Block chain technology is a new term in economics and while most people know that it is connected to cryptocurrencies, most people don’t know how block chain works or how cryptocurrencies work. This is especially significant in the online casino industry as block chain technology is becoming more and more prevalent in the industry.
A new casino called Zeroedge has arrived. It uses block chain technology and has its own cryptocurrency called the ZeroCoin. The huge innovation being experienced at Zeroedge Casino is that the Random Number Generator they use to determine the outcome of each game has been calibrated to give the house a zero edge in all games.
By offering gaming with zero house edge, the casino is essentially offering free games in the sense that players can expect to either break even, win a little, or lose a little. It takes online casino gambling almost fully into the area of pure entertainment.
This formula for success works only if the cryptocurrency the casino uses continues to rise in value, if the casino doesn’t accept government money from players, and if no player wins a jackpot that exceeds in value all the cryptocurrency the casino has at that moment to pay the winner.
What is Block Chain?
In order to fully understand block chain, we need to become familiar with and comfortable with an entirely new set of terms. Let’s start with the term “block”. A block in this vocabulary is a financial transaction. When you put financial transactions together, you get a block chain.
The term block chain can be used in non-financial areas as well. You can create a block chain of medical records, birth and death records, and so on. The key concept is to see each block as a separate link in a chain.
Block Chain in Currencies
If you have a cryptocurrency, you actually own a link in the block chain in that currency. Since cryptocurrencies are entirely internet phenomena, you own an internet code for the currency. The code for your cryptocurrency is similar to the PIN number you use to access your checking account when you want to use your credit card.
You don’t have to put in your PIN when you make credit card purchases; the code is in the computer strip on the back of the card. You need the PIN to get money from an ATM.
The block chain code is your access key to your cryptocurrency. If you lose the code, you can never recover the currency from the block chain. This is an inherent weakness in the entire concept of block chains and cryptocurrencies.
Strengths of Block Chains
The opposite side of the coin, so to speak, in the idea of a code to access your currency in a block chain is that there are no user fees for making transactions. In this sense, cryptocurrencies are a new style of bank in which you have “money” but collect no interest and also pay no fees.
Anyone can access the general transactional flow in a block chain. They won’t know who spent the equivalent of $1000 at an online casino using the cryptocurrency, but people can see that such a transaction occurred. As cryptocurrencies become more accepted to actually buy and sell things rather than as a speculative investment, a cryptocurrency will rise or fall in value depending on actual purchases.
We can also see the rise and fall in the real value of any government currency by accessing the conversion rate of that currency into gold, silver, another currency, or any other commodity that can be readily bought and sold on a public market.
Cryptocurrencies are, thus, a major challenge to government money. Cryptocurrencies would not have general popularity were there widespread trust in the enduring value of government money. Many investors in cryptocurrencies do so because they expect government currencies to crash relative, once again, to gold, silver, another widely traded commodity, or to cryptocurrencies.
So, an online casino that issues its own cryptocurrency is actually relying on its currency rising in value against any other financial measure. This is clearly a big gamble on the part of the casino. For players, it means that they can play at that casino with the knowledge that they are not at a disadvantage at the very outset of their gaming activity.
An increasing number of online casinos are accepting Bitcoin, the most widely known cryptocurrency. These casinos also accept other government currencies so they maintain the house edge in all games although the house edge fluctuates and the edge in some games, notably video poker, is almost nil.
If the idea of a casino issuing its own currency proves profitable for one casino, we will probably see other casinos follow suit. The idea of many cryptocurrencies in circulation makes the whole idea of alternative currencies risky but potentially very profitable.