While blockchain technology (and cryptocurrency) may not be grabbing the headlines it once did, the technology likely still has a role to play in future online systems and platforms. But for those who missed the initial hype around this new tech, what do you need to know and is it something that you need to even be concerned with as an online gambler?
Let’s take a look at what blockchain technology is, unpack how it works and investigate how it will affect online casinos and the casino games you enjoy, whether it’s online slots, poker, roulette or any other online games of chance.
What is blockchain technology?
Investopedia defines blockchain as “a distributed database or ledger that is shared among the nodes of a computer network. As a database, a blockchain stores information electronically in digital format.”
Another way of looking at it is that the blockchain offers a way to securely store information without needing a third party to verify that the information is accurate. This is because the exact same information is shared across multiple locations which makes it harder to change information as you’d have to alter the data on every copy that is part of the blockchain. This is a very important step away from centralized databases or ledgers which are currently the norm and are, compared to the blockchain, much easier to change.
How does the blockchain work?
Now that we have a basic understanding of what the blockchain is, we need to take a closer look to understand how it works in greater detail.
The idea behind the blockchain is that every single action that takes place that affects a particular record is added to the blockchain. In practice, this action is added as a new block to the blockchain. This block doesn’t only include the changes that were made to a particular record, but additional information such as the time that the information was changed and additional information to identify who made the change. All of this is stored in a hash, which can be considered a type of digital fingerprint. This hash also has information on the previous block, forming a connection between the two blocks and preventing anyone from editing the sequence of blocks.
In addition to these security measures, there are literally thousands of copies of a particular ledger distributed across the internet, all of which are instantly updated the moment any change takes place to any copy of a particular ledger. This decentralized approach to record-keeping means that information is incredibly secure.
The four different types of blockchain networks
While there is an overarching blockchain system, there are four different types of blockchain networks that are used in different scenarios. These four types of blockchain networks are:
- Public blockchain: This is a permissionless blockchain in that anyone can join the blockchain and become an authorized node. This is a completely independent type of blockchain that will continue to exist as long as there are multiple nodes to maintain it.
- Private blockchain: Take the concept of a public blockchain but limit access to it and you have a private blockchain. It’s still decentralized and works across multiple nodes, but it doesn’t exist on the public internet and is contained within an organization’s private network.
- Hybrid blockchain: If you need elements of your blockchain to be publicly accessible but also want to keep some elements of your blockchain private, you can make use of a hybrid system. This type of blockchain is contained within a private network and managed by a single organization. This organization gives permission to certain users so that they can access specific information on the blockchain.
- Consortium blockchain: A consortium blockchain is similar to a hybrid blockchain but unlike a private blockchain which is managed by one organization, it is managed by many organizations. Hence the name.
A summary of the benefits of the blockchain
There are many advantages to the blockchain, depending on which type of blockchain network you wish to use. However, we’ll be highlighting the main benefits that the technology as a whole offers here.
These benefits include:
- Enhanced security for your data through its decentralized nature
- Increased transparency since information can be made publicly accessible
- A complete record of every action so that everything can be traced
- It can reduce costs through automation
What the blockchain offers the online casino industry
Now that you understand how blockchains work, you may be wondering why this is important to the online casino industry. Firstly, a blockchain casino can make use of blockchain technology to track any and all actions that take place in the casino, ensuring that it offers a fair and secure online gambling environment whether you’re playing online casino or live dealer casino games. It’s not only the blockchain itself that offers major benefits to online gamblers but the cryptocurrencies that run off blockchain as well.
Cryptocurrencies are currencies like bitcoin that are run completely on decentralized blockchain networks. These virtual currencies offer online crypto casinos a quick and easy way for players to make deposits and receive their winnings, as the blockchain allows for virtually instantaneous financial transfers when compared to traditional online banking services. These transfers are also more secure as all the transactions are recorded using the blockchain and the actual financial information itself is highly encrypted to protect it from prying eyes who may try to access it. As the blockchain develops and cryptocurrency becomes more accessible, it might become the default currency for online gamblers.
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