A crypto lottery resembles its traditional counterpart in many ways. In both, you purchase a ticket with a serial number on it. Then, a number is randomly picked, and the ticket with the serial number closest to it wins. However, there is one main difference. Read more below.
Conventional lotteries are brimming with mistrust, riddled with unwanted fees and often lead to unsatisfactory customer experiences. Blockchain technology serves as an effective solution for these problems and can transform the lottery system as we know it. Let’s find out how this is possible.
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What is a crypto lottery?
A crypto lottery resembles its traditional counterpart in many ways. In both, you purchase a ticket with a serial number on it. Then, a number is randomly picked, and the ticket with the serial number closest to it wins. However, there is one main difference — crypto lotteries use cryptocurrencies instead of traditional fiat currency.
How does blockchain solve issues faced by current lottery systems?
-Fairness: When it comes to lotteries, fairness is a critical component of the game. However, traditional lottery systems struggle to harbour a spirit of trust within the community. Fortunately, the public, yet, secure ledger of a blockchain can bridge this gap. Information about the lottery becomes available to all, and transparency is restored in the system.
-Reliability: The second challenge faced in the lottery industry is the disbursement of funds. Generally, 50 percent of the proceeds from ticket sales are added to the cash pool, which becomes the jackpot for the winner. However, players can’t know where the money is being directed, which is what causes all the mistrust.
However, with a blockchain-based system, the total amount arising from the sale of tickets is visible to all. Moreover, smart contracts on blockchain lotteries guarantee that the right amount is delivered to the right person at the right time with complete security. This also restores trust in an otherwise grey system.
Smart contracts are self-executive pieces of code that carry out transactions based on terms and conditions mentioned within the contract. So, if Person A is deemed to be the winner of a lottery, the smart contract will automatically transfer winnings, without any human intervention.
Also Read: Explained: Blockchain Bridges
-Infallible: Another challenge in mainstream lottery systems is fraud. Scams are commonplace in this industry, such that security and compliance with the law are integral parts of the operation. However, blockchains ensure that every node (transaction validator) maintains a copy of the public ledger, thus making it impossible to tamper with. Also, blockchains do not allow human intervention as all the processing is distributed across the globe, thus eliminating the slightest possibility of fraud.
-Availability: Lotteries aren’t legal in all countries, and this prevents mass participation. The decentralized nature of blockchain technology mitigates this problem. There isn’t any restriction on obtaining cryptocurrencies in most parts of the world, and one can join in from anywhere, thus solving the issue of availability.
Blockchain-based platforms that are currently in operation:
-Firelotto: This is an international, decentralized, Ethereum-powered lottery platform. It is completely run through smart contracts, thus doing away with human contact altogether. It offers two kinds of lotteries and features a built-in crypto exchange. One can procure lottery tickets via cryptocurrencies as well as fiat currencies.
-Quanta: Quanta is a lottery system that focuses on fairness and transparency. It is built on the Ethereum blockchain and aims to “transform the conventional lottery system.” With traditional lotteries, it is common for users to doubt whether their participation is of any significance and whether they will have a fair chance to win the prize. Quanta significantly alleviates these concerns through fair and competitive processes. It also allows cross-border participation too.
-Lotto Nation: Lotto Nation is yet another Ethereum-based lottery system. It is a unique combination of innovation and business and also incorporates Artificial Intelligence (AI) in its operations. It acts as a transparent yet safe medium for individuals, charities, and businesses to connect. It even allows individuals to create and host their own lottery game.
(Edited by : Shloka Badkar)
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