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how does blockchain gambling work

There is quite a bit of crypto casinos around. Some of them offer pure blockchain gambling. But what is blockchain gambling, what does it entail and how is it different from traditional gambling? Here is an overview.

Blockchain Gambling Software

Blockchain gambling refers to a specific kind of casinos that base their games on software that somehow either:

  • Run on a blockchain through a smart contract
  • Or depends on random number generation from a blockchain for results – like a hash on a Bitcoin block

Most of these options also require players to play with cryptocurrency, although it is possible to base a fiat game on software that depends on blockchain random number generation for its results. Many times, this random number generation that is based on block hashes, is used to guarantee provable fairness.

Smart Contract Blockchain Gambling

Those brands or games that apart from requiring players to use cryptocurrency, also run on a smart contract, often run completely autonomously from human intervention. Those games and brands that don’t run on smart contracts but are still blockchain based, can also be automated, but their processes are somehow centralized. Smart contracts allow blockchain-based casinos to run a completely autonomous operation.

Blockchain Gambling is Provably Fair

Another de facto feature of blockchain gambling is that games and brands that use this type of gaming are provably fair by definition. It is virtually impossible to tamper with the records of an immutable decentralized and distributed blockchain like Bitcoin. Therefore, it is easy to make the results verifiably random based on block hashes.

How Does Blockchain Gambling Work?

Given that a blockchain will store data immutably, pay outs are often automated as well. The way these casinos or games work is the following:

  • A bet is placed on a given outcome
  • If the outcome is true, the software or the smart contract will pay those who bet on that outcome from the bets that were placed, to the addresses that predicted the result correctly.
  • This means that wins are limited to the pool gambled.
  • If it is a smart contract that runs the game, then it is possible to give tiered pay outs according to the smart contract.

Advantages of Blockchain Gambling

Given the way blockchain gambling works, and how it is automated, it offers several advantages to its users:

  • Transparency
  • Verifiability
  • Immediate pay outs
  • Generally low house edge
  • Low minimum deposits or minimum playing amounts
  • Gambling that is as reliable as it can be
  • Anonymity (often)
  • Globally available gambling (although local restrictions might apply, it is almost impossible to enforce them)
  • Most blockchain gambling games and brands offer low house edge – even zero edge

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