Betting with Bitcoin (Part 3)
XWIN is just one of a number of ICOs looking to revolutionize the world of sports betting.
In Part 2 of our Betting with Bitcoin series, we discussed prospects for the future of cryptos and bitcoin-based sports betting in 2018 and why, despite recent market fluctuations, crypto-based betting is still a safe and smart bet heading into the future. This was one of the main takeaways:
Bettors looking to cut out the middle man, avoid banks, and hold their winnings securely would be wise to study the potentials of Blockchain technology.
In Part 3, we’re going to go more in depth, as we discuss a number of avenues for crypto-based sports betting, including revisiting FansUnite — a crypto-based betting platform — and other plans for the future of sports gambling.
Recent estimates have valued global sports betting at upwards of one trillion dollars annually with solid and consistent yearly growth. Countries that had once been opposed to have now taken measures to legitimize gambling, including Vietnam and Japan. The industry offers participants the potential for billions in additional tax dollars — and in a world governed by debt-based economy, gambling offers these nations a respite from budgetary deficits.
The United States, arguably the world’s largest sports betting market, has been inching closer and closer to legalizing it. In 2017, more than twenty states banded together to challenge the federal ban.
The Problem
With all this forward momentum pushing the likely legalization of sports betting markets outside Nevada in the foreseeable future, you might think that solid betting solutions exist as it is. But that’s simply not true. Currently, sports bettors face a number of obstacles to smooth gambling transactions including:
- High fees of up to 10% per bet;
- Lack of transparency in operations and resolution of bets;
- Limits placed on successful bettors and the unfair locking of accounts without appeal;
- Risk of entrusting financial information and funds to often less than trustworthy organizations; and
- Entrusting the fair resolution of your bets to a party with a vested interest in the transaction.
Due to the largely centralized nature of gambling, bettors face these and many more obstacles. As we move closer toward the legitimization of sports betting, we’ll no doubt move closer to removing many of these barriers to entry and accessibility. We touched on these issues in Part 1 of our Bitcoin series. Now we’ll take an in depth look at ways that Blockchain innovators are solving these problems.
The Solution(s)
FansUnite is one such company with their minds set on a decentralized, equitable future for sports betting. Built by bettors, for bettors, FansUnite seeks to do what its name suggests—unite sports fans and bettors on a non-governed, nonpartisan, peer to peer platform that removes the greatest headaches involved in sports gambling.
Built on Ethereum and utilizing IPFS (InterPlanetary File Storage), FansUnite aims to imbue bettors with confidence that their bets will be executed just as they entered into them, that payouts will be executed quickly and correctly, and information will be indisputably stored on the blockchain.
(For reference, IPFS is a protocol and eponymous network designed to create a content-addressable, peer-to-peer method of storing and sharing hypermedia in a distributed file system.)
FansUnite will provide clients with unparalleled opportunities for transparency and security over their wagers. Among other things, bettors will be able to review the smart contracts responsible for bet execution, and have their verifiable bets stored and maintained on the blockchain.
Also, for the first time in history bettors will also be able to engage in trustless betting — that is, betting without the intervention or participation of a centralized betting authority (i.e. the big time sportsbooks). With the help of Ethereum’s smart contract technology, bets are resolved automatically, without the need to rely on data confirmed by the sportsbook on the other side of a bet. On FansUnite, bets will be resolved automatically based on results from preordained and independent external sources through an oracle.
On top of all this, large sportsbooks are often marred by bloated spending and too many fees. But FansUnite will be able to reduce the fees paid by the individual bettor to a historically low 2% with the help of crypto and blockchain technologies.
That being said, the benefits of decentralized betting extend far beyond secure transactions and a lack of oversight. The FansUnite platform lets members share their picks and collaborate with the goal of improving everyone’s probability of profitability. As it stands, centralized betting and massive sportsbooks make it hard for bettors to sustain a profit in the long term. The aim of FansUnite is to create a people’s sportsbook of sorts, where bettors run the show. Peer to peer and blockchain technologies will empower bettors to make more informed decisions with their wagers, and to take greater control of all aspects of the gambling experience.
Another company making waves in the world of blockchain betting is Edgeless. The official site proclaims itself as the world’s ‘First Ethereum Based Casino’. They feature everything from blackjack to poker to, of course, sports betting. While still very much in its development phases, Edgeless promises a new wave of blockchain gambling free of the large centralized sportsbooks that impede smooth transaction processing.
Ever since SatoshiDice — a blockchain-based betting game operating since 2012 — was launched using Bitcoin, blockchain entrepreneurs have been racing to create edgeless, decentralized platforms for gambling. Generally speaking these entrepreneurs have been racing to the bottom in the crypto gambling industry as each organization tries to offer increasingly lower house edge rates.
Edgeless’ business model proposes a zero house edge (the house’s statistical advantage) for its casino games. For games like blackjack where casinos have a natural edge , Edgeless will adjust payouts so players earn more. Edgeless plans to earn profit solely from player error and from sports betting. The Edgeless team estimates that the actual house edge for blackjack, taking player error into account, will be approximately 0.83%.
Unlike many blockchain casinos that allow users to contribute liquidity to the bank and earn profits from wagers, Edgeless will have a centralized bank more like a traditional casino. The first 50,000 ETH earned in the crowdsale will primarily be used to fund the Edgeless Casino bank.
While it has yet to launch the sports betting portion of its site, EDG promises to spearhead a new movement towards decentralized sports gambling. For seasoned bettors, it’d be a good idea to keep an eye on EDG and similar companies seeking to revolutionize the world of sports betting.
So what do FansUnite and Edgeless have in common? Ethereum Smart Contracts. But what are they?
Without getting too technical — because frankly I don’t even understand the logistics behind it — let’s try to explain the smart contract.
While a standard contract outlines the terms of a legally-binding relationship, a smart contract enforces the same sort of relationship with cryptographic code. In other words, smart contracts have the potential to render lawyers obsolete. With smart contracts you can exchange money, property, shares, or anything of value in a transparent, conflict-free way while avoiding the services of a middleman.
Check out this description from Blockgeeks.com
The best way to describe smart contracts is to compare the technology to a vending machine. Ordinarily, you would go to a lawyer or a notary, pay them, and wait while you get the document. With smart contracts, you simply drop a bitcoin into the vending machine (i.e. ledger), and your escrow, driver’s license, or whatever drops into your account. More so, smart contracts not only define the rules and penalties around an agreement in the same way that a traditional contract does, but also automatically enforce those obligations.
With so many practical applications, it’s easy to see why we’re so hyped on blockchain technologies. Smart contracts are revolutionizing transaction-based interactions worldwide. In the realm of sports betting, transparency and accessibility are extremely important aspects of a free and equitable gambling industry. As it stands in this capitalistic society, gambling authorities, like banking authorities, are heavily centralized and therefore not subject to public scrutiny in the way that Bitcoin and Ethereum-based casinos are.
All over the crypto arena, ICOs are popping up that promise to utilize Ethereum smart contracts to decentralize and make equitable the gambling industry. Another such example is XWIN. They refer to themselves as ‘a transparent and secure betting platform for sporting or other events with a revenue sharing using decentralized smart contracts on the Ethereum blockchain.’
“Using our platform means a comfortable, safe and guaranteed access to betting for the players, for the bookmakers it is the transparency of the players’ transactions, and for the investors it is the guaranteed receipt of income from activity of the bookmaker. XWIN CryptoBet allows you to build a new mechanism of trust and reliably fulfill all the conditions of the bet concluded on the eve of the event. This is the feature of the XWIN betting platform that does not allow violating the conditions prescribed in the smart contract.”
This is really only the beginning for Bitcoin and Ethereum betting. As more and more people begin to realize the potential that this technology holds, waves of innovation are sure to occur. Among these innovations we’ve seen a serious rise in blockchain betting sites. By staying on the cutting edge of gambling technology, sharps and squares alike have the ability to define their own future for sports betting — taking it out of the hands of big banks and big sportsbooks and putting it back in the hands of the people where it belongs.
Here are some links to various blockchain betting companies currently on the market:
- https://www.herocoin.io
- https://edgeless.io/#!/index
- https://xwin.io
- https://webetcrypto.io
There is no doubt that the world of crypto betting is largely unexplored and untapped. These are just a few ICOs trying to make that world a reality in the coming years.
