Let’s face it, we’re not all crypto experts. Some of you know smart contracts inside out, while others just know you can buy crypto and play casino games. Wherever you stand, you’re in the perfect place to learn more.
We’ll clear up what smart contracts are, why they‘re important and how they specifically benefit crypto gambling.
What are Smart Contracts?
The short and technical answer is that a smart contract is a self-executing program stored on a blockchain. It automatically enforces the terms of an agreement without needing a middleman. Smart contracts are commonly used on the Ethereum blockchain and other networks built on top of it, such as Solana and BNB.
However, to help explain, let’s go hypothetical. When you want some cheesy snacks from a vending machine, the process is simple. You insert your coins, and assuming they don’t get stuck, those snacks come tumbling down. The transaction is quick and does not involve a cashier.
Smart contracts work in a similar manner. As long as predetermined conditions are met between the sender and recipient, they automatically complete the transaction without the need for banks or financial institutions.
What are the Roles of Smart Contracts at Crypto Casinos?
Smart contracts play a role in many functions at a crypto casino, ranging from deposits and withdrawals to the bets you place and any winnings you receive.
Automation
At regular online casinos, different types of transactions usually require a handful of steps. For instance, a withdrawal will require verification, processing, and even manual checks. With smart contracts, that whole process is made quicker and easier as everything is automated.
- Deposits and Withdrawals: Whenever you cash out or make a deposit to your crypto casino account using a smart contract-based network, the transaction is processed automatically. While speeds vary depending on the network and congestion, it’s generally much faster than traditional banking.
- Settling Bets: When you spin the reels of a slot or place any kind of bet, a smart contract automatically logs your wager and processes the outcome based on pre-set rules. If your bet wins, the smart contract completes, and your account balance is updated instantly.
Fair Play and Transparency
One of the most beneficial aspects of smart contracts is that they foster trust between a platform and its players. That’s because they help ensure fair play through transparency and provably fair games.
- Transparency: Every transaction made, whether a bet or deposit, is immutably recorded on the blockchain. Those records cannot be tampered with or altered and remain indefinitely. As a blockchain is a public ledger, those transactions are publicly viewable by anyone.
- Provably Fair Games: Smart contracts are also a big component of the provably fair algorithm, which allows you to check and verify game results for fairness. In provably fair games, the algorithm uses cryptographic hashing before you place a bet to ensure fairness. The game result is then determined based on a verifiable process, allowing you to check it against the immutable blockchain record.
Why Are Smart Contracts a Game-Changer for Casino Players?
Let’s run you through what the above means for your benefits as a crypto casino player:
Speed & Efficiency
Because fewer steps are required to complete a transaction, and they’re completed automatically when using smart contracts, your deposits and withdrawals are quick and efficient. Thanks to smart contracts, transactions on blockchain networks can be much faster than traditional payment methods. While Ethereum itself isn’t the fastest, Layer 2 solutions like Arbitrum and Optimism significantly improve speed.
Lower Fees
Admittedly, gas fees on Ethereum-based blockchains can get quite high compared to other cryptos, especially during peak times. However, they’re still cheaper than the fees you’ll pay when using fiat-based transactions.
Enhanced Security
Since smart contracts run on blockchain technology, they are virtually immutable and highly secure. No one can alter or manipulate them once deployed. As long as the internet exists, which is the only thing blockchains need to run, your transactions and records will always stay protected.
Full Transparency & Fairness
Everything is recorded on the blockchain, meaning players can verify transactions and game outcomes independently. Plus, provably fair games provide verifiable random results the second you hit the spin button.
The Final Word
Our aim was to explain smart contracts in simple terms and how they play an important role for casinos and players, and we hope we’ve achieved that.
As we’ve explained, they’re essentially the backbone of what makes Ethereum-based blockchains and cryptocurrencies such great choices for gambling online. They foster transparency, ensure fast transactions, and are highly secure.
If you haven’t experienced them yet, why not see what the fuss is about the next time you make a deposit? Just use ETH or BNB when depositing and playing, as they benefit from smart contracts.