The estimated value of the global sports betting market ranges from $700 billion to $1 trillion, with the online gaming industry expected to reach $59.79 billion in volume by 2020, reports The Daily Hodl.

It’s a massive market with an ever growing number of gaming and betting platforms, including an explosion in Bitcoin casino options. These are proving popular due to better house odds over conventional gambling sites  – around 1.5-2% – and the ability to offer ‘provably fair’ games, with the option of anonymity on sign up.

So, whether online casinos or gaming platforms offer crypto-only gameplay, or augment their current payment options by accepting Bitcoin (the most popular digital currency in the sector) and a growing number of altcoin deposits, enabling cryptocurrency deposits is increasingly becoming a non-negotiable.

Seamless functionality

However, acceptance alone is not enough. To attract and retain players, these platforms need to combine a slick user interface with seamless functionality to create a customer experience that meets player expectations and their demand for instant gratification.

In fact, the gambling and gaming industry is so focused on delivering exceptional customer experiences that conferences devoted entirely to addressing this specific requirement are hosted around the globe.

Providing a seamless experience enables players and gamers to immerse themselves in their preferred activity, without rigidities or a limitation of choice in terms of how and when they play.

And a pivotal element of the gaming and gambling customer experience is the ability to transact and make deposits or withdrawals instantly.

Considering compromised CX

However, this can prove exceptionally challenging for cryptocurrency payment gateway providers, because multiple confirmations may be required before a transaction can be processed. This can take anywhere from 10 minutes to a few hours, which severely compromises the customer experience.   

Crypto payment processors targeting the gambling industry also need to meet and surpass the functionality offered by entrenched traditional payment enablement solutions to ensure their relevance and applicability in the sector.

To do so requires, first and foremost, a credible service and solution that meets specific requirements around fraud detection and prevention, and provides security for data and transactions. A suitable payment gateway must also be easy to integrate, and cost effective.

The exponential growth experienced within the cryptocurrency economy over the past five years has largely been driven by the explosion in the number of exchanges, which enable cryptocurrency trading, and crypto-mining.

Various innovative enterprises that cater to the demand for these services have launched during this time, with a significant number growing from startups to billion-dollar ventures within just a few years.

Cryptocurrency exchanges, in particular, are in the midst of a boom phase, with hundreds of millions of dollars in value traded on a daily basis across the various decentralized and centralized exchange platforms. According to Bitcoin.com, over 500 exchanges are currently in operation, with more added on a weekly basis at present. 

With interest in cryptocurrencies on the rise, especially as their appeal and application grows within the mainstream investment market, the demand is also increasing for more sophisticated, advanced and user-friendly services.

Liquidity and CX

However, for both custodial and non-custodial exchanges to encourage and accommodate greater trading volumes and thereby generate more revenue, it is essential that two pertinent challenges be addressed. These include the need for increased liquidity, and an enhanced customer experience (CX) that does not compromise user security.

In their quest to provide a secure service, most exchanges generally wait for at least six confirmations before processing a transaction (TX). This helps to mitigate double spend by validating deposits. However, although waiting for six blocks to confirm is a prudent standard from an exchange perspective, it seriously compromises the CX.

Traders don’t want to wait for 10 minutes before their TX is finalized, and it can take even longer for funds to be transferred between accounts. They also want reliable, secure and safe services that offer seamless functionality. With so many exchanges currently in operation, those that fail to deliver on this value proposition will quickly lose their relevance and appeal.

GAP600, a global pioneer in cryptocurrency payment transaction enablement, has concluded an agreement with Quoine to implement a solution that expedites deposit confirmations for the fintech provider’s cryptocurrency exchanges.

Quoine provides trading, exchange, and next-generation financial services powered by blockchain technology. It operates fully compliant cryptocurrency exchanges and will soon launch Liquid, a global liquidity platform backed by Quoine’s Qash token for all crypto investors, token issuers and a new generation of financial services customers.

“Generally, crypto exchanges wait to receive at least six confirmations before processing a transaction,” said Seth Melamed, Quoine Global Head of Operations.

Customer experience

While this mitigates risk for the exchange by nullifying instances of double-spend and ensuring deposit validation, the process takes time, which negatively impacts on the customer experience and trading strategies.

“It can be a frustrating and limiting experience for users and traders to wait at least an hour before a Bitcoin transfer reflects in their account, or a transaction is finalized, which is why we sought a service that could streamline the process.”

According to Melamed, Quoine chose GAP600 following a due diligence process because the company offers a specialized solution that few providers in the marketplace can deliver.

Risk-mitigated, final

“GAP600 facilitates instant, risk-mitigated cryptocurrency commerce by enabling exchanges, and other payment service providers, operators and merchants that accept cryptocurrency, to recognize unconfirmed Bitcoin and Bitcoin Cash transactions as final,” said Daniel Lipshitz, GAP600 founder and CEO.

GAP600’s proprietary risk engine analyzes and performs live risk scoring for each transaction as it reaches the mempool. This enables the company to guarantee cryptocurrency payments before they reach the blockchain.

Instant score, validity guaranteed

While the Quoine implementation is currently in a ramp-up phase, once fully operational – expected October 1st 2018 – Quoine will be able to send a cryptocurrency transaction query to GAP600 and the system will instantly score it and guarantee its validity.

“The bespoke solution implemented for Quoine includes unique implementation aspects, which will provide significantly faster deposit authorization than the industry standard for other exchanges. It will also enable transactions guaranteed against double spend by GAP600, which is insured with a superior A+ underwriter,” said Lipshitz.

With the ability to reflect deposits in customer accounts faster than other exchanges, Quoine would gain a distinct competitive advantage over its global competitors. “It will also craft a more compelling user experience, which will be positive for our service offering, especially for high volume traders, for whom speed is essential,” explained Melamed.

Serving clients with innovation

This ability to drive additional users to trade on Quoine’s exchanges will boost trading volumes and liquidity, which is a key strategic objective for the fintech company. “Enabling these capabilities would mark another significant step towards maintaining our position as one of the top tier cryptocurrency exchanges in the world. Our partnership with GAP600 and fast BTC deposits reflects Quoine’s focus on serving our clients with innovation,” added Melamed.

“We’re extremely proud to be pioneering instant exchange transaction enablement with Quoine, a company that is not only an industry leader in the Asian market, but a prolific global innovator,” continued Lipshitz. “The team at Quoine has big ambitions and we’re excited to be a part of enabling their vision.”

The partnership is significant for GAP600 as it marks the company’s entrance into the Japanese market – a truly powerful region in the cryptocurrency arena. The Quoine partnership completes GAP600’s offering to a global client base. “The fact that Quoine is a fully licensed and regulated provider lends significant credence to the GAP600 value proposition, and is validated recognition of our capabilities,” Lipshitz concluded.

Insights from GAP600 data

Last summer we launched GAP600, a service that guarantees zero confirmed bitcoin transactions for any wallet. Essentially, we enable instant acceptance of bitcoin transactions before they’re actually included in a block. To this end, we analyze and score every single bitcoin transaction on the network. When our algorithm approves a transaction, we guarantee the value of that transaction regardless of whether it’s included in a block. Our customers include bitcoin service providers, payment processors and exchanges. Since going live, we’ve processed more than 200K transactions for clients that accept zero confirmed transactions.

Looking at the actual data that has passed through our clients networks, we’ve managed to gain real insights about the nature of bitcoin transactions and the risks involved in accepting zero confirmed transactions.

Double Spend is a real issue

Double spend transactions are a known phenomenon in the bitcoin world and are essentially fraudulent transactions. While the actual percentage of successful double-spends on the network is low, we noticed that it still represents significant value. In the month of December 2016 alone, we rejected 121 double-spend transactions which would have amounted to a loss in excess of US $80k had they been accepted. From our observations, providers who offer instant bitcoin acceptance become more susceptible to double spend attacks (to be expected). In the transactions we processed, we saw 0.16% double spends, which is 0.09% higher than our observed bitcoin network average of 0.07%.

Transaction block acceptance takes time

By design, the average time between bitcoin block publications is 10 minutes. This is reflected in our data where we saw that the median time for a typical transaction to be accepted in a block was 8 minutes. It is important to note however that many real transactions don’t necessarily get included in the next block and the real transaction acceptance times can be much longer. For this reason, the average time we saw for a transaction to be accepted in a block was actually 16 minutes.

Block acceptance time is unpredictable

Averages are averages, but the real data shows a very large variance in the time it takes for transactions to be accepted. In many cases, it can take hours to be accepted and in extreme cases it can even take days or weeks.

Zero confirmation is risky business

If, as a bitcoin service provider, you’re willing to wait until your transaction is included within a block, you would have little to no risks. However, in a world where customers expect a minimum level of service that includes instant response from services, providers cannot afford to wait for block inclusion. Zero confirmation acceptance is becoming a standard for bitcoin service providers and as a result these risks need to be mitigated in order to accept zero confirmed bitcoin transactions.

Cryptocurrencies and the technologies that support their use as a payment method have matured, to the point where they are now disrupting traditional transactional models and established processes.

While the debate rages on whether Bitcoin, Bitcoin Cash or perhaps another cryptocurrency will someday become the single global currency, they are already reframing our thinking around the role of traditional custodial financial services providers.

A traditional financial institution, like a bank, acts in a custodial role, effectively holding a customer’s assets, either in electronic or physical form, while the client maintains ownership of those assets.

In terms of money, this equates to the bank holding a client’s cash deposits to safeguard against theft or loss. Other services can then be provided, such as the ability to transact with that money via a bank-issued card, electronic funds transfer (EFT), cross border payment, or a mobile payment via a linked app.

Credit card payment processing providers fulfil a similar custodial function. However, the regulatory compliance requirements make it administratively onerous for a merchant to implement these forms of transaction enablement, which adds friction to the process and unnecessary layers of complexity, compared to simply setting up a cash till. To make this transactional model viable, a business or online content provider also needs to achieve a certain degree of scale.

To find a suitable alternative, many are looking to cryptocurrencies to disrupt the prevailing payment paradigm. In this regard, many crypto wallets function as a custodian, as the service provider holds a client’s coins in a hot wallet, as well as the private key. In effect, the service provider holds cryptographic control over the client’s cryptocurrency and only a username and password are required to access their digital currency and authorize transactions.

…a new breed of non-custodial payment processing services are starting to revolutionize this payment paradigm

Conversely, non-custodial cryptocurrency services – like Blockchain.com, bitcoin.com, Yours.org, and Cointext – allow the user to keep their private key and their coins. This means they have more control of their cryptocurrency.

As such, cryptocurrencies and a new breed of non-custodial payment processing services are starting to revolutionize this payment paradigm. Non-custodial applications such as The Money Button from Yours.org solve the flow rigidity issues inherent in peer-to-peer (P2P) payments.

This enables the payer and the recipient to transact directly with one another, effectively stripping out all the admin-intensive and bureaucratic middle layers that create the complexity and friction inherent in most other financial transactions. This results in more efficient payments, a better customer experience, and lower costs for users and merchants.

 …..enable anyone to accept cryptocurrency payments, as easily as if they were accepting cash at a fete stand

Consider the potential that a P2P ‘pay button’ application offers as a platform for two people to transact. Embedding a button into a website or social media feed that links directly to a non-custodial wallet, such as mycelium or bitcoin.com, would enable anyone to accept cryptocurrency payments, as easily as if they were accepting cash at a fete stand.

A simple click of a button will securely, and immediately, transfer digital currency directly between the two wallets. It’s simple, fast and transparent.

Certainly, merchants could just publish their Bitcoin or Bitcoin Cash address to offer this as a payment option, but this falls short of delivering an exceptional customer experience when accepting crypto payments.

And these non-custodial services also scale better, which will ensure that these applications remain the true democratizer of financial services. It’s a revolutionary concept that has the potential to reshape the digital economy.

The potential is enormous

Anyone will be able to create content, which they can then sell for cash by simply adding a pay button, effectively by-passing the need to apply, install and paying for a credit card processing service – no intermediary services required!

These unique and innovative payment applications will help to grow and sustain sprawling informal online economies; small vendors can create new revenue streams by accepting micro payments online for low value purchases; crowd funding can be democratized. The potential is enormous.

And by adopting this technology, other benefits emerge. According to Ryan Charles, founder of Yours.org and The Money Button, the potential use case of enabling multiple payouts opens a range of payment models, including affiliate referrals and recommendations, none of which require registration with a merchant. And thanks to The Money Button, enabling payments is now as easy as setting up a website – it’s just code.

In contrast, the barriers faced by businesses in accepting cryptocurrency payments are far more complex and, therefore, restrictive. And with complexity comes cost, which means non-custodial payment services will always hold an advantage. As such, they are, and will likely remain, the transactional medium best suited to the true democratization of financial services.