The Benefits of Blockchain Technology in High-Risk Industries
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High-risk and controversial industries like gambling, the adult entertainment industry, and the cannabis industry are fraught with harsh regulation that makes it difficult to access financial services. Due to the stigma associated with these industries, merchants find it hard to open accounts with traditional financial services.
However, the few banks that process payments exploit users with recurring billing models. The gambling and marijuana industries can also benefit from blockchain technology with better payment processes and verifiable data storage tools that enable transparency.
According to a recent report by Zage, a cryptocurrency marketing firm, Kory Hoang, CEO of Stably, a financial services firm, says that “payments and settlements for high-risk industries e.g. gambling, marijuana, and adult entertainment” are likely to put blockchain technology in use in the medium term. Here is an in-depth look at how this will happen.
The health benefits of medical marijuana range from mood and digestive function regulation to relieving nausea associated with chemotherapy. Although reports show that medical marijuana has minimal side effects and that the cannabis industry is projected to hit $31.4 billion in revenue by 2021, the future of the industry hinges on policy reforms that governments formulate.
This means that the success of the industry will be determined by the regularity and compliance laws that are still undefined at the moment. Blockchain can speed up the process by streamlining the entire cannabis supply chain. That can create a secure record that tracks the quality and origin of the plant from seed to store.
Through blockchain technology, growers and plant producers can also be licensed, thus making it easy to regulate the industry. Furthermore, given that marijuana is illegal under US federal laws and in other jurisdictions across the world, payment processing for cannabis-related companies is forbidden. However, cryptocurrencies and blockchain-based stable coins provide a decent alternative.
“Stable coins can provide a solution to drastically reduce the cost and time for settlements. Stable coins also provide a cheaper, more efficient and stable way to accept payments for customers of high-risk merchants,” says Hoang.
More people across the globe have access to mobile internet. Therefore it is hardly surprising that online gambling is one of the fastest-growing markets making up 25% of total gambling revenue. Reports also show that the gambling market has been compounding annually at a 9% rate – three times the rate of the global GDP).
However, issues of trust are among the key challenges facing the gambling industry. Studies have shown that most users don’t trust in the fairness of online casinos.
Even though the gambling model is built on a revenue model based on losing players, it is believed that most online casinos turn the odds in their favor. Some casinos are also known to delay payments or even block big winners from using their platforms.
While speaking to Forbes, Filip Poutintsev, the CMO of a blockchain-based gambling service called Bitbook, said that “blockchain will not magically transform gambling into a wonderland where players win most of the time.”
He adds that the “blockchain will store records of all games and bets, (such that) players can always access the transaction history to confirm that the system paid out all that was due and that the odds were not rigged.”
The adult entertainment industry is one of the biggest industries that can benefit from blockchain technology. The adult entertainment industry is estimated to be worth $100 billion.
Like every other high-risk industry, the adult entertainment industry suffers from being isolated by financial services that refuse to process payments. Market players have started to seek alternatives. According to a tabloid report in The Sun, strip club performances in Las Vegas have already started accepting cryptocurrency as payment.
Through blockchain technology, online dating platforms can also achieve anonymous communication and better matchmaking. It will also be easy to tackle disputes that arise from sexual interactions as models get fair compensation.
The main problem that blockchain can solve in high-risk industries is payment processing. The stigma associated with these industries disqualifies them from traditional financial services. However, this presents a huge opportunity for blockchain given that these industries have a large and ever-growing pool of active users who can propel blockchain’s mass adoption.