Ethereum is redefining what online gambling means for both players and casinos. Its blockchain is uniquely capable of hosting “smart contract casinos” which allow gamblers to bet against the house in an entirely trustless and secure way. These features are made possible by Ethereum’s world computer, a blockchain which spreads computation across thousands of nodes to ensure that there is no central point of failure. Unlike Bitcoin, Ethereum can be used as not only a currency for betting but as a platform to host the logic behind the casino too. This has led to the inception of several Ethereum-based casinos which are fast becoming the go to destination for cryptocurrency gamblers who have become disillusioned by the opaque nature of traditional gambling.
While casinos have been the obvious place to start for starry-eyed Ethereum developers, the possibilities for creating a trustless esports betting platform are only just beginning to be realized. Esports and crypto have an obvious overlap, both are loved by technophiles and both are relatively nascent markets with huge potential for growth, so it is no surprise that the two should transect. The nascency of these markets also makes them ripe for agile startups to come in and innovate, something which is being seen today. These innovations are being explored on Ethereum in two key ways:
ERC721 tokens are a token standard in Ethereum which defines a set of rules for “non-fungible” tokens. These non-fungible tokens (NFTs) share similar features to existing cryptocurrencies but differ in that each token is unique to the other. While it’s important for currencies such as Bitcoin and Ethereum to remain fungible (1 ETH = 1 ETH), an NFT’s value is in its provenance, rarity and individuality with each possessing its own unique make-up. The most famous NFTs have come in the form of Cryptokitties: collectible kittens which launched on Ethereum in November 2017, receiving enough hype to damn-near shutdown the blockchain.
The overlap between esports and ERC721 tokens (NFTs) is obvious. Anyone who has played games like Counter-Strike: Global Offensive or Dota 2 will know that there is an enormous market for in-game items. These in-game items are not currently blockchain-based and players are becoming more aware of the lack of ownership under the status quo (having their assets stored on a central database with limited trading capabilities). Moving in-game assets to Ethereum will give users full control over their items, allowing them to trade – and bet – any of their items as they wish.
BetOnBit.com is currently demonstrating a more unique angle to using Ethereum NFTs in esports betting. This sportsbook rewards its players with items that can be equipped by the gambler’s avatar, earning them rewards such as cashback or better odds. These items are owned by the player and can be sold on the platform’s secondary market.
ERC721 tokens have huge potential to disrupt the esports betting space; expect 2019 to attract more and more platforms to these uniquely valuable in-game assets.
Peer to peer betting is nothing new. These “betting exchanges” were made famous by industry giants such as BetFair, pitting players against one another as opposed to the house. This type of betting has been hugely successful and provides winning opportunities that can’t be found at traditional sportsbooks. Peer-to-peer betting also crosses over into esports, however as with their stick-and-ball counterparts, these platforms all reside a single centralized database and typically have high fees for placing bets.
Enter Ethereum. With the Ethereum blockchain, betting exchanges like these can exist but without the need for a middleman taking a fee or handling customer service. Instead, an Ethereum-based betting exchange runs entirely on smart contracts with outcomes being determined by the “wisdom of the crowd” rather than any centralized database. This type of betting has already been made possible through the prediction market protocol, Augur. As an example of the power of Augur, a bettor could create a market for a particular match – “will MiBR beat Astralis in the Faceit Major 2019” – with users then able to open “yes” or “no” positions based on their prediction. The result is then determined by an agreed source of information, with any disputes then going to the public for arbitration (using some clever crypto-economic incentives for coming to the correct outcome).
Augur has so far taken millions of dollars worth of bets and esports betting markets are quickly gaining traction on the platform. 3rd party brands are also able to harness the Augur protocol to create their own esports interfaces, and while none yet exist, the door is now wide open for businesses to benefit from the esports betting potential of Ethereum.
Bitcoin still remains the most popular cryptocurrency for gambling online, however Ethereum offers something totally unique. Currently however, the Ethereum blockchain is not yet capable of scaling to meet mainstream demand for the platform; although this is expected to change significantly in 2019 as major network upgrades are released. We can expect that over the next 5 years, the number of esports betting sites and casinos using the Ethereum blockchain will grow exponentially. The computational capabilities, as well as the lower costs for operators and reduced fees for players, make Ethereum an attractive proposition for the future of esports betting online.
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