Note on fair coin toss via Bitcoin
This addresses the need for decentralized, trustless gambling mechanisms for Bitcoin users, though it appears incremental as it builds on existing blockchain concepts.
The authors tackled the problem of enabling fair coin toss gambling without a trusted party by leveraging the Bitcoin network, resulting in a system that eliminates the house edge and prevents extortion by dishonest parties.
In this short note we show that the Bitcoin network can allow remote parties to gamble with their bitcoins by tossing a fair or biased coin, with no need for a trusted party, and without the possibility of extortion by dishonest parties who try to abort. The superfluousness of having a trusted party implies that there is no house edge, as is the case with centralized services that are supposed to generate a profit.