In the past few of years, there have been several groups trying to create a cryptocurrency gambling token. Conceived with the promise of solving all the payment woes associated with doing business in a “high risk” industry. Some promised to increase in value, “just give us a lot of money now for our ICO, and in a couple of years, your gambling revenue will pale in comparison to the value these virtual golden nuggets.”
As we’re in the final two months of 2018, almost all of these ICOs for gambling-related coins have either gone bust or are barely hanging on life support due to lack of a tangible idea, poor management or a combination both. That goes for most ICOs, not just gambling coins.
One of the problems with the coins created through Ethereum’s ERC-20 token solution is that the groups hustling these Initial Coin Offerings were too focused on inventing the next bitcoin and tied their dreams pumping and dumping the coin before whatever clownish function it offered. Everyone wanted a Lambo, but nobody wanted to do the work to earn a Lambo. Investors soon wised up, and there was no more dumb money to be had, and that’s a good thing.
Another big problem with ERC-20 tokens is that Ethereum has scaling problems. Its network capacity is a maximum of 15 transactions per second (compared to 2,000 transactions per second on average on the global VISA network, and much higher at peak periods). As many “make a quick buck” ICOs and other token solutions emerged on Ethereum, it hit capacity problems. In fact, it only took a single game – “Cryptokitties” for sale of cryptocollectible cat tokens (yes, just like digital token Beanie Babies!), Launched in late 2017, the game quickly became popular, consume up to 25% of Ethereum transactions at peak times, and significantly slow down the network. If a single game for digital cat tokens can clog Ethereum, how can that network handle global commerce with a vast range of ERC-20 tokens for financial assets?
If scaling problems were not enough, Ethereum has faced security vulnerabilities. For example, in April 2018, a “batchOverflow” bug was found in many ERC-20 smart contracts and caused many cryptocurrency exchanges to shut down trading.
As a result of these problems on Ethereum, believers in a reliable token future have been waiting for a solution to emerge on Bitcoin, now reborn as Bitcoin SV (BSV). The BSV network is designed to massively scale for on-chain (not off-chain) transactions, with future capacity envisioned to support huge volumes of transactions of all types (including tokens). Its blockchain also provides security advantages due to the infrastructure of the large Bitcoin mining network.
Having an on-chain (rather than off-chain) token protocol built on the BSV blockchain means that all token transactions will be secured by the underlying Bitcoin SV economic model, ensuring miners will be incentivised to support the developing token ecosystem, providing security and assurance to all token transactions. This has an added benefit that token transactions have a real underlying economic incentive to provide valid and value driven token use cases.
Our sister site CoinGeek.com announced a winner in their £5m tokenization contest. A group, aptly named Tokenized, led by James Belding delivered a solution that will allow the creation of on-chain tokens for Bitcoin SV. The Tokenized solution will enable companies and developers with real solutions for the gambling industry, and has a unique focus on providing tools to help companies comply with any applicable regulations and real-world business needs.
James Belding gave a sneak peek at the CoinGeek.com Miners Summit in Hong Kong last week, but don’t worry the white paper will be released soon, and you’ll have the opportunity to hear Belding speak on their token solution at the upcoming CoinGeek Week Conference in London this November. For tickets, please visit CoinGeekWeek.com.
For gambling operators and service providers, the new “Tokenized” Solution will allow the creation of a plethora of functional tokens that will be useful for many industries, including specific areas of the gambling industry.
Here is just one example but when people get their hands on the white paper, I’m sure ideas and applications will flow.
Fancy Name Casino could create ‘Fancy Name Tokens’ for their online gambling platform. The company could create five different denominations of the Fancy Name Tokens: a $1 chip, $5 chip, $10 chip, $20 chip and $50 chip all representing a 1:1 ratio with the face value of the token in their preferred fiat currency.
The casino would run smart contracts to manage these tokens and would only be subject to the laws of applicable jurisdictions (such as where they reside or operate services). The casino could offer its players fiat in return for the redemption of the tokens or the equivalent in BSV.
For their players who reside in countries where the financial institutions won’t allow their citizens to send money to gambling associated bank accounts – they can route around by buying FNC tokens from other gamblers on a secondary market or by buying BSV first and then purchasing the gambling tokens directly from Fancy Name Casino.
FNC would have an audited bank account that ensured they held enough fiat currency in reserve to back the gambling tokens to make sure the tokens had value on the aftermarket.
If FNC had a bank account that couldn’t interact with certain jurisdictions but could interact with other jurisdictions’ banking systems, then arbitrage could provide liquidity in the secondary market to route around the banking restrictions.
Depending on the jurisdiction, the tokens could allow a whitelisting and KYC restrictions to prevent the purchase of these tokens in areas where the casino doesn’t want to do business.
All of this could be done in a lawful manner using tokens.
To find out more about the capabilities and possibilities of the new on-chain Bitcoin SV token solution which is ideal for the gambling industry I encourage operators to buy tickets for CoinGeek Week. It will give you a step ahead of your competition.