Who Will Share This Hundred-Billion-Dollar Business? A Further Exploration of the Integration of Blockchain and Texas Hold'em (Part 1)

Source: Guatian Lab

Recently, I read a 100-page report written last year by Research And Markets.com analyzing the current state and future development of the online poker market. The report predicts that by 2032, the global online poker market size will reach $283.4 billion, while the current market size is approximately $96.8 billion.

Texas Hold'em is the largest segment in online poker competition, with other variants like Omaha not comparable in scale. Therefore, this article will use online Texas Hold'em as an example to specifically analyze the necessity and practical cases of combining competitive online poker with WEB3. Online Texas Hold'em is further divided into two categories: cash games and tournaments. Cash games are similar to what people often play in offline gatherings, where players can buy in multiple times. Currently, internationally, cash game poker is mostly classified as gambling, while tournament poker has been categorized as an esports type by many countries and regions, including Germany, the United Kingdom, Switzerland, several U.S. states, and Taiwan in Southeast Asia, which has explicitly legislated to support Texas Hold'em tournaments as a form of esports activity.

To be honest, I've been playing poker for over a decade, but as a recreational player who plays poorly and thus isn't too addicted. Fortunately, I've done quite a bit of theoretical research, bought several books for note-taking, and never tire of watching various poker videos. However, I never imagined online poker would be a hundred-billion-dollar business. After entering the crypto space, I discovered that the proportion of poker players in this circle is no less than in the financial sector, for several reasons:

• First, although Texas Hold'em emphasizes skill and psychology, the underlying gambling nature and luck factor are fundamental attractions for players;
• Second, those who survive long in the circle are either mathematically proficient or social butterflies, and Texas Hold'em is perfect for both types;
• Third, crypto people face computers all day and find it boring, so having an easily accessible online game as a social tool adds emotional value.

Therefore, the crypto user profile highly overlaps with poker player attributes, which explains why after more exposure to the WEB3 poker circle, we surprisingly discovered that many top players frequently appearing in high-stakes cash games on WPTpoker or Hustler are actually crypto industry leaders in their main professions.

Two years have passed, and the WEB3 industry has had its ups and downs, with practitioners coming and going. After experiencing firsthand the helpless sigh that "it's all bubbles," we've become more focused on studying projects that could potentially use blockchain's inherent characteristics to change certain WEB2 industries or products, even if just slightly. This feels more reassuring than Ponzi schemes where "I know it will collapse, but I believe I can run faster than others." So in the current depressed market, we've selected certain tracks or products to closely follow and analyze, hoping to see their long-term development potential, with online poker being our first chosen target.

1. How Blockchain Technology Can Transform Online Texas Hold'em

Blockchain technology can completely address some of the current pain points in online poker, which is already a consensus among many teams involved in blockchain poker. We'll systematically explain this below.

1.1 How to Prove Fair Dealing: Transparency in Card Distribution

I remember when I first started playing online poker, an old classmate who ran online private poker games kindly advised me: "Never play big stakes online; the cards can be manipulated at will." It makes sense - with centralized dealing programs, couldn't the platform's own technicians adjust them as they wish? So later, when I got the urge to play, I only played small stakes on PokerStars, because it's the largest globally and wouldn't bother cheating small players like us. However, it still has the ability to cheat! This is similar to centralized institutions in the crypto space, always balancing their brand value against the benefits of misconduct. For example, if you hypothetically had billions of USDT stored on a certain exchange, wouldn't that exchange be tempted to misappropriate some of your funds to help with cash flow problems? Let's not challenge human nature here.

If card dealing uses protocol-based random distribution, is recorded on an immutable blockchain, and everyone can verify through Zero-Knowledge Proof (ZKP) that these records haven't been manipulated, it perfectly solves the transparency issue in poker dealing. Zero-Knowledge Proof is a powerful concept in cryptography, with Tsinghua University's Professor Andrew Yao being an expert in this field. It allows proving the authenticity of something without revealing any specific information about it.

Some say that current excellent online poker platforms already use Random Number Generator (RNG) mechanisms rather than simple card distribution systems, isn't this ensuring fair dealing? As a technical layman, I humbly consulted some code experts, and the conclusion is: RNGs vary in design quality and are still under centralized control. Even if the RNG process itself is flawless, the input and output can still be manually controlled. Therefore, if RNG is considered "Anti-Cheating System V1," blockchain's ZKP + RNG mechanism could be called "Anti-Cheating System V2."

Different teams have been working on how to embed zero-knowledge proofs into poker dealing systems while maintaining smooth dealing and player experience over the past two years - it's quite expensive. But I believe this is the most fundamental way blockchain technology can change the online poker sector, and this foundation enables other improvements to follow.

1.2 How to Prevent Collusion and Multi-Accounting: Player Fairness

It's impossible to completely solve collusion and multi-accounting issues in online poker, as human greed is endless. What project teams can do is: continuously increase the cost of cheating through collusion and multi-accounting while minimizing the impact on legitimate players' gaming experience.

We've seen various WEB3 poker projects implement different methods to combat collusion and multi-accounting, mainly through rules. For example, some projects with cash games only allow administrators to send one-time links to invited members. Another example is MTT Sports (which is running a major event at Token2049 in Singapore, as they're starting official competitions in October with weekly 1 BTC prizes, totaling 100 BTC waiting for global poker experts), which has abandoned the cash game business model to focus solely on tournaments. Higher-level competitive tournaments require higher-level identity verification, including face verification, and players are randomly moved between tables during competitions.

Blockchain technology's improvement in this area is that it can identify potential colluding accounts or multi-accounts based on player big data recorded on the blockchain within a certain range, and then take action. Players can appeal if they disagree, as all previous actions are recorded on-chain.

1.3 How to Protect Fund Security: Decentralized Wallets

If poker players remember how Full Tilt Poker, once prominent a decade ago, collapsed, they would enthusiastically support the introduction of blockchain decentralized wallets.

Full Tilt Poker was second only to PokerStars a decade ago, even endorsed by poker legend Ivey, but the centralized system allowed the team to lose players' deposits from $400 million to just $60 million, leaving many people with total losses.

Such incidents are actually very common in the crypto space, with the FTX incident being a version of Full Tilt Poker. If online poker could implement decentralized wallet login, keeping main assets in decentralized wallets where project teams cannot access them, and only keeping minimal funds in centralized project accounts for smooth gameplay, even if the project runs away, the vast majority of assets would still be in players' own wallets.

1.4 Circulation and Payment Convenience: Cross-Border Automatic Contract Settlement

In the early days of playing PokerStars, we could only find sellers on Taobao for deposits - this bizarre business model existed due to circulation barriers. What about regions without Taobao? The final benefit blockchain brings to online poker is: entry chips can be obtained anywhere with internet access, rewards are automatically settled through game rule-embedded contracts, and cashing out can be done through WEB3 withdrawal channels.

In this article, we've summarized how blockchain can change several native characteristics of WEB2 "online poker," directly addressing pain points that users have suffered from but were forced to accept from WEB2 online poker projects. When such projects integrate blockchain technology to create chemical reactions, it allows teams, investors, and users to establish a slightly longer-term basic consensus: that the project is at least trying to change some existing unreasonable phenomena. In the next part, we'll discuss some specific WEB3 poker project cases in detail.

For Part 2, see: Who Will Share This Hundred-Billion-Dollar Business? A Further Exploration of the Integration of Blockchain and Texas Hold'em (Part 2)