Why is it Finally Time for Decentralised Betting to Take Off?
Decentralised betting is not a new concept. In fact, blockchain’s answer to it a.k.a. prediction markets have been at it for as much as 7 years with well-known projects like Gnosis, Augur and other more recent ones like Polymarket going for it. Betting/predictions is an obvious choice for decentralisation via smart-contract blockchains. But it never really worked. The reasons for this are both objective (state of broader market & technology) and subjective (issues with predictions markets’ approach to the problem). Today we’ll focus on the wider state of affairs and the trends and proof-points solidifying our thesis that the time for decentralised betting has come. (We’ll go for a deep-dive about why prediction markets are not scalable and won’t be able to “make it” in their current shape and form in our next article).
The rise of betting with cryptocurrency
With the 2017 cryptocurrency boom — the first tangible, bigger batch of people got exposed to cryptocurrencies. Although in the bear market of 2018 and after adoption and general usage, active wallets and so forth dropped dramatically — the genie was out of the bottle. Despite the overall decrease, some cases for the usage of cryptocurrency proved very resilient and communities around them continued growing. Geographically some countries experienced this very clearly, with prominent examples being Venezuela, Argentina, pockets of Africa and Asia, Turkey mostly in connection to drop in the value of the local currency, capital controls and other reasons. Something similar continued in betting and generally so-called “high-risk” payments. With more than a few of Azuro’s core contributors coming from different areas of the betting industry (including payments, lead generation & bookmakers), today it is not a secret for anyone in the know that high-roller bettors globally already prefer crypto payments. There has been an exceptional rise in the number of betting sites accepting crypto, and the new crypto-only betting sites, such as one of the market leaders, Stake.com — a case-in-point. Stake covers all major events, has an extensive selection of markets and sponsors some of the biggest athletes. It’s safe to say crypto betting is being welcomed, with Stake receiving over 7 million visitors to their site every month (as SimilarWeb data shows)! On the other hand, naming rights deals & massive sponsorships like that by FTX in Miami, Crypto.com in LA and the UFC — are a further testament to the overlap between sports and crypto. Bettors are not only comfortable using cryptocurrency for betting, but many will very much prefer it to bet with. Cryptocurrency, being used as a payment method for betting with traditional bookmakers, has been gaining in popularity over the past few years.
Overlapping user bases and similar profile
Crypto betting is here, on a very large scale. In the past 5 years, we have seen an ever increased overlap of bettors and cryptocurrency users, with both having 18–34-year-old males falling into their key demographics. Azuro’s Paruyr Shahbazyan who is also the founder of “Bookmaker Ratings”, an international online sports betting publication, informs us that cryptocurrency exchanges have approached “Bookmaker Ratings” extensively with advertising deals. When asked why — the crypto-exchanges answer is that the customers are “the same”.
Players have shown that they have no problem with having to learn how to take part in betting with crypto. Of course, some players are already invested in crypto and understand sending/receiving crypto, but some may have been introduced to crypto through betting. Sites like sportsbet.io have some great guides for beginners on how to get into crypto and go that extra mile to introduce crypto betting to all.
The cohort of people comfortable with Web3 is growing exponentially
To participate in crypto betting, players are required to understand how to use crypto wallets, the most popular of which is MetaMask. MetaMask, the most widely used crypto wallet, has seen a notable increase in users. The mass adoption of such services shows a very positive sign for decentralisation. The chart below shows the spike in users over the past year and the most recent announcement on August 31st 2021 from Consensys the creators of MetaMask, shows that the number of monthly active users had reached over 10 Million!
Rise of Esports
In the 1980s, players would battle it out over space invaders or Tetris where winning was mainly rewarded with status, slight fame and very little money. The rise of fighting games and first-person shooting games coupled with the boom of online gaming brought a new life to what is now known as Esports. Nowadays, the most successful players who take part in Esports are revered as genuine celebrities and events are watched by millions of people from all around the world. Professional players receive full-time wages, sponsorships, training, scholarships and some teams are managed by famous ex-sports players.
Having such a large following and billions of dollars behind it has led to Esports breaking into the betting world and creating a very exciting future for it too. Betting on Esports has grown extensively since it began in around 2000. Esports betting first appeared on unregulated sites and various attempts were made to make it a safe space for players to bet, but they failed. Some 15 years later Esports was added to bookmakers. With Esports having the ability for thousands of events to be held every week and mass adoption already taking place shows that Esports could be a key player in online betting. More — Esports natural connection to a younger audience of digitally native users means a much higher propensity for openness and preference towards trustless web3 solutions on the part of Esports bettors.
A changing world — new generations care more about what decentralisation can bring
Decentralisation means today’s younger crowd and their next-generation may no longer have to worry about privacy and trust issues when they are online. Using blockchain and smart contracts behind everyday sites could be the norm and owning your data could be a right and not a privilege. The adoption of blockchain technology and cryptocurrencies has shown a switch in a lot of people’s mindsets. Young people know what’s possible. A sense of community and comradery is apparent among the crypto scene and especially with its younger members. There have been campaigns to boycott products such as Facebook and WhatsApp because of worries over users’ data and privacy.
Web 2.0 brought us all together and gave us the ability to communicate better by breaking down borders. Web3 and the rise of decentralised autonomous organisations (DAOs) is another extension of people striving for transparency, fairness, and equality. The trends to play out and accelerate as the new generations take over will support the move towards bigger disruptions through decentralisation.
Back to betting again, the first disruption, in terms of paying with cryptocurrency is already here and sweeping the industry like a wave. But there’s multiple trends and proof-points suggesting the next bit of change is much bigger and profound — and that is the decentralisation of betting. It would not be possible however if the technology didn’t allow for an experience that is good enough for the benefits of decentralisation to have enough weight in bettors’ choices. And here comes the last straw — with the progress made over the past few years, clearly visible recently — blockchain solutions can finally support high-transaction frequency with the needed speed of finality and low gas costs.
Blockchain’s speed and gas costs are finally at a level that can support decentralisation of industries like betting
Ethereum, Polygon, Solana, Avalanche, Terra, BSC and others are paving the way for what decentralisation is becoming today. These solutions have advanced to support >50,000 transactions per second. Gas fees have been brought down to a fraction of a cent. Blockchain is now ready to be integrated into more centralised industries to create a more transparent experience for users and with the ability to improve current protocols.
These technological advancements will give us the ability to decentralise betting without jeopardising the user’s experience. Bets will be placed and settled in seconds. A great user experience coupled with smart contracts means every transaction will be transparent, fair and safe.
Trends show that we are heading for a decentralised future. The tools we all need are out there and people are taking advantage of them. The market is ripe and the tech is ready. Now the only thing needed is the right decentralised betting solution, and that isn’t prediction markets as we know them. More on that in our next article…
This is only just the beginning of our decentralised movement and we will dive deeper into Azuro’s solutions and approach and decentralised betting as a whole in our future articles.
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