There can be no denying that cryptocurrencies and blockchain technology are a great match for the online casino space. Whether it ‘s near-instant deposits and withdrawals, transparent gameplay, or the ability to gamble in a safe and secure ecosystem – crypto-centric casinos really do fill a major void. With that said, we are finding that more and more cryptocurrency casino providers are opting for Ethereum vs Bitcoin. The overarching reason for this is that Ethereum transactions are faster, cheaper and more scalable. This is crucial in an online gambling industry that facilitates a significant throughput of data.
In this article, we explore why Ethereum is better suited for the online casino space in comparison to its Bitcoin counterpart.
How Does an Ethereum Casino Work?
First and foremost, we need to quickly discuss how an Ethereum casino actually works. In a nutshell, online gambling platforms that support ETH as a means to deposit and withdraw funds work largely the same as a traditional casino site.
That is to say, you will have access to thousands of popular casino games at the click of a button. This includes everything from blackjack, roulette, live dealers, slots, progressive jackpots, and even sports betting facilities.
However, this is where the similarities stop. For example, opening an account at a traditional online casino requires a significant amount of information from you. This includes your full name, nationality, home address, and date of birth. On the contrary, Ethereum casinos only ask you to enter your email address, and choose a username and password.
Furthermore – and perhaps most importantly, Ethereum casino sites allow you to deposit and withdraw funds virtually instantly. This is in stark contrast to a traditional fiat operator, whereby debit/credit card withdrawals take days on-end to process. Bank accounts take even longer.
Ethereum vs Bitcoin – Deposits
When it comes to comparing the two cryptocurrencies in the deposit department, Ethereum wins hands down. This is because Ethereum has an average confirmation time of about 16 seconds, while Bitcoin is still stagnant at 10 minutes.
For those unaware, the deposit process is actually quite simple when using a crypto-centric gambling site. For example, once you have gone through the 30-second process of opening an account, you will then need to head over to the deposit page of your chosen gambling site.
Upon selecting ‘ETH’ as your prefered deposit method, the casino will display your unique deposit address. Then, you need to head back to your private Ethereum wallet, paste in the deposit address, and transfer the amount of ETH that you wish to add to your casino account.
Once you do, the best crypto-centric casino platforms will fund your account after 1 confirmation. This means that a mere 16 seconds later – you’ll be able to start playing your favourite casino games!
It is important to note that while Ethereum deposits are approximately 3,650% faster than Bitcoin (based on a 16 second vs 10 minute split), they are actually on par with traditional debit/credit card and e-wallet deposits – which are also instant.
With that in mind, we need to move swiftly on to the withdrawal process at crypto-centric casinos.
Ethereum and Bitcoin vs Traditional Payments – Withdrawals
Without a shadow of a doubt, the overarching benefit of using an Ethereum casino to gamble online is the withdrawal process. To be fair, this is also the case with Bitcoin payments too. Before we get to that, let’s quickly explore how a withdrawal would work when using a traditional online casino.
Before you can make a withdrawal request, you are required to upload [a] your government-issued ID and [b] a proof of address. In some cases, you might be asked to [c] upload a copy of the front of back of the debit/credit card you used to depositThe casino will then take 1-2 working days to validate the documents – sometimes longer during busy periodsOnce your documents are verified, you then need to make a withdrawal ‘request’. This means that the casino needs to manually process it, which can take a further 1-2 working daysWhen the withdrawal is released by the casino, you then need to wait 1-3 working days for the funds to arrive on your debit/credit card. E-wallets are much faster – especially PayPal.
So where does this leave us? Well, in a worst-case scenario, it would take you 2 working days to have your ID validated, 2 working days for the withdrawal to be processed by the casino, and then 3 working days for the funds to appear on your card. All in all, that amounts to an end-to-end withdrawal process that can take well over a week!
How Ethereum and Bitcoin Compares
To put this into perspective, withdrawing funds from a crypto-centric casino in the form of ETH would take less than 1 minute. No, that’s not a typo. Literally, as soon as you make a withdrawal request from the Ethereum casino, the platform will automatically release the payment. As per the Ethereum blockchain’s confirmation time of 16 seconds, this means that the funds will be sitting waiting for you in your private wallet before you get a chance to log in!
So what about Bitcoin? Well, the withdrawal process when cashing out your Bitcoin winnings works in exactly the same manner. With that said, you’ll need to wait 10 minutes instead of the 16 seconds offered by the Ethereum blockchain. But, in comparison to traditional methods, this is still very good.
Casino Transactions – Ethereum vs Bitcoin
So now that we have covered the process of depositing and withdrawing funds into a casino via Ethereum and Bitcoin, we now need to take a closer look at the underlying infrastructure. More specifically, this relates to two key components – fees and throughput.
Let’s start with fees.
Fees When Gambling With Ethereum and Bitcoin
Crypto-centric casinos do not charge any deposit or withdrawal fees per-say. With that said, you will need to pay the respective blockchain fee at both ends of the transaction. For example, when you transfer funds from your private Ethereum or Bitcoin wallet into the casino, you’ll need to pay a mining fee.
Then, when it comes to withdrawing your funds out of the casino and back into your private wallet, the platform will deduct the respective fee from the withdrawal amount. In most cases, we find that crypto-centric casinos play fair in this respect, and rarely charge you anything more than the real-time blockchain fee.
Nevertheless, it is important to note that there is often a significant disparity between the blockchain fee required on the Ethereum network, against that of Bitcoin. That is to say, while Ethereum transactions typically cost just a few cents, Bitcoin can be 10, even 100 times higher than this – depending on network demand. Crucially, this all boils down to the underlying make-up for the two blockchain protocols.
Ethereum is More Efficient
You see, while it takes a super-long 10 minutes for the Bitcoin network to validate a transaction, Ethereum requires just 16 seconds. Moreover, while Bitcoin is capped at just 7 transactions per second, Ethereum is primed to reach hundreds of thousands in the coming year. This is due to the Ethereum Foundation’s impending upgrade to Proof of Stake – which is substantially more efficient than its Proof of Work predecessor.
So how does this relate to crypto-centric casinos? The obvious starting point is that it is much cheaper to deposit and withdraw funds with Ethereum, as per the network mining fee that you will be required to pay. However, it is actually the process of confirming gambling transactions via the blockchain that makes all the difference here – which is something you likely won’t be aware of as a casual player.
Gambling Transaction Throughput – Ethereum vs Bitcoin
Players are often unaware that each and every gaming out at a blockchain-based casino requires a separate transaction. Whether it’s the spin of a roulette wheel or a hand of blackjack – the underlying system is required to process the transaction on the blockchain.
Ordinarily, this wouldn’t be a problem when you have a game that is being played by a few people. However, when you consider that the best crypto casinos in the online space host thousands of individual games – and host hundreds of thousands of players – this very quickly becomes problematic.
In Layman’s terms, there are only so many transactions that a blockchain network can process at any given time. While in the case of Bitcoin being capped to just 7 transactions per seconds, this is anything but compatible with the multi-billion dollar online gambling industry.
And what happens when the Bitcoin network becomes congested? You only need to go back to the crypto-craze of late 2017 to see that Bitcoin transactions were averaging $40 per transfer. This means that each and every transaction on the underlying blockchain requires a separate fee.
With that said, once Ethereum completes its rollout to Proof of Stake, this won’t be an issue. On the contrary, the network will eventually be able to handle hundreds of thousands of transactions each and every second. Not only this, but the Proof of Stake consensus mechanism results in significantly cheaper transactions, too.
Gambling Games – Ethereum vs Bitcoin
Before we delve into the gaming suite itself, it is important for us to note that as it stands – the vast majority of casino games hosted by crypto gambling sites are licensed from traditional developers. This includes the likes of NetEnt, Microgaming, Quickfire, and Playtech.
These developers service the traditional casino industry – both online and offline. As such, they are regulated entities that must comply with their license issuers.
With that said, crypto gambling sites do offer a number of games that were created by blockchain developers. The phenomenon – which is known as ‘Provably Fair’, allows developers to build games in conjunction with the blockchain. The Provably Fair protocol ensures that each gaming outcome is 100% true and fair, without the potential for third-parties to manipulate the result.
Much like the blockchain protocol itself, Provably Fair transactions can be independently verified by anyone that wishes to do so. This means that although the outcome cannot be ‘genetically engineered’ by the casino, it offers a transparent safeguard that allows players to verify its authenticity.
Smart Contracts are Required
Now, as great as Provably Fair games are, the process requires one key component – smart contract technology. This is because the underlying process of accepting bets, generating the outcome, and distributing winnings is facilitated in an autonomous manner. Without the use of a smart contract, the integrity of the game wouldn’t be 100% guaranteed.
For those unaware, Ethereum is the de-facto smart contract blockchain of choice. Launched in 2015, the process allows parties to transact in a trust-less manner. This is because the smart contract is governed by code, and only code. For example, let’s say that the smart contract is tied to a game of roulette.
In order for the smart contract to be deployed – it requires a stake. This is simply the stake that you wish to gamble on the game. To keep things simple, we’ll say that you stake 1 ETH on the roulette ball landing on ‘Red’.
Once the stake has been collected, the smart contract – via the Provably Fair protocol, will generate a gaming outcome. This is then reflected in an audio-visualization of the roulette wheel spinning, and landing on the subsequent number that the smart contract generated.
Then, if the ball does in fact land on ‘Red’, the smart contract will automatically transfer the funds to your wallet. No ifs, no buts – the smart contract can only follow the pre-defined conditions it has been programmed to meet. Once again, smart contracts are transparent, so players can check the underlying fundamentals as and when they see fit.
Crucially, while smart contracts sit at the core of the Ethereum blockchain – they don’t with Bitcoin. In fact, smart contracts are not compatible with the Bitcoin network – period. This means that casino developers will create games on top of the Ethereum blockchain by default.
Decentralized Casinos: Ethereum vs Bitcoin
On the one hand, it is true that both Bitcoin and Ethereum are decentralized networks. In other words, no single person or authority has full control over the underlying system.
This would lead one to think that this makes both blockchain projects ideal as the backbone of a decentralized casino. However – and as noted earlier, Bitcoin does not have the capacity to deploy smart contract agreements, meaning that the network is unfit for this purpose.
Before we explain why Ethereum once again fills this void, let us quickly explain what a decentralized casino is, and why we think it resembles the future of online gambling.
In a nutshell, when you gamble at an online casino – where that’s a traditional or crypto-based platform, you are required to use a third-party. This third-party is the casino site itself, insofar that it sits between you and the casino games that you play. In other words, the casino is there to collect your stakes, facilitate your gaming experience, and then honour winning bets and withdrawals.
On the contrary, a decentralized casino would not require the use of a third-party. This is because the end-to-end gaming process is facilitated by smart contracts. And who holds the key to the smart contract phenomenon? Ethereum.
Become the ‘Banker’ Through an Ethereum Decentralized Casino
Although the idea of decentralized casinos is still in its infancy, several platforms are rumoured to be launching in the coming 12-18 months. With that said, a major stumbling block of removing the role of a third-party casino is what happens to payouts.
What we mean by this is that when you use a traditional fiat or crypto-based casino, the operator will pay out your winnings with its own funds. This isn’t an issue per-say, as the casino will have the backing of a house-edge that ensures it always makes money in the long run.
However, with no such ‘banker’ in place at a decentralized casino, it initially remained to be seen who would fund winning bets. The mist has since been cleared, as this will open up the door to a whole new gambling sector – becoming the banker.
The way it works is anyone holding ETH tokens will be able to contribute to the decentralized casino’s bankroll – which is used to honour winning bets. Why would anyone want to do this? Well, in return for keeping your funds at a decentralized casino, you will earn interest. The interest is taken from the decentralized casino game’s profits, which are guaranteed via the house-edge.
Most importantly, as per the underlying make-up of Ethereum smart contracts, there are no issues with safety. This is because the smart contract is merely deployed to follow the rules it has been programmed to comply with. As such, nobody can amend or manipulate the outcome.
On the one hand, the fundamentals of Ethereum vs Bitcoin are highly conducive for the online gambling space. Not only are deposits and withdrawal near-instant, but there is no requirement to enter sensitive payment details into the platform’s website. With that said, Ethereum is significantly better than Bitcoin for online casinos for a number of reasons.
As we have discussed throughout our article, Ethereum transactions are faster, cheaper, and more scalable than Bitcoin. Not only this, but Ethereum has the capacity to employ gambling smart contracts.
This is fully conducive with the Provably Fair protocol, which guarantees beyond doubt that the casino game is true and fair. Finally, it is reasonable to suggest that Ethereum will also lead the way in the decentralized casino phenomenon in the coming years – so watch this space!