iGaming, Blockchain, and Bitcoin SV: What's the fuss?

The recently concluded ICE London conference provided those of us who follow online gambling and cryptocurrency with plenty to talk about. At the top of the list is all of the attention Bitcoin SV got during the event. Bitcoin SV is being aggressively promoted by its creators as the one and only blockchain format capable of meeting the needs of the iGaming industry.

Of course, there are plenty of people who disagree with that assertion. Nonetheless, Bitcoin SV suddenly finds itself at centre stage in the online gambling arena. So, what is all the fuss about? Can Bitcoin SV truly be the all-inclusive blockchain platform the online gambling industry is searching for? It is possible, but not likely. A more likely scenario is that the industry will choose to adopt multiple blockchain technologies over the next several years.

More about iGaming

Understanding all the fuss behind Bitcoin SV as an online gaming platform begins with understanding the prominent players. Let us start with iGaming. The term 'iGaming' applies to that entire collection of online games on which people gamble. The online tech magazine known as AlleyWatch defines it as follows:

"iGaming is having a bet on the outcome of an event or game online, and these activities include poker, sports betting, online casinos with the largest share of the market being taken up by sports betting and online casinos."

Their definition pretty much covers every form of online betting you can think of. As AlleyWatch explains, the iGaming sector is dominated by online casinos and sports betting. There are multiple reasons for this, but that is a different topic for another post. It is enough to focus on casino gambling and sports betting for now.

Regulatory enforcement issues

There is no doubt that iGaming has a lot going for it. However, it is not all sunshine and roses for the industry. One of its biggest challenges is overcoming both real and perceived regulatory enforcement issues. For example, nearly every jurisdiction that allows online gambling requires that operators treat players fairly.

Fairness is a fundamental tenant of human psychology. We all want life to be as fair as possible in every respect. The problem with online gambling is that proving fairness is quite difficult. Some jurisdictions have implemented a strict set of rules whereby online casinos can prove the fairness of their operations. In jurisdictions where no such rules exist, operators take it upon themselves to set fairness standards.

Nonetheless, policing all of this is nearly impossible. Why? Because online businesses are exceedingly difficult to keep track of. You can get away with things online you could never pull off in a brick-and-mortar setting. Furthermore, online casinos are not limited just to the jurisdictions wherein they reside. People from outside those jurisdictions can also visit and play. Yet the governments of those outside jurisdictions have no control over how the online casino treats its citizens.

Bitcoin SV is allegedly the solution to many of these enforcement issues. More on that in just a minute. First however, it is necessary to take a closer look at Bitcoin SV, who is behind it, and where it came from.

A fork of a fork

Most people are aware of the fact that Bitcoin was the original cryptocurrency. When it was first launched more than a decade ago, there was nothing else like it on the market. Creator Satoshi Nakamoto intended his project to act as an alternative monetary system that would allow people to buy and sell outside of the traditional banking sector.

It became apparent within a few years of Bitcoin's launch that the platform had some shortcomings. Among them was its inability to properly scale. Because Bitcoin doesn't scale well, its growth created speed problems that began turning people away. To make a long story short, a disagreement over how to solve the scaling problem resulted in a hard fork known as Bitcoin Cash (BCH).

Bitcoin Cash took a different approach to processing new blocks. It also departed from Satoshi Nakamoto's original code in other ways that did not sit well with some. Eventually, it was so far departed from the original that a number of prominent people within the BCH community decide to create another fork. Their fork is known as Bitcoin Satoshi Version, or Bitcoin SV (BSV).

Bitcoin SV backers realigned much of the code in order to make the project look more like the original Bitcoin - minus the scaling problem. Hence the decision to include Nakamoto's name. However, the most important change brought about by the creation of Bitcoin SV was the ability to use the Bitcoin blockchain to do more than record financial transactions.

This new functionality does not give Bitcoin SV the same kind of power and reach that Ethereum offers, but it can be used for all sorts of accounting purposes. Whether the accounting is financial or otherwise, Bitcoin SV can handle it. Best of all, Bitcoin SV is more scalable than the original Bitcoin.

No such thing as a Private Blockchain

So, how does all of this apply to iGaming? In a word, transparency. The number one issue facing the iGaming industry today is not regulation or finances. It is offering the kind of transparency necessary to prove that online gambling is fair and that gambling operators are not acting as money launderers.

Humanity's inherent desire for privacy is juxtaposed with an equal desire for transparency. Gamblers want their identities and personal information kept private for obvious reasons. Gambling operators also need privacy to protect their operations. Yet everyone wants transparency for the purposes of proving that no one is getting ripped off.

Interestingly enough, what many people do not realize about blockchain is that its security is found in its transparency. Craig Wright, one of the primary scientists behind the Bitcoin SV project, explained the principle in a speech he gave in late 2019. Watch the video below:

Blockchain is, by its very nature, heavily reliant on the distributed ledger concept. Bitcoin's distributed ledger exists as multiple copies hosted on computer nodes around the world. At this point, no one really knows how many copies of the ledger exist. Bitcoin SV's ledger is also distributed publicly.

How can this be secure? By requiring all of the ledgers to agree before any additional blocks can be added. It is called 'consensus'. Without consensus, no new blocks can be added. This consensus makes it very difficult to perpetrate fraud.

Wright believes that this sort of transparency is just what the iGaming industry needs to create provably fair games. By building them on blockchain technology that utilizes a publicly distributed and decentralized ledger system, operators can be transparent about their games without revealing sensitive information.

Blockchain number generators

iGaming's biggest players, online casinos, rely on random number generators (RNGs) to make their games work. It is the RNG that determines the outcome of any spin on a video slot game, for example. It turns out you can build RNGs using Bitcoin SV's code as the foundation. Doing so offers the opportunity to permanently record the results of every single spin in perpetuity.

Because such a blockchain would exist as a distributed ledger, anyone would be able to see the results of game-play at any time. Such open transparency would force operators to make sure the games they have on offer are fair. And because blockchain ledgers are immutable, the data cannot be changed once it is added to the ledger. This prevents operators from tampering with game results in order to hide unfair play.

Bitcoin SV has its issues

Let us assume that the proponents of Bitcoin SV as an iGaming platform are correct about how blockchain can be utilized to improve online gambling. That still doesn't mean Bitcoin SV is the best blockchain for the job. It has its own issues that still need to be worked out.

A big issue rests with Bitcoin SV's perceived security. Bitcoin SV was birthed out of a hard fork that occurred in mid-November 2018. A month later, a cryptocurrency researcher by the name of Reizu stirred the pot by claiming he was able to double spend coins he owned on both the BCH and BSV blockchains. This created legitimate concerns over whether or not the latter was truly secure.

In its defence, Bitcoin SV has remained a top tier cryptocurrency since its launch some 16 months ago. It enjoys a fairly high market capitalization and a comparatively strong value against other alt coins. Perhaps it does possess the unique properties necessary to be a solid platform on which to build the iGaming industry. Whether or not the industry gets on board remains to be seen.