The Smart Casino Chip: What is It and does it exist?

Tokenized CEO James Belding recently gave a brief interview to Calvin Ayre correspondent Becky Liggero Fontana during the CG London conference in early March. The point of the interview was to talk about smart casino chip technology and its early entry into both land-based and online gambling.

Let's explore more about this topic and explain exactly what a smart casino chip is, what it does, and whether or not it actually exists beyond theoretical design. From the limited information we currently have, it appears as though the gambling industry is heading toward blockchain platforms powered by smart casino chips.

An introduction to Casino Chips

If you have been around casino gambling long enough, you already know what a casino chip is. A chip is a physical representation of cash you have deposited with a casino's banking operation. Different chips represent different monetary values. You use them to play table games such as roulette, blackjack and so on.

Online casino chips work in much the same way. Though they are not physical in nature, they are graphical representations of financial value.

The point of using casino chips is to make betting easier. It is a lot more convenient to place chips on a table rather than fumbling around with bills and coins. Chips are also easier for dealers and croupiers to work with. And of course, chips benefit the house inasmuch as customers obtain them by purchasing them with cash. That means the house keeps the customer's money if said customer walks out the door with chips in hand.

The Smart Casino Chip

A smart casino chip is one that combines the traditional use of casino chips with new technology that gives it added value. Just like a smartphone is several steps up from a landline phone, the smart casino chip is at an entirely new level.

Smart chips are equipped with embedded microchips and sensors that allow them to interact with other sensors and computer systems. The embedded microchips store information that can be read by surrounding sensors. Moreover, information on the chips can be altered.

For example, you might have a single chip that represents $500 in cash. However, you might want to only bet $375 on the next spin of the roulette wheel. There is no need to convert that chip to smaller increments in order to place your bet. Use your single chip but place a bet of $375. Should you lose on that spin, computer software will reduce the remaining value of the chip by modifying its embedded information.

Representing a variety of assets

Smart casino chips can represent a variety of assets. The chip itself is financially worthless but functionally valuable. In function, a smart chip can be programmed to represent any other assets the house desires.

You might walk into a casino with U.S. dollars to deposit. Your smart chips will be programmed to represent value in your currency. Someone else could walk in with British pounds. His chips would be programmed accordingly. But it doesn't stop there.

The ability of the smart casino chip to represent virtually any other asset means they can be used to support cryptocurrency gambling. Remember, cryptocurrency is not represented by any kind of physical token. It is simply numbers on a blockchain ledger. You cannot go to your local casino and hand them physical bitcoins.

A smart casino chip bridges the gap between digital currency and physical gambling tokens. A casino that accepted Bitcoin deposits could issue smart casino chips as a physical representation and get all the benefits of cryptocurrency payments at the same time.

Smart Chips and Smart Contracts

To make a smart casino chip work in the cryptocurrency universe requires some means of interacting with a given crypto network in real time. What is the solution? Smart contracts. Remember that inside the smart casino chip is a microchip that contains information describing what asset that chip represents.

Smart contract code can be included on the microchip for the purposes of facilitating cryptocurrency transactions in real time. Those same smart contracts can be used to execute financial transactions within the casino itself. Finally, smart contracts can tie into blockchain ledgers in order to create an immutable record of every single transaction.

In theory, relying on smart contracts to trigger financial transactions would mean you could use the same smart casino chip at both a land-based casino and a sister online casino. You would use it just like a normal chip at the land-based casino. In order to use it online, you would have to register it with the site. That site could tap into a computer network to get information about that chip.

As you gamble, smart contracts would execute the necessary transactions and force the system to keep a running total of the value of your chip. The next time you took that chip to the land-based casino, it would automatically update once in range of the casino's computer system. At least that is how it could work in theory.

All of this theory sounds rather exciting, doesn't it? The question is, does the smart casino chip actually exist? Belding says it does. In fact, he took the occasion of his interview to mention a land-based casino that is already using the smart chip.

A different kind of chip

At this point it is important to point out that smart casino chips are not the same thing as RFID-enabled chips. The latter technology has been around for a number of years. RFID-enabled chips simply communicate information between chips and computer systems in order to keep track of bets.

Smart chips are different in that they utilize smart contracts to execute financial transactions. The nature of a smart casino chip allows it to directly tie into a casino's blockchain in order to execute transactions in real time. If you're not sure why this matters, there is a practical illustration that should make it pretty clear.

Imagine being an affiliate operating a number of different gambling websites featuring games from some of the biggest developers in the industry. All your sites do is host the games. They do not directly accept deposits or pay winners. All of that is handled by the game developers for whom you are an affiliate.

You have to wait to get paid until those developers settle their own transactions. Depending on who you are affiliated with, you might only get paid once a month. That is the nature of the beast when you are talking settlements. Smart casino chips combined with smart contracts change that.

A smart contract can execute a transaction nearly instantaneously. Once executed, it only takes minutes for the transaction to be verified and added to the blockchain. Once added, it is immutable. Guess what? You are not waiting on settlement. You get paid a lot more quickly because you're not waiting on developers and payment processors to settle things among themselves.

The necessity of Blockchain

There may be a reason that Belding only mentioned a single casino currently using smart casino chips. That reason is the necessity of blockchain. Because smart casino chips rely on smart contracts for execution, they are useless in a system that does not utilize a blockchain platform.

Perhaps this is why Belding tied his discussion of smart casino chips into the Bitcoin SV platform. As regular readers of our blog already know, Bitcoin SV creators are pushing to make their platform the de facto platform for online gambling. They believe Bitcoin SV is the only blockchain capable of supporting every aspect of online operation.

Both land-based and online casinos have to adopt some sort of blockchain platform before smart casino chips can offer any value. Thus, promoting smart casino chips apart from blockchain is a fool's errand. You cannot have the chip if you do not have a blockchain to support smart contracts.

Belding and other Bitcoin SV proponents feel like now is the time to convince the online gambling industry to go all-in on blockchain. They specifically want gambling operators to select Bitcoin SV as their platform. If that happens, we expect to see Bitcoin SV partner with someone else to create a standardized smart casino chip that could be used both on land and online.

Now you know what a smart casino chip is. One really does exist, according to Belding. How long it will be before the smart chip is widespread is anyone's guess.