Blockchain is frequently mentioned in news about the gambling industry. It isn’t surprising as this technology seems to be attractive for both operators and casino users due to the long list of advantages of its application in payment methods.
Nick Burt, CEO of The Crypto Kings, has provided his opinion on the role of cryptocurrency for the casino sector and told Login Casino readers about its main strong points.
The popularity of cryptocurrency payments at online casinos is a controversial topic. While some experts say that it is the 2020’s and 2021’s trend, others are sure that blockchain technology as a payment method isn’t convenient for the majority of gamblers because it is difficult to use. What is your opinion about this?
I would say that the biggest challenge cryptocurrency has from full adaptation is the fees surrounding such transactions. There is no reason for users to transfer their money into cryptocurrency to gamble if their casino of choice accepts their money. This is probably the most important factor for the majority of gamblers who are currently active at online casinos.
The process of using cryptocurrency at online casinos is rather simple, but anything different from what users are used to can be perceived as difficult. Also, some established casinos may not allow cryptocurrency as a payment method. If gamblers are not allowed to make payments in crypto, there is no reason for them to transfer their money to crypto.
However, there are a few features that actually increase accessibility for the general gambler, such as microtransactions. With microtransactions, some cryptocurrency casinos can provide services to users who want to gamble with as little money as possible. Also, some cryptocurrency casinos provide unlimited bonuses and refills in the form of microtransactions. Typically, the threshold to withdraw the deposits is much higher than the microtransaction amount, essentially allowing customers to play an unlimited amount of times without giving them the ability to withdraw their “bonus money”.
As cryptocurrency casinos are less widespread and dominant, most customers are probably not used to features like these, which are generally only possible with cryptocurrency. As the use of cryptocurrency grows, and cryptocurrency casinos increase their penetration in market share, eventually, I think, a shift in consumer demand and expectations is possible.
Recently, IGT has announced a patent for special ATMs that convert cryptocurrency into cash for playing in land-based casinos. What will be the next step in this direction?
Cryptocurrency ATMs are nothing new, they have been around for a number of years. The biggest problem with cryptocurrency ATMs, generally speaking, is the high fees surrounding the transaction. In Las Vegas, there are at least a few casinos, which have Bitcoin ATMs as well as accept Bitcoin for payment of rooms, food, and other general services. I can’t say whether it’s the next step or a few steps into the future, but I think that the gaming industry has a big opportunity to supplement these financial transactions to increase accessibility for the consumer.
I believe it depends on both consumer demand and the financial decisions of the gaming industry leaders. If consumer demand for cryptocurrency services is high, the gaming providers will provide services to appease the consumer. If leaders in the gaming industry decide that they want to shift their assets or portfolio into crypto, I expect that these institutions will find ways to adapt and make accessibility to crypto easier.
The biggest challenge for a full-integration of cryptocurrency into gaming services seems to be regulation. I don’t think there is a great enough need for existing gaming providers to expand their gaming services into cryptocurrency and disrupt the processes they are used to. When cryptocurrency becomes more ubiquitous with merchants and consumers, this may change, though large-scale in-person cryptocurrency gaming services seem to be something that will happen on the tail-end of greater adaptation.
Is there any opportunity that blockchain technology will be simplified somehow specifically for its usage at online casinos? Let’s be honest: the gambling industry is among the main cryptocurrency’s target markets.
I actually think that blockchain technology is perfect for online casinos, and any emerging company trying to engage in providing online gaming services has to consider the advantages. Blockchain technology increases trust between a merchant and user, allowing all parties to mutually agree to the terms and conditions of a transaction through a smart contract. All transactions can be verified and examined by the participating parties as well as anyone else interested in the result of a transaction. This makes all transactions completely transparent and lowers the burden for verification for regulators.
Making this process easier, from a casino development standpoint, is a major asset and benefit for gaming service providers and regulators. From the consumer side, making deposits and the transaction process isn’t much more difficult than entering your credit card information. The biggest challenge for casinos to be competitive to the consumer is simply the fees – from money to crypto, from an exchange to a casino, from a casino back to an exchange, and finally from crypto to local currency.
If this process can be simplified from a fee perspective, it will increase ease of accessibility. As each of these processes generally requires its own license, with the need to follow AML and KYC regulations, this could be a challenging task for the service provider. I think that it is possible but, because there is so much competition with each of these services, an institution providing all of these services together has a challenge of capturing enough share of the market to make it work from a business perspective. In my opinion, eventually, we will see casinos offering these services or partnering with an exchange or payment processor to make these transitions easier. Undoubtedly, there is an opportunity here.
Many countries restrict blockchain solutions and crypto trading, not to mention online casinos. Can we hope for loyalty to digital assets and their usage for a gambling purpose from governments?
In this instance, cryptocurrency and blockchain solutions are a fantastic resource for governments. I see Indonesia as a perfect example. Gambling in Indonesia is illegal, but there are frequent talks about creating a casino resort island to provide services to affluent Australians.
With blockchain technology, the Indonesian government could ensure that all transactions were done by Australians or other foreign nationals, and not a single Rupiah was involved in any gaming transaction. The freedom of choice is not something I will debate for this article, but I do think that governments have a great opportunity here to prevent money laundering and maintain general integrity throughout the entire process with blockchain technology.
Probably the biggest problem with the change in process for most governments is just that – change. Some existing industry leaders are probably not interested in changing their methods, and acknowledging this technology from a government perspective might threaten their ability to control the money supply. While blockchain technology is an amazing asset for AML and KYC protocols, not all countries or industry leaders may be overly enthusiastic about this robust transparency.
Hundreds of billions of dollars are laundered each year, and casinos are a common target for criminals to launder their money. While we can all agree that this activity is not good, the reality is these illegal, untraceable dollars, which are sometimes welcome not only from casinos but entire communities. They won’t admit it, they will file their SAR, but imagine if we could make all monetary transactions transparent? It could effectively eliminate the need for SARs, with over 46 000 reported in 2014 alone. I question if casinos, local governments, and even federal governments really want to put a stop to this massive flow of illegal money. But if they did, blockchain technology could be an incredible asset.
What is your 5-year prognosis for the cryptocurrency market? Will BTC remain in its leading position?
Obviously, with the significant change in the world caused by COVID-19, it is difficult to know what will happen in 5 years. I do expect that the total market cap of cryptocurrency to increase by at least 30%. I think BTC will likely stay in the lead, not because it is so much better than other cryptocurrencies, but because it is trusted and has much greater name recognition.
Typically, when I talk about cryptocurrency with people, I say “cryptocurrency, like Bitcoin”. Bitcoin is essentially a household name. I do expect Bitcoin’s dominance in the market to decrease. I see a lot of value with ETH, I expect ETH to gain ground and increase market share. It’s also entirely possible that we see a new cryptocurrency in the next 5 years that takes a strong position in the overall cryptocurrency market.
Eventually, I think we will see a change in monetary transactions. I expect the globalization of the world economies to continue. There will be a shift, either from the consumer side, wanting a more stable and robust unit of monetary transaction, from the merchants who want to accept cryptocurrency over regular currencies or perhaps even by governments, which want to disband their currency creation process and fully embrace the new technology.
It is hard to say whether things will happen in 5 years, but I think one of these changes will happen, and it will change the landscape of the world and how it does business. The biggest challenge to this adaptation of next-generation technology is simply the resistance to change by major players. Once the resistance falls, and society decides to switch to this more secure technology for financial transactions, cryptocurrency will be astronomically high compared to current market rates.
I also see the gaming sector as a major asset to this transition. Cryptocurrency and gaming are a perfect match, and gaming offers a huge consumer demand opportunity for the utilization of cryptocurrency. When the opportunity of this new technology will outstrip the opportunity of the existing systems, it will be interesting to see. It is a question of “when”, not “if”.
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