By Eva Johnson
The concept of blockchain might feel a little intimidating, but in reality, it’s quite simple.
Blockchain stores information or data, just like a simple database. The difference between the two is how the data is structured and stored.
The data gets stored in fresh blocks where each block comes with storage capacity. Once this happens, it gets connected with the previous block containing data. And together, these blocks of data form the blockchain.
Now that we have a basic understanding of how it works, let’s talk more about the type of data that blockchain stores. The data can be transaction records or information about tangible or intangible assets. These assets can include patents, intellectual property, copyrights, houses, office space or cars, for example.
The scope of blockchain in esports
1. Fraud elimination
The data is recorded once and is visible to all the network participants. This data not only helps eliminate duplicate entries but also helps enhance transparency which, in turn, can also help to eliminate fraud.
2. More transparency
No one can alter the information that blockchain stores. When it is given incorrect information, it needs the correct information to reverse the mistake. And at the end of the day, both the correct and incorrect data are visible. This visibility enhances transparency and helps tournament organisers establish trust among gamers.
3. High-end data security
Millions of computer systems that participate in the chain store the data in blocks. Hence, even if the data gets lost somehow, it can always be recovered.
4. Automatic prize money transactions
Smart contracts help businesses set specific conditions on the blockchain. These conditions help to trigger automatic transactions. In esports, several conditions can be pre-set regarding prize money. Hence, the winners and runners-up can automatically get paid when the tournament gets concluded.
Blockchain’s role in fraud prevention
The lack of standard authentication tools and identity verification processes often results in security breaches through identity theft and card fraud.
This can lead to affiliate scams, bonus misuse, multi-accounting, account takeovers, chargebacks and even money laundering.
These frauds take a toll on the business’ overall revenue, damage its reputation and cause wastage of funds.
Fraud prevention tools help esports betting businesses overcome frauds and breaches effectively by securing their registration and authentication processes and providing them with high-end verification solutions.
Some of these solutions include device fingerprinting, IP analysis and use of light, as well as stringent KYC checks, moderating sources of incoming traffic, implementing security questions and answers, as well as detection of suspicious activity and users.
Fraud prevention renders several benefits to esports betting operators, including customer protection, minimised disputes, reduced regulatory fines, high-end security and increased credibility.
Compliance and its impact on esports betting operators
There was a time when AML regulations, data protection, IT security compliance and financial transaction processing used to be the only areas of focus for igaming operators. But times have changed.
These days regulations are tighter than ever and have completely transformed the landscape of compliance, which continues to evolve.
But what exactly is compliance? Well, it means aligning with certain rules and regulations, standards, laws and policies.
Every esports betting platform starts small. And when things go well, businesses strive to expand to various other jurisdictions. To do so, they need to conform to specific jurisdictional laws. But there is a catch.
If the compliance history and records of an online esports betting platform are weak, it can adversely affect the platform’s ability to acquire new licences as well as franchises. In short, we can say the success of an esports betting platform depends on its compliance history. In addition to this, the absence of a compliance programme also results in the revocation of the licence.
Having a good compliance programme in place enables esports betting operators to conform to the various regulations and allows them to minimise the risk of regulatory or criminal action, helps them maintain a healthy reputation in the industry, and enables them to identify areas of concerns and make amendments.
KYC for esports betting operators
Online platforms have always been more vulnerable to fraud than land-based platforms. The convenience they offer is one reason why they’ve become the new safe place for cybercriminals and money launderers.
By its nature, esports encourages plenty of in-game purchases and transactions, and so esports platforms are attractive to criminal elements. Hence, KYC regulations have become stricter than ever. So, what is KYC?
KYC enables esports betting operators to get vital data about their customers and ensure they are not involved or associated with financial crimes such as money laundering. Though KYC checks are carried out during the onboarding of a customer, due diligence is an ongoing process that monitors and controls any suspicious activity.
KYC protects online esports platforms from fraud and enables esports operators to avoid severe penalties. It also helps operators keep their platforms safe and secure for legitimate customers while protecting their platforms’ integrity.