So; you’ve found yourself on our crypto casino website and subsequently navigated to this page looking for information on how crypto casinos actually work… well, you have come to the right place and you might be surprised to learn just how many actual crypto casino users are not completely au fait as to how the casinos they use, truly operate. Here are a couple of interesting facts that will also dispel any thoughts that you might have been alone in seeking this information:
- A recent survey revealed that even though many had already used crypto casinos for deposits, casino staking or other purposes, a surprising 69% of gambling respondents admitted that they didn’t actually know much about cryptocurrency.
- Additionally, although indicating that they were comfortable using and operating on crypto casinos, respondents also admitted that they nonetheless, lacked a solid grasp as to what the blockchain was and how it worked.
Let us then address these two cornerstones of crypto casino operation to finally understand exactly how they do work.
Crypto Casinos and the Blockchain
As with everything in the world, things progress and evolve, and crypto casinos are just the latest evolution of the original physical casino concept. Just for informational purposes, the first physical brick-and-mortar casino was established in Venice, Italy, in 1638. The next development (resort model casinos) came in 1931and it was not until 1994-1997 that the first online casinos appeared and gained traction.
The technology enabler that allowed the development of online casinos was, of course, the advent and availability of the public internet.
Similarly, the great technological leap which has enabled crypto casinos is the blockchain.
Unfortunately, the science and concepts behind the blockchain are very complex and this sadly renders many explanations found both on crypto casino sites and elsewhere, inadequate or incomplete; so let us swiftly move on and see if we can improve upon this.
Most crypto casino sites may tell you that a crypto casino operates on blockchain technology; which is a “decentralised ledger which records all transactions across a network of computers”. Well, that’s all to the good, but let us examine this a little closer:
Ledgers
So what is a ledger? A ledger is a master record where transactional data is recorded and stored. In effect, it is the sole and definitive arbiter of truth for participants or stakeholders, sources or destinations. You could even say that it is the master record ‘set-in-stone’. So far, so good…but what does the ‘decentralised’ bit mean?
Decentralised Ledgers–Open Ledgers
The blockchain is in effect, a giant decentralised (open) ledger of every Bitcoin transaction that takes place anywhere. The key takeaway is that open (decentralised) ledgers are available to view by everyone, contrasted against closed ledgers (such as bank ledgers), which are only available to members/participants.
Importantly, the blockchain is anonymised, i.e. it does not record the personal details of who is transacting; it solely records transactions between bitcoin wallet addresses. It records, how much Bitcoin is moving, to where, when and between which wallets. As a consequence, it naturally keeps a running balance of how much bitcoin is held in every bitcoin wallet.
Structurally, the blockchain stores a copy of the master ledger across multiple computers and locations worldwide (called Nodes). This open ledger is constantly updated; with all nodes constantly cross-checking, verifying and validating all transactions on the blockchain.
But perhaps it would be helpful to compare and contrast open (blockchain) ledgers and closed ledgers (such as those in Banks) to fully emphasise the differences:
- The Blockchain is public, open and shared worldwide. Everyone can see who sent what to whom and when. The ledger is anonymised. With closed ledgers, only the controlling/owning organisation can see the full ledger…which is not anonymised.
- The blockchain sits upon and is stored, controlled, run and updated by a network of computers; there is no single owner. With closed ledgers, there is a single owner who solely stores, maintains and updates the transaction records.
- Once a transaction has been recorded on the blockchain it is very hard to change due to the constant cross-checking and validating amongst the Nodes, promoting confidence in a true and authentic ledger. With closed ledgers, owners can reverse, correct, edit or erase records at will.
- Trust in the Blockchain is derived from mathematics and cryptography; trust in closed ledger systems is based upon faith and confidence in the organisation administering the ledger.
To use an analogy; The blockchain is like a spreadsheet that anyone can view, that thousands of computers in multiple locations worldwide help keep current and up-to-date. No single node can secretly create, or alter entries that are not genuine. In contrast, closed ledgers are like a private spreadsheet on a bank’s own computer; you may be able to see your own balance but the bank itself fully controls the spreadsheet and the ability to make any changes it wishes at any time.
Decentralised Ledgers–A real-world example
So having now cleared up exactly what the Blockchain is and how it works, and how it relates to crypto casinos who use this open ledger technology across the whole of the crypto casino ecosystem, let us finish the subject of ledgers with a real-world example to really solidify our understanding.
Let us imagine you wish to send one thousand pounds to a family member; firstly via a traditional banking transfer and then via the blockchain:
Bank Transfer
- You instruct your bank to transfer £1,000 to your family.
- The bank checks its records to ensure that you have sufficient funds.
- The bank updates its records and debits you £1,000 whilst crediting your family £1,000.
- All parties trust that the bank performed the transaction correctly and in case of error, that the bank can adjust or correct it.
- You are never privy to the full ledger, only the portion that the bank enables you to access.
Blockchain
- You send £1,000 in crypto to you family’s digital wallet.
- The transaction is published on the blockchain.
- Many nodes worldwide verify that you have sufficient funds and you are allowed to send them.
- The transaction is approved and recorded permanently into the blockchain.
- The transaction is visible to all as ‘wallet address A sends to wallet address B’ and the corresponding changes in balance within both wallets.
- No single party controls this; the ledger is completely open to all.
Well, there we are. By now, you will have a clearer understanding of the blockchain than at least 69% of current crypto casino participants and will have a clear understanding of the technical framework that underlies not only every crypto casino, but the entire cryptocurrency infrastructure.
Of course, you may by now have noticed that we have only addressed crypto casinos’ use of Bitcoin. You will also, be aware that crypto casinos not only deal in Bitcoin but several other crypto currencies. The principal, however, remains exactly the same.
Bitcoin is native to the blockchain open ledger. Other cryptocurrencies (sometimes generically termed Altcoins) which are utilised by crypto casinos, simply sit on their own native open ledger infrastructure. So for instance Ethereum sits on the Ethereum network; USDT sits on both the Ethereum and Tron networks; SOL sits on the Solana network and so on. In the end, the choice of cryptocurrency is up to your personal determination and circumstances, but all crypto casinos can accommodate your choices.
Crypto Casinos and Crypto Currencies
Having come thus far, we can now turn to that second weighty problem which assails crypto casino users…understanding cryptocurrencies themselves.
As mentioned previously, crypto casinos can accommodate a number of cryptocurrencies, but in essence, the principle underlying all cryptocurrencies is the same: So let us move forward and use as our example, perhaps the best known crypto currency and one which all crypto casinos work with…Bitcoin.
Bitcoin-Basic Principals
In a nutshell, Bitcoin is a decentralised digital currency that facilitates secure, worldwide peer-to-peer transactions, without centralised control or oversight.
Bitcoin-history and inception
The Bitcoin idea was first brought forth in 2008 in a concept document entitled ‘Bitcoin-an electronic cash system’, however, it was not until the following year that the first Bitcoin software was released and the Bitcoin network activated.
The ‘inventor’ of Bitcoin was an individual named Satoshi Nakamoto, however, it is possible that this was simply a pseudonym for a group individuals; to this day, the identity and whereabouts of Satoshi Nakamoto is shrouded in secrecy.
In the latter part of 2010 Satoshi Nakamoto stepped away from Bitcoin and its native blockchain, finally leaving responsibility in the hands of the community (see the previous explanation of open ledger and Nodes).
Bitcoin-raison d'être
Dissatisfaction with the traditional, centralised banking and currency system was the primary motivation for the invention of Bitcoin, with the 2007-2008 global financial crisis proving an especially poignant driver.
The causes of this crisis were basically over-leveraging and securitisation of sub-prime (bad) debt with a subsequent liquidity and inflationary crisis, which underscored, in the mind of Satoshi, the requirement for a system able to provide complete financial sovereignty to individuals, away from the high transactional fees and lack of privacy of the old centralised systems…and essentially, away from the ability of both governments and financial institutions to inflate the money supply, causing inflation and financial crises.
Bitcoin-operating principals
The operating principals behind the underlying operation of Bitcoin are, as might be imagined, extremely detailed, however, an abridged explanation follows below:
- A sender initiates a transaction by defining the recipient’s wallet address and the amount to be sent.
- The sender digitally signs off on the transaction using their private key, which then simultaneously proves ownership of the Bitcoin they wish to send.
- The signed transaction is then ‘broadcast’ to the blockchain.
- The transaction is verified, as is checking sufficient coin balance of the sender to make the transaction and the authority of the sender to make the transaction.
- The transaction is confirmed and written onto the blockchain ledger.
Bitcoin: take-aways
Now that we have covered what Bitcoin is, how it came into being, the blockchain upon which it operates and its working mechanisms, let us outline the advantages of Bitcoin over Fiat currency. After all…there is a reason why you have invested in Bitcoin and why you have decided to engage a crypto casino using this cryptocurrency. These summary points may, indeed, help to confirm your decision to become involved in Bitcoin and in crypto casinos themselves:
- Bitcoin operates on a peer-to-peer model completely free from central control, oversight or risk of censorship. Governments, authorities or financial institutions play absolutely zero part in any aspect of Bitcoin or the blockchain.
- Bitcoin transactions are cryptographically protected. Although transactions are not themselves anonymous, your personal details and those of the people you deal with are.
- Because it is peer-to-peer, Bitcoin transactions are fast and relatively cheap. They enable global transactions by bypassing the need for currency exchange or legacy banking system involvement.
- Due to the mathematically algorithmic nature of Bitcoin, the maximum Bitcoins that can ever exist is capped at 21 million. This is naturally deflationary as opposed to the integrally inflationary Fiat system, thus ensuring value and potentially, capital growth over time.
- Bitcoin gives access to financial services to people worldwide…all you need is internet access. People who previously could not access traditional banking due to geography or personal circumstance are now liberated.
And here we finally conclude our journey into crypto casinos and their link with cryptocurrencies. As promised right at the start, you should now know more about the blockchain, the history of cryptocurrencies and how they work than probably 69% of active crypto casino users.
In subsequent articles we will delve further into the world of crypto casinos and all aspects of how crypto casinos work as well as various associated technical topics.