What is Ethereum & why is it great for gambling?
Bitcoin was so groundbreaking in its design that it spawned a whole new digital ecosystem built around Ethereum, the most popular coin after BTC. But what is Ethereum and why is it great for gambling?
Bitcoin was decades in the making, the culmination of work among cryptographers and libertarians. Its genesis has inspired thousands of projects. Whether they fully understand what it is, most people have now heard of bitcoin, the first cryptocurrency and blockchain application created in 2008. But what about the second most popular cryptocurrency by market capitalisation - Ethereum?
Launched by Russian programmer and Bitcoin magazine owner, Vitalik Buterin, in 2015, Ethereum shares characteristics with Bitcoin - a decentralised blockchain validated by nodes and mining, with rewards paid in a native digital money - Ether.
Ethereum isn’t however just a different shade on Bitcoin, it was created with the lofty ambition of functioning as the ‘world’s computer’. It achieves this by providing a platform upon which other applications can run. These decentralised apps (dApps) are governed by rules defined within ‘smart contracts’ paid in Gas. Think of a smart contract as a built-in business logic that is fully transparent and can only be created, amended or concluded by consensus.
Dapps leverage the Ethereum network’s computing power and standardised system for token creation, opening almost endless possibilities - essentially what is meant by its description of being Turing Complete, enabling any calculation. This unique combination fuelled an explosion of applications, in what became known as the ICO (Initial Coin Offering) frenzy.
Ethereum isn’t however just a different shade on Bitcoin, it was created with the lofty ambition of functioning as the ‘world’s computer’.
Everything from oracles, lending, decentralized synthetic assets, sub-token creation, prediction markets, stablecoins to staking are just a few of the ways in which the Ethereum network has been leveraged using smart contracts. Basically, if Bitcoin lets you use its native cryptocurrency any way you like, Ethereum allows you to build anything you like. (Read more about the comparisons between Bitcoin and Ethereum).
While many ICOs were no more than ideas proposed in whitepapers, and never got beyond that, worse still, many were straight-out Ponzi schemes. However, one industry that has utilised the functions of Ethereum as a digital currency and driven a huge amount of dApp users, is gambling. So let’s explore the reasons behind that.
The need for speed
As discussed earlier, Ethereum shares many of the structural features of Bitcoin, they are both decentralised blockchains running across nodes validated by miners. That said, there are key differences. The Bitcoin network mines a new block of transactions every 10 minutes for which a 12.5 bitcoin reward is paid (until the May 2020 halving) and in general, six confirmations are required to provide certainty that transactions are legitimate, and multiple blocks cannot be mined in tandem.
There are good reasons for this. Satoshi Nakamoto, Bitcoin’s fictitious creator, unashamedly sacrificed speed, and in many ways on-chain scalability, in return for unhackable security. That decision has proved sensible; in over ten years of its existence there hasn’t been a single instance of double-spend, hashrates are at an all-time high and this is reflected in bitcoin's increase use as a store of value.
In practical terms, this does mean though that a bitcoin transaction to or from Cloudbet can theoretically take up to an hour, though in practice this is rarely the case. Now contrast this with Ethereum where a block is mined every 12 seconds, and orphan blocks are allowed, which translates into a much quicker, almost instant transaction. This doesn’t mean that Cloudbet thinks all customers should switch to Ethereum, but if you want to bet in a hurry, it is a great option for example:
- to take advantage of a live bet
- to take advantage of an arbitrage opportunity
- to secure value from a tip before the odds move
- or simply because time is very valuable to you, often the case with VIPs
- because you want any profits to be immediately available to withdraw
Cheaper Transactions Too
The way the Ethereum network calculates transaction fees is another way it diverges from Bitcoin. The latter is based on block size, while Ethereum transaction fees are based on computational complexity, bandwidth use and storage needs (measured in gas ). What this means in practice is that fees for moving Ethereum are tiny in comparison to bitcoin, both in absolute and relative terms (fee to transaction amount ratio).
Ready to bet with Ethereum?
Hopefully, having read this far, it is clear that though Bitcoin and Ethereum share some similarities, it shouldn’t be an either-or decision in terms of your personal portfolio or for betting at Cloudbet. It makes sense to use both, as the circumstances permit, and if you are new to betting at Cloudbet you’ll get a generous Welcome Bonus either way - up to 5 BTC or 5 ETH.