Crypto and Provably Fair games: Everything you need to know

1 October, 2020

There is a push on to convince online gambling operators to retool their businesses so that everything is powered by blockchain. Among the many arguments in favor of blockchain is that it allows operators to easily prove the fairness of their games.

If you have been around online gambling long enough, you know that provably fair games have been an issue for quite some time.

It is difficult to prove the fairness of your games to players if you are an operator not yet running on blockchain. The only way to do it is to give third-party testing operations access to your random number generators (RNGs) and output data and let them analyze the results. Most online casinos do it that way, but it takes the customer completely out of the equation. Not so with blockchain.

By its nature, blockchain creates instant and permanent records of each and every transaction. By using three small pieces of data, a provably fair casino can prove its fairness to customers at an instant. Those customers can compare data to verify fairness on their own, without the help of third-party testing labs.

How it works

Provably fair gaming based on blockchain technology requires three things: a server seed, a player seed, and a nonce. A server seed is an encrypted digital sequence provided by the operator's computer system. Likewise, the player seed is a similar digital sequence generated by the player's device. The nonce is a variable that increases by 1 with each roll or play.

Proving fairness starts with the casino computer generating the server seed for the next roll or play. That seed is sent to the player who then creates his/her own seed. The bet is made, and the roll or play is completed. The operator's server then sends an unhashed version of the player's seed to the player. All three seeds are input into a software tool to verify the outcome.

It is entirely possible for an online operator to not recognize the player's seed, thereby preventing verification. Any player not actively looking to verify fairness would never know. Doing so allows an online casino to claim provably fair games - because they have the technology to do so - without actually being fair when not being watched.

Software verification tools

It goes without saying that software verification tools are a necessary component in checking up on casinos that claim to be provably fair. Some casinos are now building those tools right into their games. In such cases, seeds are transferred automatically with each play. Players wishing to verify fairness can enter the information right within the game itself. Verification takes place as part of normal play.

While this method adds convenience to the provably fair concept, it is not the only way to go. There are also third-party websites that verify game-play separate from casino operators. You simply log on, enter the seed information, and let the software do its thing.

Players looking for an off-line solution can invest in third-party tools installed locally on their machines. These tools essentially do the same thing. They analyze the seeds relative to the nonce and come up with a verifiable result. With all that said, everything described here relies entirely on the use of a blockchain ledger.

How blockchain helps

Critics of provably fair gaming claim, and rightly so, that it is still possible for operators to cheat even when using a blockchain system. The fact is that there isn't a perfect way to do this. Cheating has been part of the equation for as long as gambling has existed. It will continue to be in perpetuity. But provably fair gaming through blockchain technology is better than what we have to work with in the RNG arena.

Blockchain brings a lot of advantages to the table. In addition to allowing gamblers to prove fairness on-the-fly, blockchain also produces a permanent record of each and every transaction. A blockchain ledger creates the digital version of a paper trail that cannot be altered once records have been finalized. That paper trail makes it harder for cheating operators to cover their tracks.

As things currently stand, most licensing authorities around the world require license holders to prove their games are fair. Some licensing bodies require proof on a regular basis in order to keep one's license. This is why online operators submit their games to testing labs for verification.

Licensing authorities rely on the information provided by those labs. But what if an online operator and a lab conspired together to provide false information? The difficulty of proving fairness outside of the blockchain realm is rooted in a lack of truly verifiable data. This is one of the inherent problems with RNG games. On the other hand, blockchain systems create that verifiable data in real-time, as bets are placed and games are played.

Verifying RNG games

To understand how RNG games are verified, it must first be understood that there are two types of random number generators. The first is a hardware RNG. Also known as a true random number generator, a hardware RNG relies on a physical process to generate random numbers. For example, you might have a piece of hardware that mechanically generates low level, statistically random signals that can be translated into numbers.

A hardware RNG works on the principle of generating signals in some way that cannot be effectively modeled. If you cannot model it, you cannot predict the outcome. Thus, you can say that the signals truly are random.

The other type of RNG is known as the pseudo-random number generator. It utilizes a computer algorithm to simulate the results produced by a true RNG. Pseudo-RNGs are what most online casino games utilize. The challenge with these types of RNGs is that the sequences they produce are not truly random. They cannot be because they are determined by an initial seed value. Know the seed and you can predict the outcome.

Programmers get around this problem by making the initial seed value random. In doing so, they can create simulations of hardware random number generation with outcomes that cannot be predictably modeled.

What does all of this mean to provably fair games? In order for an RNG game to be proved fair, testers need to have access to the operator's algorithms. Those algorithms have to be tested time and again to prove they do what they are supposed to do. Testers also have to analyze results and, through those tests, be fairly certain that the results cannot be modeled.

More room for cheating

Unfortunately, there is a bit more wiggle room for cheaters in RNG games. Algorithms can be adjusted for testing purposes and data can be manipulated slightly without raising eyebrows. As long as an operator is careful to cover its tracks, fooling testers and licensing authorities is possible.

Cheating is also possible with a blockchain based system, but it is intrinsically harder. Again, it all goes back to the ledger. Blockchain systems produce verifiable ledgers that are distributed across multiple computer nodes. This forces greater accountability and transparency on the operator's part.

One other thing to consider is cheating within the game itself. It is one thing to manipulate data in order to convince testers and licensing authorities that your games are fair. It is an entirely different thing to use your verification system to cheat inside a game.

One way in-game cheating is facilitated in a blockchain setting is paying attention to the nonce. If the nonce is stored in an unsigned integer variable, a nonce overflow will eventually occur. So playing multiple rounds of blackjack with an unsigned nonce could eventually lead to overflow. Once nonce overflow occurs, every subsequent round of randomly generated numbers becomes predictable.

Operators and players alike could take advantage of this inherent flaw. Your average casino player probably wouldn't know any better because he doesn't know what to look for. Thus, the nonce overflow issue often works in favor of the operator.

A good system will get better

Provably fair gaming via blockchain platforms is a hot topic in the online gambling world. A small number of new online properties powered entirely by blockchain already market themselves as provably fair. That is a good thing. At least it gets the ball rolling on a technology that could ultimately turn online gambling on its head.

Blockchain-based provable fairness is a good system. Is it perfect? No. Will it get better? Yes. As more gaming operators get on board with blockchain, the technology will evolve and improve. Competition will see to that. A few years from now, we could be looking at games that prove their own fairness, automatically, with every bet placed.

Until then, gamblers looking to verify the fairness of the casinos they frequent must make the effort to do so on their own. In the case of Bitcoin casinos that rely on blockchain to prove fairness, players can use third-party websites or acquire a software tool to analyze the data. Players who prefer traditional online sites that rely on RNG games should look for licensing information somewhere on the site.