Blockchain for gambling: And the winner is... speed

The people behind Bitcoin SV (BSV) are by no means shy about their belief that their blockchain is superior to Bitcoin in so many ways. They are also not shy about saying that BSV is the absolute best choice for gambling operations looking to go blockchain. Should they be so confident? If privately commissioned research is any indication, yes.

In the race to see who will produce the best blockchain platform for gambling operations, the winner is going to be that platform that offers operators what they need most: speed. It is already evident that blockchain provides important benefits like immutability, transparency, and security. What it lacks is speed. And unfortunately, speed is a critical component that gambling operations cannot live without.

Payments or everything

At the heart of the matter is how a gambling operation intends to use blockchain technology. If an operator is looking to do nothing more than apply blockchain to payments, any old platform will do. Bitcoin is as good as Litecoin or Ethereum.

As far as payments go, what all of these other blockchains lack can be overcome. And even if not, payments are just a small part of what gambling operators worry about. Very few of their customers, as a percentage of the total online gambling spend, pay with cryptocurrency. The vast majority of payments are handled through credit cards, bank account transfers, online payment services, and the like.

The speed issue really comes into play when a gambling operator wants to transfer absolutely everything to blockchain. You are talking not just payments, but every aspect of the operation - from back-office accounting to the actual games themselves.

Trying to run every aspect of a gambling operation with Bitcoin would be nigh to impossible. The Bitcoin network is far too slow. Even worse, BTC is barely scalable. A casino operation of any size would collapse under its own weight being run exclusively on BTC. Too many transactions being conducted in too short a time would see to that.

Building an operation with BSV

BSV proponents say that their blockchain platforms can handle entire gambling operations from start to finish. They point to recent research conducted by nChain, research that looked at 14 different blockchains and graded 23 critical points. The blockchains were combination of public and private platforms including BTC, Ethereum, and Hyperledger.

Not surprisingly, BSV came out the clear winner. We say "not surprisingly" because nChain and BSV have a close working relationship. Nonetheless, the research is at least worth considering.

The research suggests that BSV is currently capable of achieving between 1,000 and 6,400 transactions per second (tps). Moreover, it is eventually projected to reach 4 million tps. By comparison, Ethereum is limited to about 15 tps while Bitcoin is only capable of 7 tps.

Speed is not the only issue. But if it were, BSV clearly comes out the winner. This is assuming that estimates are correct. A system capable of 4 million tps should be more than capable of sustaining an online gambling operation of moderate size.

The Private Blockchain alternative

BSV and many of its competitors are public blockchains. But what about a private blockchain platform? It could be a solution, but at what cost? The same research that compared BSV and BTC also looked at Hyperledger. Its speed tapped out at 3500 tps. Certainly better than what BTC and ETH can produce, but to get the full Hyperledger experience, users pay a hefty monthly fee of $10,000.

Private blockchains absolutely have their purpose. And yes, Hyperledger and others might prove very useful for gambling operations. But if BSV performs just as well - or even better - at a fraction of the cost, does it make sense to put financial resources into a private platform?

The other thing to consider about private blockchains is that they are permissioned. That is how they maintain security. This suggests that building a gambling operation on a private blockchain would eliminate some of the transparency benefits of using a public blockchain.

Remember that one of the big reasons for pursuing the blockchain route is to bring greater transparency to the industry. Both regulators and customers alike want proof that games are fair. A blockchain system would offer that proof through an immutable database detailing every play of every game.

Likewise, regulators also want proof that gambling operators are on the up and up in terms of their finances. They want to be able to see that operators are not knowingly laundering money, that they are paying their customers in a timely manner, and that income reported for tax purposes is accurate. A blockchain ledger proves all of that with an immutable record.

Customers want speed

Getting back to the speed issue, it is hard to argue that any of the other concerns are more important than making sure a blockchain platforms for gambling is as fast as possible. If nothing else, customers want speed. Operators cannot expect them to put up with slow sites that make them wait to complete even the simplest of actions.

If you are an online gambler, you want to be able to log on to your favourite site and instantly make a deposit. You want to be able to start playing your favourite games shortly thereafter. If it takes 10 minutes to complete your deposit and then another 60 minutes before you can play, are you going to frequent that casino? Absolutely not.

Consider speed in terms of the games themselves. Gamblers expect their games to move at a pace that is close to real time. If you are playing slots, you're placing your bets and spinning the reels several times per minute. Any kind of lag ruins the experience for you. That goes double for playing table games.

Let's say you're playing blackjack. You expect your decision to take another card will instigate a response by the dealer nearly instantly. Even waiting 5 or 6 seconds for the dealer to respond interrupts the flow of the game. Thus, not being able to run games at a speed equivalent to real time turns players off.

Every action is a transaction

What must be understood is that every action that takes place in an online casino constitutes a transaction. Deposits are transactions. So are withdrawals. Every action taken while playing a game is also a transaction. Every spin of the video slot reels; every card turned in a blackjack game; every bet placed on the roulette wheel constitutes a transaction.

Suddenly it becomes apparent why a casino operation needs a blockchain capable of thousands of transactions per second. And by the way, that would be the bare minimum. Use your imagination and you can easily see why 4 million tps is so attractive.

A reliable blockchain platform would have to be capable of keeping track of a tremendous volume of transactions throughout the day. There would be no room for slowdowns. There would be no room for lack of scalability. The system has to be able to keep up with absolutely every action.

A platform with scalability built-in

Hand-in-hand with speed is scalability. The online gambling world needs a blockchain platform that grows seamlessly as an operation grows. Operators cannot afford to lose time on a system that doesn't easily scale. Worse yet, they cannot afford to be stuck with a system that doesn't scale at all.

BSV proponents say that their platform scales just fine. Without getting into all the technical details, there are enough differences between BSV and BTC architectures to make them drastically different in how they scale. As you know, BTC doesn't scale well. Those who prefer BSV say it does.

So let's assume that all of the claims made about BSV are absolutely correct. It is fast and scalable. It is permissionless, secure, and public. Everything about BSV appears to be a perfect match for the needs of online casino operators. Where does that leave BTC?

A battle for supremacy

There has been a long-standing attempt within the cryptocurrency community to come up with a blockchain that could knock BTC off its throne. BTC is the clear leader when it comes to investments and payment systems. It boasts the largest market capitalization and the highest price among traders. BSV isn't even close in that regard.

However, BTC's Achilles' heel is its design. BTC was originally designed to be an alternative monetary and payment system. It was never intended to be anything more than that. In fact, that is the very reason Ethereum was developed. The primary mission behind Ethereum was creating a public blockchain platform that could be deployed for things other than financial transactions.

Assuming BSV proves its worth in the coming months and years, it stands a real chance of overtaking ETH as a platform on which to build applications. Should the gambling industry embrace it as well, there is the possibility that it could overtake BTC as a monetary system. No one is seriously projecting that will happen yet, but it is a possibility.

In the end, this is all about speed for gambling operators. BSV clearly dominates if research can be trusted. Speed alone gives BSV the upper hand in the race to develop a blockchain platform gambling operators will embrace.