Betting as a science and pure business
Written by makarid*
KYC, Confiscation, Restriction, AML are the most popular words in today’s gambling industry. Every year more and more regulations been created for and by the governments in order to get a bigger piece of the gambling pie. They are doing that in collaboration with the bookmakers at the expense of the player. As you all know, more and more countries restrict, forbid, or tax any gambling-related activity. Because of that, the player is getting worse and worse odds in order to bet on his/her favourite team. I believe that this is irrational, and all people must have access to fast and restriction-free gambling.
With the help of blockchain technology, we are one step close to achieving this restriction-less future.
Here is how we can achieve that:
Blockchain is a big distributed file (ledger) in which we can only add new information, and we cannot modify or delete a previous one. Imagine a global database in which everyone can read the values, only one can write new values in it at a time, and no one can modify a previous value. This feature ensures that no one can lie for an action that has made in the past. If for example, I had sent X amount of money to Joe 2 days ago, everyone can verify that action, and I cannot lie to them that I haven’t done it. I will not go in-depth to how blockchain works because it is not the subject of the article. You can find more information on the internet.
So how this new technology can help us in placing restriction-less bets?
We can create an exchange like Betfair but using blockchain network as a payment service. The most secure blockchain network that exists today is the bitcoin network, so we will use that network.
The exchange will be like a regular website or a mobile app in which we can have access using our browser. Because we will not use any fiat currency, we do not need to go through any KYC/AML process or even create a new account. We need to create a wallet in the bitcoin network. This wallet is like our bank account with the exception that only we have access to it. No one can confiscate or restrict your funds in your wallet.
So, now we have the exchange and the funds in our wallet, how can we place the bet? Every time a player wants to place a bet, the following actions will happen:
- He/She needs to find another player that wants to take the opposite bet
- When he/she finds one, the exchange will create a unique wallet (smart contract) which both parties will send the money they are wagering to.
- The smart contract will lock both users funds until the games end.
- When the match ends, the smart contract will send the funds to the winner.
The smart contract
That way, both users will be 100% sure that their funds will never get confiscated because the exchange has no access to them. The smart contract will do only what is programmed to do and no one can change that behaviour because no one can modify an action that has been made in the past on the bitcoin network. Because the exchange will use bitcoin network as a payment provider, no banks will be involved, and no government can restrict access to the exchange. With the use of bitcoin network as a payment provider and gateway, we can achieve the following benefits:
- No KYC/AML needed because no one touches any fiat currency system
- No bookie can confiscate your money because they don’t have access to them, the smart contract will.
- No restrictions can be applied from the governments because they have no power over the bitcoin network.
This structure is not only on papers, but a lot of developers are also working on projects like these. I will inform you about 2 of those projects which I believe have a great future if they continue the development.
The first one is Bookie pro from Peerplay’s network. The bookie pro is an app which runs on the Peerplay’s network, and it offers sport betting events only. Right now they are suggesting matches from NFL, and you can bet with Peerplay’s native currency which is PPY. They will launch a bitcoin chain in early 2020, which will create the first app, which is possible to bet on sports using bitcoin completely decentralised. The exchange has 1% fee, for every matched bet. Smart bettors are welcome, and much needed to provide liquidity to the exchange. The 1% fee will be distributed evenly to the holders of PPY token (the peerplay’s network native token). So, you can even take advantage of that feature also.
Augur and Ethereum network
The second one is Augur, a decentralised prediction market platform which uses Ethereum network as a payment provider and gateway. You literally can create any market you want there and bet using ether, the native currency of Ethereum network. They have great funding behind them, and right now, they are trying to solve the scalability issue that many projects like these have. They have created a new version of the platform in which you can place bets using DAI, a stablecoin that tracks the USD dollar, so you don’t need to worry for market volatility.
Of course, there are many other projects like the above, you can find them if you are searching for gambling blockchain apps.
As you can see, a new digital decentralised world is being created for the gambling industry, which will put a stop to all these irrational restrictions and bureaucratic nonsense of KYC/AML. The new world will be completely decentralised, and censorship resistance and will bring back to us the freedom that we deserve. If you like to be part of this world, the only thing you have to do is learn and participate in these projects with the way that you can and want.
Thank you for reading.
*About the author: makarid is a software developer for cryptocurrency financial markets, cryptocurrency enthusiast, and deep learner in financial markets structures and functions.