Earlier today, the CEO of LTO Network, Rick Schmitz tweeted that they signed a new deal. Without disclosing too many details, the tweet tells us that it is a new client in the casino space, most likely a a crypto casino. And that the project would involve their DID technology (Decentralized Identifiers). I have not written extensively about LTO Network before, other than some brief mentions in relation to VIDT. In this article, I will write about decentralized identifiers and how this technology could be applied to solve any existing problems within online casinos. And take a look at the value of the online gambling industry to paint a picture about the TAM (Total Addressable Market).
Official LTO Network retweeted:
DID is an abbreviation of Decentralized Identifier, which allows a person, in the case of an online casino, to appear anonymous. Each DID is secured by a private key that is owned by the individual person it represents. This enables verifiable, decentralized digital identity on a dApp running on the blockchain.
Companies (for example, an online casino) collect sensitive information about their users. Information such as personal details, emails and financials. While there has always been a high pressure on companies to protect this user information, it is becoming increasingly more important to do so. Pressure is higher from regulators and authorities, with the rise of privacy-centric regulations such as GDPR. As methods of protecting data has grown more sophisticated, cybercriminals are getting more sophisticated too. Data breaches happen regularly and the need for better protection is in high demand. The issues around privacy in corporate IT is a bigger issue in "legacy" businesses and apps running in WEB 2.0.
When it comes to the blockchain, by nature, anonymity comes by default to a large degree. Everyone is known by a number, a public address tied to your non-custodial wallet, for example. When making a transaction (TX)on the blockchain, the TX need to be signed using your public address that is known in the network, with the help of your private key that is (ideally) only known to you. The problem here is that your key pair (public address and private key) could be compromised and used by someone else, and there is no way of telling that they key pair really belongs to you. There’s no such inherent relationship between a public key and a real-world identity.
The inherent high-level anonymity of blockchain is often touted as one of the main perks of blockchain technology. However, as you might have understood, this type of anonymity is a double-edged sword. It does a great job protecting the identity of a user, but it can also hinder adoption and cripple growth. In the case of online casinos and many other types of businesses - knowing the identity of a user is required by law. In this case, the businesses need to know the identity, all the while they do not want to fall back on legacy systems of dealing with the collection, storage and protection of data.
Today, there exists several on-chain identity systems that provides a blockchain-based identity system that identifies individuals through digital assets so that it is possible to stay compliant. What most on-chain identity systems lack is interoperability. And, often, the case is that these systems have inherited legacy processes tied to permissions and legal contracts to work. As we know, one of the fundamentals of blockchain technology is to remove centralized governing in processes, such as permissions and legal contracts. As a result, most on-chain identity systems have failed to make a significant impact on the blockchain ecosystem.
LTO Network is a hybrid blockchain solution that can communicate with both private and public blockchains. You might have read about hybrid blockchains, it is one of the main types of networks: public blockchains, private blockchains, consortium blockchains and hybrid blockchains.
In hybrid blockchains, a private blockchain network is integrated or have interoperability with a public blockchain network. An organisation could leverage a private blockchain and get access to smart contracts, higher performance, and give auditors or regulators accurate insights into the activities of the network. Meanwhile, the private blockchain is interoperable and connected with a public blockchain, which provides transparency and verifiability.
The goal here, in terms of a crypto online casino for example, is to integrate with LTO Network's hybrid blockchain where parts of a transaction is recorded on the public blockchain, while the full details (including the identity of a person) of the transaction is maintained only in the private network. Full visibility of transactions is given in the private blockchain, allowing auditors and regulators to review activity and keep the company compliant with the law. LTO Network would provide the hybrid blockchain infrastructure and assist with the integration to it. This open the possibility of decentralized solutions involving B2C (Business-to-Customer) use cases and transactions, as is needed in online casinos.
According to the LTO Network website, they introduce a new transaction type through their DID technology: the identity transaction. Their DID technology enables businesses, for example a crypto online casino, to publish certificates on the blockchain. Each certificate is associated with a key pair (public address and private key), providing an inherent relationship between the person's key pair and the person's real-world identity.
In this document, you could read more about the details of how the certificate works. The document provides information on several scenarios of how a certificate can be issued and validated. Regardless of how it is done, the key differentiator of LTO Network is that a "web of trust" is created between the original issuer of the certificate, any third-party or intermediate certificate authorities (CA) in the network, and the owner of the certificate. This way LTO Network is not tasked with created any anchor points in the network (which needs governing - legacy) to provide trust, instead the different peers mentioned provide endorsements for the validity of the identity (certificate) of a transaction/user.
I am only guessing here. I have extensive knowledge of the crypto gambling industry, but I have limited knowledge of LTO Network and DID technology. But here we go:
An online casino has to collect data from a user. They need to do so to stay compliant with the law and be allowed to operate their business. This data is collected at different points of the user's lifetime:
• Account creation.
• Depositing money/tokens.
• Withdrawing money/tokens.
Throughout these three steps, the crypto online casino would gather different pieces of information from the user, including the identity of the person. My guess would be that once a B2C entity, in this case a crypto online casino, has collected the information needed, they create the certificate along with the key pair. This certificate contains the details of the user which was verified. Then it is published by the online casino. Where we are left with a self-signed certificate created by the owner. Any intermediaries in the network could be, for example, an auditor, a payment provider, a gaming provider.
This should be feasible given one paragraph from LTO Network's "On-chain Identities and Credentials" linked to in the previous section. It reads:
It’s possible to publish CA issued certificates as well as self-signed certificates. Self-signed certificates are issued by the owner itself. The identity isn’t verified when the certificate is issued, and must rely on endorsements for trust.
As a result, LTO Network provide the infrastructure to create a specific trust network tailored to the needs of the company's project/dApp. Replacing the inherent anonymity of blockchain technology with privacy protection of known identities. Something that is a must in an online casino, allowing a crypto casino operator to achieve higher levels of decentralization, while at the same time staying compliant with regulations.
In 2020, the international online gambling market was worth approximately $64.13 billion. A number that is expected to grow to $72.02 billion in 2021. With a CAGR (Compound Annual Growth Rate) of 12.3% - the total market is expected to be worth over $100 billion in 2025.
This number is a mix of traditional fiat online casinos and crypto online casinos. When estimating the market for crypto gambling, it gets more difficult to get an accurate estimate. This is largely due to the maturity of the two. Crypto gambling is a relatively new phenomena in comparison to fiat. But as everything blockchain, has taken the world by storm. There are hundreds of cryptos casinos today, with millions of users worldwide. All of these casinos could benefit from the solution of LTO Network. Now, it remains to be seen what comes into fruition from this new deal and if any other deals will come in the future.
As of yesterday, LTO Network was not associated with any crypto online casinos. Making this a new exciting venture. As a closing it worth noting that LTO Network is not new to DID and providing hybrid blockchain solutions to deal with identity and privacy issues. They have working work processes that are compliant with GDPR, something that has allowed them to bring GDPR compliance to the blockchain.
Looking at the emergence of online gambling and crypto online casinos - the market is ripe for LTO Network's DID technology to allow for compliance, adoption and further growth.
LTO Network along with VIDT that I have written about many times, are both gems in my eyes. Solid technology, organisations, solving real-world problems and have adoption. The opposite of a shitcoin. $LTO has not gotten much love since Bitcoin went down to sub $30,000-levels. Before that, $1 was close with the price of $LTO peaking at $0.8952. At the time of writing this LTO Network article the price of $LTO is $0.2778.