SP8DE — THE GAME OF CHANCE. CHANGED
Sp8de is a protocol for decentralized blockchain based platform with multiple features that are essential for the growing blockchain gambling industry and whose solid implementation is lacking in any of the currently existing projects in this space.
Game of Chance is a risk-taking game; The point is the risks … and, of course, the reward. It’s all said, however. Per se, they are just abstract concepts and lack of mathematical substance. They are just artifacts of ancient man-made games built around a concept that is at least as old as the universe itself. This concept is commonly referred to as Chaos or randomness: the lack of a pattern or combination that can be understood.
It still sounds abstract. So when applied to the game, randomness is a core concept: it is a process that may not be manipulated by anyone and regularly delivers an unnumbered set of numbers that determine who wins and who loses. This is basically a really refreshing number. The process of generating these numbers is not possible:
a. Manipulated by any evil party,
b. Recognized with significant probability in view of input from information available prior to scrolling, or
c. Observed by anyone before anyone else does … at least in theory,
d. Also, of course, it has to be repeated.
The canonical example of manmade mechanism which, if made fairly, is sufficient to meet this important quality is the roulette wheel that is routinely used in almost all casinos worldwide. Thus, roulette wheel screening through our 4 prerequisites for random number generating mechanisms that can be applied to a casino:
a. This wheel produces self-refreshing (meaning recursively generating new numbers — from time to time) a collection of numbers — the number and color of the winning pockets for several periods,
b. Manipulating rolling wheel results is not possible assuming a good wheel,
c. Many individuals who tend to be mathematical about the history of mankind develop and use complex methods aimed at ‘guessing’ (more like ‘predicting the outcome of certain games with statistically significant and, more importantly, interesting economic probabilities’) the results of various casino games including roulette) is given a set of inputs: little if any ever works;
d. Of course, this is repeatable: each wheel rotation by the dealer is a new iteration that generates a series of randomly selected values.
The Blockchain and the Casino
In what follows we describe a protocol for decentralized blockchain platform for developing casino applications with multiple unique features whose solid implementation is lacking in any of the currently existing projects in this space. The concept of decentralized consensus that lies at the heart of blockchain is based on the smart application of cryptography and game-theory. Combined, they create the economics of trust and hold immense
potential for revolutionizing many classic industries.
This backbone of blockchain technology renders it an obvious candidate to consider in developing online gambling applications as, arguably, trust considerations and the need for transparency are — and always used to
be — two major cornerstones of the gambling industry , , , . In particular, blockchain has the potential to provide transparency to all transactions, drastically reduce the house edge, nearly eliminate transaction
costs, ensure anonymity of participants and ultimately, create the trust among players and other industry participants. This rapidly evolving technological stack offers immense potential for improvements in the online gambling space, however, it also carries multiple new pitfalls that are scarcely (if at all) researched and poorly understood. To understand the benefits the blockchain brings, one needs to delve deep in the economics of casinos (the institutional viewpoint). Appreciating the challenges requires an overview of the mechanics of the blockchain technology.
So, why would applying blockchain to online gambling appeal to an average person?
Economics of Gambling: An Institutional Perspective
While being driven throughout its long history by complex economic and sociological changes, the gambling industry has dramatically changed its competitive and institutional landscape — on the supply side it has changed remarkably little from the perspective of a person who wishes to try one’s luck. Indeed, it is still the same set of games that dominates the casino landscape, it is still the chance that defines one’s faith and these are still the classic transaction costs that interfere into the process, owing to the fact that the world we live in is not frictionless.
It follows that we can view the casinos from the perspective of institutional economics, a branch of economics studying the impact of institutions on the behavior of economic actors.
One of the major roles the financial institutions play, in modern economics, is economizing on transaction costs, thereby facilitating financial transactions that would otherwise be unfeasible. They also serve as escrows, notorious trusted third parties, who facilitate trust among the participants allowing them to enter into an exchange more efficiently than would otherwise be the case .
In this vein, casinos act as “gambling” intermediaries realizing the economies of scale, maintaining order and quality of service, thereby facilitating the “conditional” transactions — bets.
Let’s imagine the evolution of the gambling industry as a path towards reducing the transaction costs where innovative industry newcomers attempt to take a piece of the overall pie from the old incumbents by bringing gambling closer to the frictionless ideal.
In this vein, classic casinos reduce security and search costs, facilitate standardization by using chips and having house rules and, most importantly, realize economies of scale by bringing together people united by the shared
desire to gamble. Following this line of reasoning, online casinos while performing the same functions as their classic brick-and-mortar counterparts, also facilitate convenience and economize on the travel costs on the side of players. The major reason for their existence, however, stems from their more lightweight cost structure that is characterized with virtually zero marginal cost of adding a new client. This translates into significantly lower overhead costs, results in smaller house edge and, therefore, smaller average wagers and larger average net gains on the side of the clients , .
The advent of the cryptocurrency casinos came as a result of their anonymity feature as well as absence of any regulatory oversight. As many other applications of the blockchain technology in its early days, the major
considerations behind setting up casinos on the blockchain were idealistic, impractical or outright shady in nature. The anonymity and laissez-faire regime, however, are not the features that fit best into our line of reasoning: indeed, the decentralized infrastructure does not imply any server maintenance costs: the protocol is autonomous; the bets are fair: the protocol code is public; its workings are imprinted into the immutable
ledger forever and can always be verified by anyone.
As a rule, once something new offers better ways for solving old problems, there always is a catch
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