Before I cut into the meat of this article, I will give a brief explanation of the three terms mentioned above for the benefit of those who are not conversant with the terms and their uses.
What is bitcoin? Bitcoin is a type of digital currency in which a record of transactions is maintained and new units of currency are generated by the computational solution of mathematical problems, and which operates independently of a central bank. Balderdash*. It’s funny how dictionaries attempt to say something without saying anything at all.* Simply put, bitcoin is a cryptocurrency – ‘crypto’ as in encrypted, and it’s a new form of money used for buying and selling on the internet. There are many types of cryptocurrencies out there but on this article, we are only going to focus on this one.
eSports (electronic sports) is competitive video gaming. Players and teams compete within a local area network (online) or on the internet. Betting on eSports has risen over the years since its inception in 2010. In 2018, eSports betting made an annual revenue of $900 million and is set to rival other betting industries like sports betting and online casinos.
Skin gambling as the name implies, is the betting in competitive matches using ‘skins’ as a form of virtual currency. You remember those old deejay software you downloaded for free, but were coerced into paying for in order to get more functions and change the ugly design? That design or appearance is known as a ‘skin’. Skins in video games are essentially cosmetic elements in a game that do not determine the outcome of a match – be it competitive or otherwise.
In skin gambling, players utilize skins as virtual currency and use that virtual currency to take and place bets in competitive matches. In recent times, third parties interface with huge gaming communities like Steam and Origin to conduct the buying and selling of skins for real world or digital currency. Now you see where I’m driving at.
The eSports betting industry has grown to the point where Pinnacle – an online gaming sportsbook licensed in the Netherlands, was reported to have taken over five million bets in the past nine years.
Betting was fully introduced into the eSports industry with the arrival of CS:GO (Counter-Strike Global Offensive) an online multiplayer first-person shooter. Players placed bets using skins earned by completing missions in the game, which can also be bought with real money from third party markets. This inevitably led to a thriving underground economy in the trade in skins and the rarer the skin, the higher the cost.
This inexorably led to the creation of skin betting platforms where players can place bets with their skins in the hope of winning even rarer skins. The problems began when players who won such rare skins began to trade them for real money leading to criticism that the trade in skins was a form of unlicensed gambling that allowed players – including under aged children to place bets on skins.
Enter bitcoin. We’ve earlier said it was a cryptocurrency. And you know that as virtual currency, bitcoin is unregulated by any central bank. It operates via blockchain – which I won’t get into right now, but because of this lack of regulation, skin gamblers shifted their focus from real money to bitcoin.
In addition to this, bitcoins can be converted into real money. So as eSports continue to expand, with more games and more skins, you can bet the skin and bitcoin economy will continue to thrive.