RNGs vs. Provably Fair: The Battle for Fairness and Trust in Crypto and DeFi

• RNG systems ensure randomness but face manipulation risks.
• Provably Fair systems enhance trust with verifiability.
• Beyond Web3, DeFi, and crypto gaming, Provably Fair systems have applications in areas such as supply chains, crowdfunding, and online voting.

The arrival of crypto, decentralized finance (DeFi), and Web3 games has created the need for greater security and transparency within gaming mechanisms and ecosystems.

Here, we’ll walk through what Random Number Generators (RNGs) and provably fair systems are, and how they help ensure fairness and foster trust in Web3 gaming environments.

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RNG

What is RNG?

A Random Number Generator (RNG) is a process, via hardware or algorithm, that produces numbers and symbols in random, unpredictable sequences.

They are often used in:

• Cryptography
• Video Games
• Online Casinos
• Statistics
• Research
• Computer Science
• Algorithms

They serve a myriad of functions. In cryptography, they are vital in creating unpredictable values for security-related tasks, such as password generation or encryption.

In video games, they may determine when a character deals critical damage or an enemy drops a particular item.

In the context of fairness, it is considered a way to guarantee unbiased outcomes in online casinos, lotteries, and other similar activities.

Theoretically, well-designed RNG systems are secure and can produce random, unbiased outcomes.

But, there is still plenty of room for hacks, manipulation, and vulnerabilities on any platform or service leveraging RNG.

In Web3 and crypto, these risks are amplified due to the high financial stakes and lack of centralized oversight.

Without proper transparency and auditing, such as providing an open source code, a less reputable online gaming platform could operate with compromised RNG codes.

Types of RNG

Two types of RNGs are used in gaming software: Pseudo-Random Number Generators (PRNGs) and True Random Number Generators (TRNGs).

Here’s how they differ in mechanism and application.

PRNG

This software approach generates numbers through deterministic algorithms based on an initial seed value.

It’s a way of producing sequences that appear random, but can be reproduced if the seed is known.

They’re fast and widely used in video games and online casino software, but can be vulnerable to manipulation.

Reputable platforms use audited PRNGs, though they are limited in transparency compared to provably fair systems.

TRNG

TRNGs derive randomness from physical processes such as atmospheric noise and radioactive decay. This makes them non-deterministic and unpredictable.

They’re less common in gaming as they’re slower and more expensive, but they have demonstrable prowess in security applications.

Provably Fair

With the advent of Bitcoin and blockchain, it became possible for online gaming platforms to operate with complete transparency and establish trust with an open, transparent, verifiable ledger of transactions and code.

As the name suggests, provably fair systems go beyond the limitations of RNGs by allowing users to check and verify a platform’s fairness and integrity independently.

There are several applications for provably fair systems, including:

• Online Voting Systems
• Supply Chains
• DeFi Protocols
• Crypto Gambling
• Web3 Play-to-Earn Games
• Crowdfunding Platforms

In the context of Web3 gaming and crypto casinos, players and servers generate random seeds, and the player can verify the outcomes post-game.

These systems resist manipulation as committed seeds can’t be altered, and their blockchain infrastructure ensures transparency.

Types of Provably Fair Systems

There are numerous types of PF systems that leverage various aspects of computer/blockchain tech to deliver transparency and fairness.

Here are examples and their applications.

Seed-Based

Servers and players create seeds, which are combined to create game outcomes. Players can verify this post-gamer by checking the server’s revealed seed against the hash it provided. These are widely used in online casinos.

Blockchain-based

Seeds and results are recorded on a public blockchain like Ethereum (ETH). This ensures immutable and transparent verification on a fully auditable ledger.

This is an ideal fit for Web3 gaming.

Smart Contract Systems

Blockchain-based smart contracts can automatically execute game logic and store outcomes.

This also allows players to audit code and on-chain records. Smart contract-based systems can be found within most Web3 applications.

Commitment Scheme

Servers commit to a random value generated by cryptographic hashes prior to a game, then reveal it afterward for player verification. This mitigates mid-game manipulation, often within online betting.

Zero-Knowledge Proof

Players can verify fairness through cryptographic proofs without accessing sensitive server data or revealing their own, preserving privacy. This type is often found in secure voting systems or anonymous crypto gambling platforms.

Multi-Party Computation

Multiple parties jointly compute outcomes using cryptographic protocols. This ensures that not a single party can manipulate results, and is often seen in collaborative DeFi protocols.

Building Trust

RNGs and provably fair systems are vital for building trust in centralized and decentralized online platforms, especially in gaming, crypto, and DeFi.

Whilst RNGs are efficient, they still risk manipulation if poorly implemented, or created/owned by nefarious entities.

Provably fair systems, with types like seed-based and zero-knowledge proofs, offer unmatched transparency and trust.

Their applications, from crypto casinos to secure voting systems, demonstrate their versatility.

As trust becomes critical across Web3 industries, provably fair systems are poised to raise the bar and lift fairness standards.