There are of course a host of specialised games for smaller digital assets. Some larger crypto gambling sites also take a variety of tokens.
But none have really made a dent like Bitcoin.
Ethereum Smart Contracts
Developers are trying to change that. By leveraging the power of Ethereum smart contracts, they hope the world will take note.
Ethereum, as a scarce, blockchain PoW network-token is the same as Bitcoin. As a token it is fairly arbitrary to integrate Ethereum next to Bitcoin, for its unit value.
But Ethereum, at its heart, is fundamentally different. Its architecture is different. Its approach is different.
There is a robust and complete scripting language at Ethereum’s core. Any computation or logic is theoretically possible. In building gambling experiences, you are limited only by your imagination.
Through correctly implementing Smart Contracts, some developers hope to leverage the unique attributes of Ethereum to shake up gambling.
The ecosystem is quite young. So the experimentation is limited. Yet we are seeing some very sophisticated and promising decentralised gambling games on the Ethereum network, as Smart Contracts.
First off the block (pun intended) is vDice.io
This is similar in nature to Satoshi Dice, fully decentralised, and implemented as an Ethereum Smart Contract.
Randomness is tricky with Ethereum. There are limited ways to generate randomness for use on the blockchain. The relative merits of differing approaches is discussed here.
vDice has chosen an innovative approach to get randomness by doin this from a third party. Another 3rd party oracle then processes the bet using the random number source.
The result is provably fair, delivered to your betting address, fairly quickly. This feels just like playing old school Satoshi Dice for Bitcoin.
The Oracle here has an extensive library and impressive catalogue. They’ve come up with some clever approaches to provide security and certainty based on TLS notary.
Next up we have Rouleth. Rouleth, as the name suggests, is Roulette implemented as an Ethereum Smart Contract.
It looks competent and there is some clever development work here, especially to get bet processing time down.
Gas costs are still a little high. The code is somewhat long. Since the DAO hack that could make users apprehensive. Also, randomness is done on chain. Developers assure that their unique system is safe.
Games like this will need to bring these gas costs down a lot in future, to be viable. Also, if Ethereum is able to do faster blocks in future, then games like this will benefit greatly.
I like blockchain. So I appreciate how cool this is.
But what’s happening behind the scenes is not so important to an average user. Sometimes there is a decentralisation for its own sake approach. It can leave these sort of projects in the academic arena.
Anyway, Rouleth is cool. It’s provably fair. If you’re into Ethereum you should have a go.
Now, using dapps.ethercasts.com, we could find only 3 working gambling games, implemented as Ethereum Smart Contracts.
Ethereumlottery.io was the final one. I was unable to play because, it seems, tickets had already sold out for the next round by the time I arrived. I am left to wonder.
The game is a lottery which takes randomness from the blockchain. As the site admits, this can be problematic. So its novel approach is to use the Bitcoin blockchain for this Ethereum Dapp. Bitcoin blocks cross-chain are accessed using BTCRelay.
There is a budding ecosystem of gambling Dapps on Ethereum. It makes sense. Gambling is an obvious use case.
There is a lot of potential here. In future we could have a stable coin, either native to Ethereum, or ported in from another chain, like Bitshares. A pegged USD token would allow betting in Dollars through these platforms. This could seriously expand scope and appeal from a niche audience.
The possibilities are really endless with a Smart Contract. It will be interesting to see what the market continues to develop.
Is it possible for Crypto Currency exchanges to create coins and trading volume from nothing?
Crypto currency exchanges are starting to trade enormous daily volumes on their crypto currency exchanges.
All the transactions occur ‘off chain’, so they are not recorded on any blockchain or publicly accountable database.
Exchanges take deposits in crypto currency coins and then ‘credit’ your account with that amount ready for trading. For your deposit there is a verifiable blockchain transaction to the exchange but the crediting of your account appears to be just an entry on their database. Likewise, each trade on the exchange is just a ledger change on their own private database.
Exchanges do publish all the reported volume on their platform but how do we know if this volume is real and backed up by real crypto currency deposits? Quite frankly, we don’t know for certain so there is every chance that some of the volume or orders could be fakery. This means the crypto currency exchanges could have the power to act as market manipulators with ‘coins’ on the exchange created from nothing. We are calling this #CoinCreate .
Sound familiar? Yes, it is exactly like fractional reserve banking or a ponzi scheme. As long as they have enough coins to pay each account holder when customers go to ‘withdraw’ then we are all good. Until of course the tide goes out and we have a ‘run’ on the exchange when everyone withdraws at once. Then we can see who is swimming without any trunks on.
Audit & Accountability
Do the exchanges have auditors or any accountability? All exchanges should be registered businesses, with some even being regulated, so they certainly should have an accountant or even an external auditor. However, as we have seen time and time again, any auditor being paid by the company to check the books often overlooks or doesn’t question crucial information. It takes quite some effort for an auditor to go that extra mile to ensure every check and balance is performed, especially in something like crypto which can be difficult to understand.
It seems like exchanges could certainly do #CoinCreate but are they actually doing it? It would certainly be tempting. History tells us that if someone can cheat they usually will. Cheating often starts small at first and then it becomes addictive and profitable so the temptation to profit further kicks in. Also the more people that become aware of whats going, the more people you have to ‘pay off’.
Incentive to be honest
There is certainly some incentive to be honest and not do this. Crypto is an early stage phenomenon and any bad actors now will potentially compromise themselves becoming an extremely large company in the the future, thus disincentivising gaming the market. Crypto is a passionate and honest space with some of the best minds on the planet ready to campaign and call out any bad actors in this space. Money and their savings is the driver and motivation, as with most things. The more people get ripped off the more angry people you will create. Therefore any short term and dishonest profiteering now risks forgoing long term success for any exchange that could become a very big player in this space.
Of course, the other major incentive is the threat of criminal prosecution from operating a ponzi scheme.
There are already ‘on chain’ type solutions but the speed, expense and low liquidity means they are underused. It just shows how people are willing to forgoe security for convenience up until the point they lose money. One solution is of course BitSquare but this has next to zero volume on most available markets. Therefore what is really needed for now is an exchange to open up their business ‘Bitcoin Style’ and put all their transactions on a publicly available immutable ledger ready for inspection at any time. Sounds fanciful yes, but this would give trust and assurance that they are not cheating their customers by creating volume and moving markets with proprietary trading from free credits #CoinCreate.
BlockChain Capital completes 10 million USD ICO.
A more traditional style Venture Capital fund has been launched by Blockchain Capital and has raised over the 10 million USD maximum in its first day and will invest all of this in anything but traditional ventures.
In what BlockChain Capital itself dubs a world first they have launched the First Digital Liquid Venture Fund which they say “will disrupt the traditional VC market and create the first of its kind “Digital LP” investment vehicle”.
The difference with this fund, and why it can disrupt, is that it will not only invest in companies associated with Blockchain technologies, such as Bitcoin, Ripple and Ethereum but it will issue a liquid tradeable token, representing value in the fund, that can be bought and sold on an exchange. This means that investors can essentially cash in their investment at any time as opposed to waiting many years like in a more established Venture Capital fund.
This Blockchain Capital token will be issued on the Ethereum Blockchain, and joins an increasing number of ICOs using Ethereum’s easy and straightforward deployment of secure tokens on its network.
Time will tell
We shall certainly see over time whether this fund is able to return value to its investors but with some big names backing it, and a massive treasure trove to pick the best investments from, it certainly has a great chance of retuning investors multiple times their original investment in 5-10 years.
The fund has essentially underwritten the value of the token at 1USD and thus creating a floor at its original par value. This is achieved trough their intent to buy up any tokens in the event that it falls below this base value.
With the ICO raising finishing so quickly, it would have meant many would-be investors potential missing out on the initial offering. This will create a pent up demand and when the tokens are finally issued on Ethereum and listed for exchange you could see an initial explosion in price built around the hype and opportunity of a more regulated type token, of sorts, amidst a largely speculative and unregulated space.
Of course now they have created a honey Pot for new and more established Blockchain type companies to request funding from. This makes Blockchain Capital the current ‘Belle of the Bitcoin Ball’ and thus creating an opportunity to pick and choose from the most alluring suitors. This should at least mean the Fund managers being able to decide on more quality investments and not just any old Blockchain company with a great idea. With this space developing so fast, and there starting to be a number of well established players likley looking to expand their offerings, there will certainly be no shortage of suitors.
Open Blockchain not Permissioned database
If they use the mantra that the word ‘Blockchain’ cannot be replaced by the word ‘Database’ when looking at company pitches then it is likely to be a better type business investment. Many new startups and advisors are creating new closed access, permissioned style databases and calling it ‘Blockchain’ or ‘Distributed Ledger Technology’ and are really suggesting nothing better than an open SharePoint. Unless a company is building technology that resembles all of the main characteristics of Bitcoin such as having an open and permission-less innovation & security model then it will inevitably find it hard to differentiate itself. Any Blockchain investment needs to be disruptive and not just offering small efficiency gains here and there.
It will be fascinating to see how the token trades when it is listed on exchanges and how they will restrict Non-Accredited US investors from buying the tokens. I suspect it will be listed only on a limited number of exchanges who conduct thorough KYC before allowing investors to buy. One such exchange could be the fairly new NYCEX, which looks fairly quiet but well designed and part of the Argon Group that helped launch the ICO on Tokenhub .
Watch this space…
5 apps that are running on Ethereum that you may not know… yet! Here we present a list of apps developed on Ethereum that you need to check out! 1. Trek Miles : This Android app helps you to raise money while doing physical activities, as walking, running, etc., creating tokens based in your effort. These […]