Cryptocurrency and online gambling have a couple of things in common. First, both were ahead of their time when they launched. Second, both embraced one another in a way that no two industries ever had in the past. And now it looks as like they will be inseparable at some point. You can take this to the bank: crypto will eventually be the only way to gamble online.
In fairness, making such a statement requires a somewhat liberal definition of the word 'cryptocurrency'. Anyone who defines crypto as a privately developed digital currency free from government and central bank control will not agree with our assertion. But if you define cryptocurrency as any digital currency built on blockchain and secured by encryption, then you should fully understand where this post is coming from.
In order to make it easier to draw the distinction, this post will refer to digital currencies as a technology separate from established cryptocurrencies like Bitcoin and Ethereum. We also have to discuss central bank digital currencies (CBDCs) inasmuch as they are the foundation of this post's main argument.
As things currently stand
It is possible in the current market to play video slots and table games by depositing BTC, ETH, or one of the other more popular cryptocurrencies. Some online casinos accept cryptocurrency alongside traditional fiat payments like credit cards and bank transfers. Other casinos are built on blockchain and accept cryptocurrency - usually BTC - exclusively.
In both cases, players need only some coin and a digital wallet to make a deposit. Those casinos that deal in cryptocurrency exclusively also allow their players to withdraw the same coin they deposit. Casinos that accept both crypto and fiat may or may not allow cryptocurrency withdrawals.
So far, so good. But now let us bring the digital currency concept into the equation. Digital currencies, above and beyond what most would consider traditional crypto, can be either privately or publicly developed. Facebook's Libra is an example of a private digital currency. If it ever gets off the ground, it will share many of the fundamental basics of cryptocurrency as we know it.
However, there are two aspects to Libra that will make it different. First, it will not be truly decentralized. Facebook proposes creating a separate consortium to govern Libra at some point. In the interim, Facebook will exercise complete control. Thus, Libra will not be truly decentralized.
Second, Libra will be established as a stablecoin backed by a basket of assets including several fiat currencies. Libra may someday be fully decentralized, but it will never be completely free of influence from governments and central banks for the simple fact that it is tied to their money.
Enter the world central banks
Assume Libra gets off the ground. Assume other stablecoins, like the U.S. Dollar Coin (USDC), get themselves on solid footing and begin to proliferate. It is reasonable to assume that online casinos will begin accepting stablecoins as the demand for them grows. Will it end there? Probably not. Why? Because central banks will not let it end there.
It is clear to anyone paying attention that national governments the world over are seriously pursuing digital currencies. Venezuela launched its own cryptocurrency backed by national petroleum assets a few years ago. What became known as the Petro hasn't done very well, but it exists, nonetheless.
More recently, China has let it be known that they are working on a digital currency. Though it was supposed to be released sometime in 2020, coronavirus got in the way. It has been pushed back until at least 2021, and perhaps 2022.
Meanwhile, the Bahamas is in the process of introducing a digital Sand Dollar they hope will eventually replace printed bills and minted coins. The Sand Dollar is pegged to the Bahamian dollar, which is pegged to the U.S. dollar at 1-to-1. Bahamian officials have been clear in their intent: they plan to take bills and coins out of circulation in the near future. They could very well be the first nation to completely eliminate minted currency.
Adding more proof to the pudding is Sweden, another country that has made its intentions for a cashless society clear. Canada is also on the digital currency road as evidenced by a recent job posting from the Bank of Canada. The bank is looking for an economist with experience in digital currencies and financial technology. The eventual hire will be working on a project aimed squarely at developing a digital currency to replace cash.
It goes on and on. The U.S. and UK are both known to be working on digital currencies. Likewise, the European Central Bank has floated the possibility of developing a CBDC to preempt private digital currencies, like Libra.
Digital currencies are inevitable
All of this points to the inevitability of digital currencies in the future. The simplest way to put it is to say that digital currencies are at the doorstep. The days of paper bills and minted coins are coming to an end. It may not happen within the next year or two, but it is a safe bet that bills and coins will be gone completely within 5 years in the West.
When that day comes, online casinos will have no other choice but to deal in digital currencies. The only question is one of which currencies they will accept. The smart money says that they will welcome both CBDCs and private digital currencies. Casinos already accepting BTC, ETH, etc. will probably continue doing so for as long as those coins are in circulation.
What will be interesting to see is how individual CBDCs play together on the open market. One assumes that international payments could be made using any CBDC - just like fiat is used today. It is also reasonable to imagine one or two CBDCs becoming reserve currencies through which the majority of international payments are made. But that does not change the fact that each CBDC will have its own blockchain.
Right now, standard ledgers can be reconciled fairly easily even when multiple fiat currencies are being accounted for. The fact is that accountants can enter any form of currency they want into an accounting ledger. It is no big deal. But blockchain doesn't work that way. Unless a blockchain is created specifically to facilitate multiple tokens - which is harder than it sounds - it only covers one token.
It is unlikely that the various central banks will create digital currencies capable of interacting as easily as fiat. What does this portend? An eventual token that becomes the de facto currency of the entire world. National CBDCs could still be called upon for domestic payments, but a global currency would be used for all international payments.
Where would that leave online casinos? In much the same position they find themselves today. An online casino currently has the freedom to deal in whatever fiat currencies its owners prefer. They should be able to choose the CBDCs they want to accept in the future.
Why the world is headed this way
All of this points back to the question of why the world is headed this way. Why is it that digital currencies are seen as the next step in the evolution of money? Some say it is security. Others say it's convenience. Still others say that the driver is technology. In reality, it is probably a combination of all three.
Digital currencies are, in many ways, more secure than fiat. They are secure at the accounting level thanks to the use of decentralized ledgers that create a permanent, immutable record. They are secure at the transaction level by encryption and pseudo-anonymity. Finally, they are secure at the consumer level by making them harder to steal.
Right now, it is pretty easy to steal cash. Stealing credit and debit card numbers is pretty simple as well. Converting everything to digital currency and combining it with self-sovereign identity makes it extremely difficult for petty thieves to steal. Not impossible, but very difficult.
Digital currencies are, by their nature, more convenient than cash. An entire economy based on digital currency would eliminate the need to carry cash and credit cards around with you. Without cash, there is no more need to go to the bank for any reason. There is no more need for armored trucks delivering cash to department stores and grocery outlets.
The only thing you need to conduct business in a cashless society is electronic means of identifying yourself. That could be anything from a smartphone to an RFID-enabled card. If the powers that be choose biometric ID instead, physical devices will not even be needed. People might pay for things with their fingerprints or facial scans. (Yeah, welcome to Orwellian hell if you are not in it already!)
There is a case for saying the drive toward digital currencies is being fueled by technology. In other words, central banks are looking at CBDCs because they can. That may be true. Would we even be talking about CBDCs if Satoshi Nakamoto had not launched Bitcoin more than a decade ago? Perhaps not.
One day in the not so distant future, cryptocurrency will be the only way to gamble online. Gamblers will have to use digital currencies because traditional fiat will no longer exist. The only thing that remains to be seen is whether or not CBDCs will prove to be the ultimate demise of more traditional cryptocurrencies. It's not likely, but such a scenario is not beyond the realm of possibility.