Smart contracts are digital contracts, created on blockchain networks, that have the terms and conditions of the contract written into the code. The contracts execute automatically and without direct intervention from end users or third parties, potentially enhancing trust and ensuring a reliable experience.
They are used in all areas of blockchain, including cryptocurrency and other forms of fintech, and have found use in industries from real estate to gaming.
The Importance Of Trust At Online Casinos
Thanks to their ability to enhance trust between parties and to minimize errors, they can be very useful to online casinos and their players, too. Trust matters to online casino users, which is why the most popular casinos, like those reviewed by cardplayer.com, place such emphasis on trust and reliability. According to online gambling expert Alex Hoffmann, trust is the reason that online casinos use reputable software makers and offer a wide range of reliable payment methods.
What Are Smart Contracts?
Smart contracts are contracts that self-execute. Neither party involved in the contract needs to finalize details or submit the contract for completion. Instead, the terms of the contract are written as lines of code. When certain requirements are met, and automatically submitted via blockchain, elements of the contract conclude.
For example, in a simple cryptocurrency exchange, a buyer might agree to purchase 1 Bitcoin for $100,000. The buyer and the seller enter into an agreement and establish a smart contract.
The contract dictates that when the buyer submits $100,000, the seller will send the Bitcoin to the other party. Only when the $100,000 payment is evident on the blockchain, using designated crypto keys, will the Bitcoin be released and forwarded to the buyer.
This is a basic contract with minimal steps, but because the process is automated, it eliminates the risks of theft and fraud from the transaction. This enhances trust for both parties, and it can also speed up the transaction process. Contracts can include multiple layers, and only when specified requirements are met will the contract move to the next stage.
How Smart Contracts Can Be Used At Online Casinos
Even while banks and other institutions warned against the use of cryptocurrencies during Bitcoin’s early years, these same financial professionals lauded the benefits of blockchain, primarily because of its use of smart contracts. As such, they have seen use across various industries.
They can be used in supply chain management. A shop’s stock is recorded on blockchain. Whenever purchases are made, records update automatically, and when the shop reaches a certain level of stock for a given item, an order is automatically placed with the supplier.
Goods are delivered and stock levels are updated automatically. The suppliers themselves will also use similar contracts to manage their own stock and material levels. Resellers, too.
Rental agreements, as well as real estate purchases, can also be concluded using smart contracts. A rental agreement is digitally signed on blockchain, including the length and payment terms. Each month, the contract will be checked to ensure there have been no additional entries, terminating the agreement, and will then complete the monthly payment from the rentor to the tenant.
In casinos, smart contracts can be used for crypto deposits and withdrawals, but they can also be used for the games themselves and in other ways throughout casino processes.
Cryptocurrency payments are becoming popular at online casinos for their speed and reliability. A smart contract can be established so that when a user requests a withdrawal, the contract executes and automatically sends payment, in their chosen cryptocurrency, to a designated wallet address.
No other parties need to be involved in the payment, not even the casino, which means it can be completed automatically in a matter of seconds. Similarly, deposits can be completed, and the funds will show in the user’s account in seconds.
Even games and game records can be recorded as part of smart contracts. Every spin of the digital roulette wheel can be recorded on blockchain, along with every bet. When a bet lands, the smart contract executes, and anybody with a winning bet receives funds in their accounts. Smart contracts can be used in this way with any game played at online casinos.
Benefits
Online casinos deploying smart contracts can enjoy several benefits:
- Less Admin – Traditional online casinos manually process payments. Not only does this mean delays in payments for customers, but it also means additional administrative work for the casinos themselves. Smart contracts eliminate some of this administrative work.
- Faster Transactions – Cryptocurrency transactions are the primary use of smart contracts at online casinos. Deposits and withdrawals can be completed in a matter of seconds thanks to their automated nature. This is preferable compared to the several working days of traditional payment methods.
- Transparency – Smart contracts are created on blockchain, and details can be publicly visible to anybody with access to blockchain explorer software. This can be beneficial for third-party analysis and record verification.
- Enhanced trust – The accessibility of smart contract records is also beneficial to users because it enhances trust. Even the instant, or near instant, withdrawals help build a sense of trust between players and the casinos themselves.
Challenges
While there are obvious benefits to the deployment of smart contracts, online casinos do face challenges, too:
- Technical Requirements – Smart contracts require blockchain technological know-how. If a casino doesn’t already have that know-how, the costs of finding, building, and employing a team can be initially very high. Generally, the use of blockchain will pay for itself, but it takes time before the cost benefits are realised.
- Regulatory Considerations – Like online casinos, cryptocurrency and blockchain are still undergoing regulatory changes. While blockchain technology can be used by any organization, some regulatory bodies may not accept blockchain records for verification, and it can be difficult for casinos to have certain regulatory bodies, like the UKGC, issue licenses for crypto payments.
