How Will Stablecoins Impact Online Gambling?

Posted by Harry Kane on Thursday, August 2, 2018

In many ways, it’s hard not to draw parallels between cryptocurrency and online gambling. After all, both are underpinned by progressive and disruptive technologies, while they’re also inherently volatile entities that share a pressing need for more stringent regulations.

Even on a fundamental level, we’ve seen the development of various Bitcoin casinos in recent times, as digital currency emerges as the payment method of choice for a growing number of online gamblers.

With the advent of stablecoins, we’re also seeing a crypto innovation that could hold considerable value for online gamblers. We’ll explore this in the post below, while asking what it will mean for the marketplace as a whole?

The Issue with Crypto and its Adoption by Gamblers

For better or worse, Bitcoin will also be renowned as the poster boy for cryptocurrency. While it may have blazed a trail for others to follow in this market, however, it also has considerable weaknesses that pose a problem for investors, consumers and gamblers alike.

To understand this further, you need only look at Bitcoin’s performance over the course of the last 18 months. First came an historic price run in 2017, which saw the value of Bitcoin increase from $900 at the start of the year to a staggering $20,000 in December.

Incredibly, Bitcoin had lost around 80% of this value by June, while the currency has since stagnated with a single token worth £4,713.17 pounds (GBP).

This highlights the volatility of Bitcoin and cryptocurrency as a whole, and continues to prevent the mass adoption of this technology among both risk-averse traders and online gamblers. Arguably, this is even more relevant in the case of the latter, as gamblers run the risk of seeing even large jackpot wins undermined by sudden fluctuation in the value of their chosen cryptocurrency.

Sure, it can be argued that this may also work the other way and increase the value of individual wins, but professional gamblers prefer to work with more calculated and measurable risks that they’re able to mitigate.

This simply does not apply to crypto valuations, with all digital currencies pegged to Bitcoin and price fluctuations completely beyond the control of mere mortals.

Ultimately, the inherent risk associated with gambling is already one that individuals must work hard to mitigate. In this respect, it’s almost unthinkable that this could be compounded by the volatility surrounding cryptocurrency, and this remains a key issue for gamblers in the digital age.

What Are Stablecoins, and Do They Offer a Solution?

As the name suggests, stablecoins represent a price stable digital currency that are pegged to a traditional and secure store of wealth.

Typically, this means that their value will be linked intrinsically to the U.S. Dollar (USD), or in some instances a basket of major currencies including the GBP, the Euro (EUR) and the Japanese Yen (JPY).

In instances where a stablecoin is pegged to the USD, a single token will equate to the value of one dollar. This immediately makes valuations more transparent and easier to measure, but most importantly it also creates a far narrower value range and considerably less scope for volatile price movements.

OK, we hear you ask, if this is the case then why wouldn’t you just gamble in USD? There are numerous answers to this question, with the first being transaction fees and the various barriers that existing when transacting across international borders. This can both increase the cost of gambling and make it impossible in some jurisdictions, so the USD simply doesn’t offer the flexibility of stablecoins.

The USD also lacks anonymity, which may be a concern for individuals who wish to keep their gambling activity private. While all cryptocurrency transactions may be logged and accessible through a decentralised Blockchain ledger, they are only attributable to a specific wallet address rather than a name, bank or debit card.

The destabilised nature of stablecoins and the Blockchain technology that underpins it should also be considered, as this means that it is not controlled or governed by a central authority. This creates far greater transparency for users, while also minimising the risk of manipulation or malicious behaviour.

The same cannot be said for the USD, or indeed any major currency that you’d care to mention.

With these points in mind, it’s fair to surmise that stablecoins offer exceptional value in the current climate, particularly for gamblers who want to access the benefits of cryptocurrency without encountering the volatile price shifts and unexpected value fluctuations.

This is why stablecoins are considered to be one of the most important innovations of the digital age, both from the perspective of the global economy and individual applications such as online gambling.

On a fundamental level, they allow for continued economic activity while eliminating costly declines in value, and it should also be noted that they enable both businesses and individuals to plan ahead with relative confidence.

The Bottom Line

From the perspective of gamblers, the innovation of stablecoins offers a number of obvious advantages.

Most crucially, it provides a reliable and price stable currency that largely guarantees the value of each individual win.

It also manages to achieve this without compromising on the core benefits of gambling with cryptocurrency, which includes reduced (and not to mention fixed) transaction fees, player privacy and the decentralised nature of the Blockchain ledger.

This also represents excellent news for the industry as a whole, however, particularly as it breaks down many of the barriers that often separate online gambling platforms from international audiences. It also improves the proposition of online gambling among players, by providing them with a price stable and accessible currency that affords them the very best of both worlds.

It’s also impossible to ignore the crossover impact that stablecoins will have, especially among individuals who already trade various tokens. Quite simply, the adoption of stablecoins will help to popularise online gambling among existing investors, creating a potentially new and high-rolling audience that provides huge benefit to the industry as a whole.