Despite a decline in prominent cryptocurrencies based on blockchain such as bitcoin, they still have a large and prevalent following in countries such as China, due to gambling restrictions enforced by the government.
However, in the licensed peninsula of Macau, a new idea to take advantage of such a demand has been formed – and it looks like it could be a success.
Connecting Blockchain and Gambling
While you might have heard of blockchain, the foundation of most cryptocurrencies, it can sometimes be difficult to understand its popularity.
But for China, which penalizes gambling despite the demand for it, blockchain allows the user to gamble in a variety of currencies without the risk of identification.
Blockchain works by creating a digital fingerprint of each transaction, which is then stored on a digital ledger. While the transaction is recorded it is certainly more difficult to track and identify the owner of the currency, which is why it has become so popular in countries where gambling is frowned upon.
A World First
Today DeClub, a casino management company based in Macau, has announced a new partnership with Malta-based investment firm, Wide Rich Global.
Together, the pair want to connect blockchain and gambling by introducing the “world’s first blockchain-based casino gaming hub with fully integrated online and land-based casinos”.
It’s a huge remit that will need a lot of financial backing. While popular, cryptocurrencies are on notoriously shaky ground due to wild fluctuations in some of the popular currencies such as bitcoin and ethereum.
And so to fund the build, the partnership has launched an Initial Coin Offering (ICO), which encourages people to donate to the fund in exchange for tokens.
These tokens will essentially become the chips that punters will play with, so an ICO often encourages a large take-up, as it is the time when you can often get the most tokens for your money ahead of an official launch. Of course, the risk is that if the project is not fully funded you could lose your tokens if a refund is not possible.
For a large-scale project such as this, it’s envisioned that the team will want to raise as much as $1bn to go ahead.
No Guarantees
While it sounds like the ideal situation for blockchain-savvy China, punters have already spotted a few flies in the ointment. The biggest is that Macau does currently not allow blockchain gambling.
This is obviously a huge hurdle to jump and either Wide Rich Global knows something we don’t, or it is taking a gamble that by the time the project is realized the government will have changed its mind.
During the ICO, Wide Rich Global will issue the “DEC” token, giving purchasers rights to host and invest in cash-lending pools. At the same time, DeClub will offer its own token, the “NNC,” which is a stablecoin that can be redeemed in order to cover goods or services at casinos.
How Would It Work?
As described in the white paper, chips would become the foundation of the casino. It states: “The tokenization of chips, casinos and their surrounding entertainment service providers will be able to build a pan-gambling business ecosystem together, so that people with varying business needs – from tourism, to business meetings, to shopping – can all gain easy and cost-effective access to customized and prestigious services on their mobile devices.”
While still far away from realization, there is certainly proof that it could work. Just this summer authorities broke up a gambling ring that used crypto-gambling during the World Cup soccer tournament to process around $1.5bn (￡1.17bn) in bets placed by more than 300,000 people.
The scheme was based on the dark web and had been accepting several forms of cryptocurrency including bitcoin, ethereum, and litecoin over a period of eight months.
The growth of this underground operation is proof of how large crypto-gambling platforms could become, based on the targeted market that it caters to. Indeed, Apple has been trying to shut down apps and Russia continues to block the IPs of such platforms.
But as seen, the Chinese market is a prime example for illegal activity. However, by moving the market into a central casino, the Chinese government could turn around something illicit into a premier tourist destination.
This is not the first time a crypto-casino idea has been floated. Dragon Corp introduced an ICO last year that raised $500 million for its dragon coin, part of which was to be used to build a floating casino, but its plans were ultimately dashed when the main backer pulled out.