Crypto and iGaming: What Do You Need To Know?

Unless you have been living under a rock for the last few years, it’s most unlikely you would have overlooked the rise of cryptocurrencies. And despite only being a little over a decade old, the global cryptocurrency exchange sector was worth $30bn in 2021. 

Cryptocurrencies themselves have also swelled in value since they first burst onto the scene. This is still the case, despite the fact that the total market capitalization of all crypto assets has fallen from a peak of $3tn in 2021 to around $1tn today.

Despite this, it is clear that not only are cryptocurrencies here to stay, but that in the years to come, we can expect to see an increasingly varied number of commercial uses emerging for this potentially revolutionary technology.

For financial technology (or fintech) in particular, cryptocurrencies and blockchain technology hold significant potential. And out of the many sectors where cryptocurrency technology has made an impact in recent years, it is arguably the financial services, banking and payments sectors where this digital revolution has been felt the most keenly.

Another industry that has enthusiastically supported cryptocurrencies since they first emerged is the iGaming sector. But what is the iGaming sector and why does it work so well with cryptocurrencies?

The iGaming sector

In short, iGaming refers to any form of game that involves gambling and betting. This includes activities such as sports betting, online casinos, online poker and esports, all of which fall under the definition of ‘iGaming’.

The online gambling sector has significantly increased in size in recent years and was valued at around $57bn in 2021. Some have even predicted it will swell to a massive $153bn by 2030.

Much of this growth has been fueled by the emergence of the iGaming platform, of which there are now thousands in operation. These iGaming platforms have experienced a surge in user numbers in recent years, as millions across the world switched from in-person play to online iGaming.

But what about cryptocurrencies – how have they contributed to this growth?

Cryptos and iGaming: a match made in heaven?

Given the core functions of iGaming platforms, it is easy to see why so many in the industry have looked to cryptocurrencies to solve many of the technological challenges the sector faces. But how do cryptocurrencies improve the iGaming experience for players?

• Payment processing: One of the main uses for the blockchain technology underpinning cryptocurrencies has been to facilitate payment processing in the online space. The decentralized nature of cryptocurrencies and how transactions are verified on the network provides both efficiency and security benefits. Users can receive payouts faster than ever by using cryptos, with their funds making it into their digital wallets fully processed within a matter of seconds. The absence of a third party to authorize, verify and process payments makes the process more efficient!
• Anonymity and privacy: Because cryptocurrencies exist outside the mainstream financial services industry, they can be used as a way to make anonymous transactions. This is particular useful in areas such as the iGaming sector, where users must submit sensitive personal information.
• Reliability: As cryptocurrency transactions are verified on the blockchain network of the currency in question and do not rely on a third party, they may also offer greater reliability. Provided the network is active, cryptocurrency transactions can be processed. This is highly desirable for iGaming platforms, which generally provide their services on a 24/7 basis!

Cryptos and iGaming: potential issues?

Despite the many clear advantages that cryptocurrencies offer over traditional payment methods, they do still face a number of obstacles within the industry. This includes the following hurdles they will have to overcome to receive more widespread acceptance and usage within the sector:

• Regulation: Although cryptos are incredibly high profile and used by millions of individuals across the world, many governments and legislators have been slow to regulate their usage. And while iGaming platforms comply with all relevant rules and regulations, there is still a lack of clarity about how cryptos will be regulated in the future. It is expected that better regulation of digital assets will support growth in their usage.
• Cost of production: Mining cryptocurrencies is an energy-intensive process that requires powerful hardware. This has a big impact, not only on the cost of producing cryptocurrencies but also of processing transactions. As such, users might be reluctant to shoulder the added costs over traditional payment methods.
• Price volatility: Another major hurdle to cryptocurrency adoption is their price volatility. The price of cryptocurrencies can fluctuate significantly over a short period, which tends to put individuals off using them. With that said, more pricing stability will help to increase adoption and usage.