The online gambling industry has certainly seen its ups and downs over the last two decades. Initially seen as both tantalizing and suspect, it quickly boomed into a global industry with casino sites sprouting up in force. And much of the greatness online gambling had promised held true; there’s no question that for many who live in areas where casinos are illegal, or where the available choices lack the hope of big winnings we want to experience when gaming. However, with new entrants in the market on a regular basis, it was only a matter of time—and probability—that a small but significant number of online casinos would act dishonestly, rigging games and odds in their favor and stealing millions from their customers. For gambling to truly work—that is, for all parties to enter a game, play the game, win or lose, and walk away without suspicion—there needs to be an element of trust.
With brick and mortar casinos, this is a little easier as most customers don’t have to trust the casinos. Instead, they trust the auditors, the gaming commissions, and the law. This is the third party paid for by customers (through taxes) to ensure that games are truly fair. With online casinos, however, the auditing and gaming commissions aren’t there, at least not in the same way. Even many of the more reputable online casinos have their licenses in countries with more relaxed policies, and customers have to rely on the reputation of the casino more than anything.
It’s not surprising that this has created a crisis of trust. Customers have become more and more wary of how online casinos operate, especially as the number of criminal acts by casinos comes to light each year. For the honest casinos, this is just as big a problem, because even if they wanted to prove that their games are fair, how could they? What would a casino have to do to show that its games are truly fair, using genuine random numbers and that cheating is impossible?
Blockchain has the answer, and it’s called Provably Fair Gaming.
Provably Fair Process: Trust through Transparency
In designing a spacecraft, SpaceX has a powerful philosophy: A simplified design requires fewer parts, and parts that aren’t needed can never cause a problem. The same holds true with the most delicate of components required in online gambling: Trust. If you were to create the process in a way where trust was actually not required, then the process would be significantly stronger. In the provably fair process, trust is not required. It is replaced with transparency, which makes the process better than trustworthy; the process becomes verifiable. Top crypto gambling sites such as FortuneJack have been developing and using this process for years, and it has earned its stripes for effectiveness, giving players the tools required so that they don’t have to trust because they can verify.
Let’s dig into the provably fair process. Note, there are more detailed layers of complexity in the algorithm than we describe below, so we are providing the key information without turning it into an academic paper (you’re welcome).
The casino uses a provably fair algorithm to generate several key pieces of information at the beginning of a game:
- Serverseed: a special code that is encrypted and given to all players so they can use it after the game for verification.
- Clientseed: a similar special code that is created by the player’s browser, but can be modified directly by the player before it’s sent to the game.
- Nonce: This is essentially a label to track the different hands in a game and what random numbers were generated at each point.
Using a verified random number generator, the two seeds are put together to create a unique code, and when used with the generator creates the randomized pieces of information needed for the game (dice rolls, card draws, roulette numbers, etc.).
After the game, or after each play in the game, the casino will provide players with the key to unlock the serverseed. With some freely available software, clients can plug in the unencrypted serverseed and clientseed.
The results of the players using the software should be an exact match to what happened in the game. The algorithm then keeps the plays in a hash, which is a special piece of information that uses intense mathematics to form, and can’t be modified undetected.
By providing complete transparency to all players, each person playing a game can verify that no tampering has taken place. In a world of slick software-enabled frauds, this achievement cannot be overstated. Using code and the blockchain, we’ve essentially bottled Trust by removing the ability to break it. For FortuneJack and similar sites, this breakthrough has created massive growth in players who want to experience the fun of online gambling, but haven’t wanted to trust an online site that has little to lose and a lot to gain by playing dishonestly.
Releasing Provably Fair into the Wild
This approach using provably fair gambling will be seen as a major turning point for online casinos globally. With the power being shared with casinos and players, it will not be long until this innovation becomes a basic expectation.
That said, some groups are working on taking this approach to transparency, and moving it out the doors of the casino and into the wild. If the problem you are trying to solve is “how do I create a trust for my (insert activity here) to work?”, then the solution is to replace trust with transparency. Recent applications of the provably fair algorithm include:
- Trading in cryptocurrency exchanges
- Raffles and giveaways
- Digital treasure hunts (with valuable prizes)
The next few years will be very interesting and will hold countless new applications. It will be exciting to see what creative ways this can be used across industries, and how we will be able to effectively evolve truth into transparency. In the meantime, we can continue to watch how the crypto gambling sites continue to mature the process, find ways to refine it and develop ways that make verification seamless.