Gambling enthusiasts have been using online casinos for decades, and business is booming in 2020. However, decentralized blockchain casinos pose an interesting challenge to more traditional digital storefronts. From payment mechanisms to information exchange and accountability, there are many fundamental differences between the two.
Oliver Scholten, David Zendle, and James Walker have authored the first academic study into player behavior for decentralized casinos. In all, this is a potentially groundbreaking development for people who love blackjack or aspire to start their own digital casino.
One point to make at the outset is that just because an online casino accepts cryptocurrency as a deposit method does not make it decentralized.
For example, we have regular online casinos on our bitcoin blackjack page that simple take you bitcoin and convert it to a regular fiat currency of your local country. These sites are often called Bitcoin Casinos but their games are not on the blockchain. You do still get some benefits like not having to give the casino your bank details. However, you miss out on the benefits of a truly decentralized site like eliminating counter party risk and making games provably fair .
The unique characteristics of cryptocurrencies make for more than just an alternative payment method. You can find all crypto transactions on the relevant blockchain, a public ledger of transactions tied to a certain crypto coin. However, personal information isn't tied to these transactions, which adds a level of anonymity that many people will appreciate.
It also lends a certain amount of transparency to the casino, as anyone can look up their transactions and ensure games aren't rigged. Traditional online casinos guard their internal documents, and you simply have to take their word for it when they proclaim their games are fair. Legitimacy and reputation are the keystones of a successful online casino, but decentralized casinos sidestep this matter completely. These unique characteristics also provide unprecedented access to data for researchers.
There are two key features of decentralize casinos when it comes to their exceptional research value, which formed the basis of the study.
Personal information associated with traditional casino transactions creates a range of hurdles to accessing and assessing any player behavior data. The companies that hold that data also have a vested interest in keeping it private, for a variety of reasons. In short, gleaning data from standard casinos runs right into a range of ethical, practical, and legal concerns.
The anonymization that cryptocurrencies use as a major selling point eliminates most of these issues. That remaining issues are resolved via the public storage and transparency of crypto transactions. Nonetheless, there is one significant hurdle to overcome in assessing the value of blockchain transaction data. That is to say, automated play.
For various reasons, a decentralized casino always has an unknown number of bots playing. That is to say, automated playing programs and betting algorithms. One of the largest hurdles of the study was attempting to eliminate these automated data points.
The study consisted of directly accessing individual data points gained on the popular Ethereum blockchain, rather than using daily/weekly aggregates. After gathering data for 583 days and attempting to eliminate users that appeared to be algorithms the researchers arrived at the current dataset.
Applications included two dice-based betting games, Etheroll and Dice2Win. One decentralized casino that offered a number of simple games went defunct in July 2019 but contributed 349,195 transactions prior to this date. Overall, the study gathered a total of over 2.2 million bets originating from over 24,000 unique addresses.
Let's now take a look at some of the conclusions of the Longitudinal Study of Actual Cryptocurrency Gambling Transactions. Polarized Spending Habits
One interesting conclusion the study gathered is that players at decentralized casinos generally spend less money, less often. On the flip side, the most heavily involved players spend much more. While average players may bet roughly $105 a day, the most heavily involved gamblers spend as much as $120,000 within a 35 day period. Heavily involved gamblers outspend average users by a ratio around 30:1! Their individual bets tend to be just under 20 times higher.
Another finding of the study was that between transactions made and returns on bets, the net loss was only approximately 5%. In gambling terms, that means that decentralized casinos typically have a median Return To Player (RTP) around 95%. This is much higher than brick and mortar casinos, and above-average among online casinos. Of particular interest is that this RTP is by no means distributed evenly, and many experience far lower losses.
Another interesting finding in the study was that the most heavily involved blockchain players were outspending the average player by more than 1000 times but their losses were comparatively smaller. The heavily involved players lost at less than 1%. The average players were losing at less than 6%.
Decentralized applications offer unique transparency in betting that could be used for the early detection of unsustainable spending by players. Normal online casinos rarely share player betting history. This play history is a valuable form of responsible gambling analytics. Decentralized casinos could identify problem gambler accounts, offer that account problem gambling help and possible restrict betting where necessary.
Currently, decentralized casinos offer very simple games, such like blackjack. Many dice-based games are available, as well as roulette and guess-the-suit or guess-the-number.
Near the end of the study, there's a number of key limitations on the data presented. For one, it's unclear how player behavior in the applications this study used may be applicable or inapplicable to other applications. It's also possible that the scale of the study was not adequate to glean the full picture of player behaviors. Another key limitation is that the labels on behavior and types of players are still quite simple, and could bear to be more in-depth.
Many blackjack players desire to keep their personal information private, but this is at odds with the requirements for many traditional online casinos. Often you'll sign up to one online casino only to start receiving an ongoing stream of spam gambling emails from many sites.
The unique qualities of cryptocurrencies and decentralized applications allow blackjack players to enjoy a higher degree of anonymity. Most people are not so worried about giving their information as long as they know they're dealing with trustworthy businesses, but some prefer to avoid sharing information altogether.
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