Scalable blockchain for online gaming payments

Smile Coin was founded in 2021 to address payment challenges faced by online gaming companies, according to CEO Nick Bucheleres. High fees, slow payment processing and domestic banking regulations all pose obstacles for Smile Coin’s customers, and Bucheleres believes that decentralized finance using blockchain technology could be the solution.

“The three real pillars [of payments] are speed, cost and security,” he told PYMNTS in a recent interview.

Blockchain fulfills all three requirements better than any other approach, he said. In addition, newer protocols enable even more efficient and less expensive transactions. All this is achieved through cryptographic protocols, rather than a third party.

“You can transfer thousands of dollars for pennies, you can receive and send funds in under five seconds, and there is very robust custody and receipt of funds,” Bucheleres said.

An immutable, public ledger

Blockchain’s chain of custody sets it apart from any other payment method. The public nature of the immutable ledger also provides trust, Bucheleres noted.

“When you’re talking about the ability of the community to audit or inspect where funds flow to and from — that’s an extra layer that banking doesn’t include,” he said. While traditional finance relies on the accreditation and reputation of those involved in transactions, blockchain allows users to actually see transaction histories and behavior for themselves, he said.

“With enough time and Red Bull, you can really unravel a lot, and you can empirically determine your own level of confidence,” Bucheleres said.

Use of the public ledger

Openness also enables innovative use cases. Smile Coin leverages the public nature of blockchain transactions for its reward system, Bucheleres said.

Gaming platforms integrate the Smile Coin software development kit into their payment platforms, after which Smile Coin scans for transactions to or from that gaming platform’s account. Rewards are then automatically distributed to player accounts based on the volume of transactions sent and received.

At the same time, the reward system is completely transparent and easily audited by any party. Even potential Smile Coin clients can see for themselves how the system works.

“There’s real accountability with the system, because the rest of the network — or the rest of the reward recipients — can be confident that they’re on a level playing field,” Bucheleres said.

Making finance work for online gaming

Blockchain’s biggest advantage for online gaming platforms is as an alternative to closed doors. Online gaming is one of several industries that, despite being legal and operating in accordance with state and federal regulations, are shut out of traditional finance, Bucheleres said.

“If PayPal and Stripe and Braintree don’t want to take your business, you don’t have a business,” he said.

Bucheleres said the gaming industry is even bigger than the film or entertainment industry. Nevertheless, growth is stifled by a lack of access to payment platforms and traditional finance. It is the ultimate inspiration behind Smile Coin and a central tenet of decentralized finance: removing roadblocks to legitimate transactions that are unfavorable in traditional finance.

“One of the main reasons we started Smile Coin and the Smile Coin payment gateway was to allow real money gaming companies with great ideas, great business models and amazing communities to actually be businesses,” Bucheleres said.

Make Blockchain worth the investment

Making it possible for these online gaming platforms to succeed requires more than just a desire to make it possible. With a sector still growing, one company may not be able to make a big impact without a scalable framework.

“If you don’t have scale, you just have a nice little project,” Bucheleres said. “Scale is what really revolutionizes the industry and brings the technology mainstream.”

When looking at which blockchain to use, Bucheleres said Smile Coin took into account the “informal studies” by white-hat hackers who have tested how many transactions are needed to overwhelm various blockchain platforms. Smile Coin also looked at the statistics related to different blockchains.

On top of transactions per second (TPS) and block time – the time it takes for a new block to be created – Bucheleres said it’s also important to look at transaction fees, an area where some of the newer players in the field have a clear advantage.

Blockchain’s public nature makes it possible, but not always easy, to test and evaluate the best blockchain to use for a given purpose. This transparency takes a lot of the guesswork out, but it still requires businesses looking to use blockchain to do their homework and ensure they are making wise investments.