This article was written by Andrew Wagner, the founder of www.blockchaingaming.com
Provable fairness is a concept originally pioneered by illegal gamblers in the dark ages of cryptocurrency, before blockchain analytics made it possible to trace transactions on blockchains like Bitcoin’s. The idea was simple: prove that online casinos aren’t cheating.
The dark web has since receded to obscure blockchains such as Monero, but the idea of provable fairness lives on. Pseudonymous blockchains still allow one to track the flow of all funds, such that players can verify if the house distributed them appropriately. Probabilities can be verified by using open source algorithms based on cryptography.
This can be applied to non-gambling games, as well, where chance is a common factor. Instead of rage-quitting, the blockchain gives players a chance to verify that the game proceeded fairly, such as by counting critical hits and misses, watching your loot rewards when farming, and handling coin flips and dice rolls.
Smart contracts can ensure all payouts are automatically accorded to the proper players and the host, such that verification isn’t even necessary. With the advent of decentralized MMOs, there need not even be a host, at all, allowing complete trustlestness. Huntercoin and Motocoin were the first to effectively accomplish this.
Online casinos still use this technology. Try Googling “crypto casino” and you’ll be flooded with results, with provable fairness being a commonly-listed feature. They spend a lot on advertising, so it’s probably not necessary to cover them all, here.
The basic method remains mostly the same: the input seed used to calculate a random number — once confirmed or “timestamped” to the blockchain — can later be verified and ran through the random number generator again. We can also use other methods, such as basing the random number on the most recent block hash, such that cheating would require massive mining power.
Non-casino games using “token economics” assure players that their game currency is safe. The Tap Project developers, for example, cannot take Tapcoin from players without hacking the Ethereum network, as TTT is an ERC 20 token. Combining this with provably fair games gives players less reason to worry about spending their tokens in them.
Platforms like EnjinCoin have even larger economies, but they also allow “true ownership.” Non-fungible tokens in unaffiliated games like CryptoKitties have sold for hundreds of thousands of dollars, as well, and use randomly-generated numbers on the blockchain to breed new assets. Blockchain gamers now expect provable fairness when buying loot boxes and engaging in human mining.
Things get even more interesting when you take away the central servers. Blockchain games such as Orbiter 8, Nine Chronicles and Cryptowars make cheating completely impossible by placing the variables and algorithm on the blockchain. To maliciously manipulate the gamestate, players or developers would need enough computational hashing power to mine multiple blocks in a row.
In Xayaships, the first major demonstration of the XAYA platform, players can also prove whether or not their opponent was honest about what assets they had or where. As with the keys to random number generators, players provide the hash value of their side of the board (to be revealed later). One could even use XAYA to prove that a randomly-generated map was calculated without bias.