How It Began: Advent of Crypto Gambling Revolution

How It Began: Advent of Crypto Gambling Revolution

When the first blockchain-based cryptocurrency, Bitcoin, was launched by an individual or group known by the pseudonym “Satoshi Nakamoto” in 2009, few people knew what to make of it at first. Was it a financial asset, a new means of payment, or, perhaps, some kind pyramid scheme that would quickly collapse?

Just 12 years later, as of August 2021, there were over 18.8 million bitcoins in circulation with a total market cap of around $858.9 billion, and alternate cryptocurrencies with various functions and specifications appear every day. The country of El Salvador has even adopted Bitcoin as its national currency!

Today, it is clear that cryptocurrencies aren’t going away any time soon. Many major businesses have begun accepting them as payment for goods and services, including Microsoft’s Xbox store, Starbucks, Home Depot, and Whole Foods. Even London’s prestigious auction house, Sotheby’s, and Elon Musk’s Space X accept cryptocurrencies now.

Gambling meets the blockchain

Another area that has seen explosive growth due to the advent of cryptocurrency is online gambling. The rapid advancement and spread of high-speed internet combined with the anonymity and convenience that cryptocurrencies provide created a perfect storm that has allowed online casinos and sportsbooks to flourish all over the world.

Yet, back in their infancy, not many saw the revolutionary potential that digital currencies on the blockchain represented. One such person was Leandro Rossi, who helped create one of the world’s first Bitcoin gambling sites, Cloudbet. Leandro recently sat down for an interview with Crypto Fireside’s Andrei Rotariu and explained how it all began.

In the beginning: who are you and what do you do?

I’m Leandro. My team and I created Cloudbet, one of the world’s oldest bitcoin betting sites. We operate an online sportsbook and casino, much like many other Internet betting operators, with the one major and obvious differentiator being that our deposits and withdrawals are all in cryptocurrency. All bets are placed in one of the 12 coins that we support. I say we’re the “oldest”, which makes us sound geriatric, but that just speaks to the relative youth of cryptocurrencies and all their related services and industries.

How did Cloudbet come to be?

This story starts with abject curiosity and diving into a bitcoin Internet rabbit hole at some point in 2012, which led us to the realization that Bitcoin can solve so many problems and challenges that exist in payments for gambling. So, rewind to 2012. We were involved with gaming sites, with this growing curiosity in Bitcoin.

As we dove deeper and deeper into it, it became clear to us that this was the most impressive accomplishment of technology and economics of our generation. The technology pieces, this truly decentralized nature, this true peer-to-peer ledger, this entirely trustless way of sharing information or moving things of value, was really cool. The other part that was really cool was the deflationary nature of the asset. The economic parts are almost more interesting than the technological parts. Either way, it’s a very cool marriage: this was such an achievement of technology and economics, of human ingenuity, that we wanted to build a business in and around Bitcoin. It wasn’t so much the gaming side, it was the Bitcoin side, the crypto side: this is fascinating, what can we build? Our experience at the time was mostly in gaming, so gaming made sense.

How can cryptocurrencies benefit online gambling sites?

At the time, as interesting and as fascinating as we found Bitcoin, there was no utility to it, you couldn’t really do anything with it, but we figured that in gaming, we can actually do something with it. To understand that you need to understand the nature of online payments, which generally means buying stuff with a credit card. The way a credit card is designed is what we call a “pull” payment. You make your transaction, and the merchant pulls money out of your credit card acquirer, and your acquirer will pull money out of your account. So, money is basically pulled from you. If you made a transaction with someone who didn’t deliver what you bought, you can raise an objection or a fraud complaint, and the transaction gets canceled. The way that you’re protected is because you’ve stopped them from pulling that money.

In gaming, that meant a lot of issues with fraud, because people would maliciously and fraudulently claim that these charges weren’t authorized, when in fact they were, so the funds were blocked and weren’t able to be pulled out of your account. Bitcoin is totally different. It’s what you call a “push” payment. Rather than having the funds pulled out of my account, I have to actively push it to you, so I don’t have any recourse to recover it, rather you’re the one that has control. The balance of power has shifted a little bit. It means that from an operator’s perspective, you don’t have to deal with payment fraud. You don’t have to deal with chargebacks, those sorts of things, and that’s cool. So, it solves a lot of issues for gaming operators who receive and send money. They can do it in a way now that is way cheaper, you can transact from anywhere instantly at extremely low cost, and with zero risks of fraud or chargeback.

Where do you see the crypto space going in the next 5 to 10 years?

The technology in the market is just going to get so much more mature and interesting. The benefits that crypto unlocks for betting over fiat currency or traditional payment methods, right now, we’re seeing them in cheaper costs, but we think we’re going to start seeing them in really profound ways. All these creative ways that we can’t dream up right now, like utility or functionality that’s unlocked because of crypto, because of blockchain, because of the cost savings, because of all of that, we will see a betting product like we’ve never seen before. Very compelling stuff that will engage players in ways that they’ve never been engaged before. Now we’re seeing new activity, new betting propositions, prediction markets have become really interesting, derivative products have become unlocked, even more options markets. Different types of instruments become relevant. Even things like esports. When you’re intersecting electronic games with electronic betting with good technology, it’s quite exciting. We don’t know what it will look like, but we’re pretty sure it will be very different from what we have now.

Crypto’s online gambling advantages

In light of this interview, the advantages of accepting cryptocurrencies for online casinos and sportsbooks are clear.

For punters:

  • faster deposits and withdrawals;
  • anonymity and security;
  • lower transaction fees.

For providers:

  • more streamlined online payment procedures;
  • less potential for fraud;
  • no chargebacks or bad transactions.


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Read more: Best Gambling Payment Providers

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