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Sunday, April 16, 2017

DAO Casino: Disrupting the gambling industry

As far as history is concerned, humans have always gambled. No matter how far back in time you go, there have always been signs that: where people gathered, people gambled. In those days, people gambled with each other on events. Those were the days of the real peer-to-peer gambling. Then gambling evolved in way to accommodate a third party: the bookmakers. They established odds for events at a price (fee). This facilitated some more complicated events, where odds were not so simple to calculate. Fast-forward to today. Gambling services are offered by Casinos, either online or offline. But their services are plagued by problems. First is the price of the services, most casinos have a house edge that ranges from 1% to sometimes as high as 15%. And secondly it’s transparency, there have been multiple cases of scams and rigged casinos, especially online.

Stats from the UK Gambling Commission show that 29% of the gambling market share is now online. The problem is, most online gambling services aren’t much cheaper than real casinos due to the overhead fees that are charged by banks and traditional online payment systems like PayPal, and there has been a vast history of online gambling scandals. People don’t usually trust the casino, especially if it’s online. But people need to be able to trust the services they use and the people that operate it, right?

Not anymore! Thanks to cryptography we have access to provably fair games in which the fairness of the game can be verified in a fully transparent manner and thanks to smart contract technology, we now have casinos that can be run automatically and in a predictable fashion, with no room for mistakes or scams. These allow the first casino ran by a decentralized autonomous organizations (DAO) to come to life, the DAO Casino.

Dao.Casino aims to be the first decentralized autonomous gambling platform on the Ethereum blockchain. The team, based in Russia, has created an ecosystem that rewards users for participating in the platform. The principle behind DAO is that the platform is owned by the community of developers and supporters, and people are rewarded depending on the value they bring to the ecosystem.

How does it work?

Dao.Casino will provide a platform, a marketplace for gambling, where developers can place their smart contract-based gambling apps like lotteries, slot machines, card games, betting on events and betting terminals. The platform will then display the games and ensure a large flow of players for them. Profits will be shared equally between the developers, the Dao.Casino, the possible referrers, and the platform (token holders). Due to the lack of government regulation, and to the lack of mediators, the highest possible percentage of payments is reserved for the participants.

Blockchain and Smart Contracts are very efficient at ensuring the transparency of the random number generator (RNG). Blockchain systems offer ways for their users to verify if the RNG is truly random, meaning that decentralization imposes high demands on the RNG. The russian team knows this, and Dao.Casino generate their RNG in various ways, mostly depending on the sum played. Their philosophy is to focus on using the most difficult RNG generators only when the incentive for stealing/hacking requires so. The beauty is that, as an open source project, it has the potential to always develop new solutions or modify existing ones. Also, by making everything smart contract based, the casino removes the issue of lack of trust by providing an environment where trust is not necessary.
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