Crypto-based Phenom Poker claims to be revolutionary and "trustless" -- but is it?

The announcement of Phenom Poker just dropped.

What is Phenom Poker? It's a new poker app with two features they claim are unique, but actually aren't.

In short, it's a crypto poker site where they don't hold your money, and you get your crypto right when you leave the table.

Here's their tweet announcing it:

https://twitter.com/PhenomPokerApp/s...26492525080607


Here's the longer description of the whole thing: https://www.phenompoker.com/post/pok...tion-is-coming

Quote:

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The Poker Revolution is coming: Introducing Phenom Poker
The game of poker is a beautiful thing. A mix of skill and luck. Math and psychology. Recreational or professional. A casual social gathering or prestigious tournament for prizes in the tens of millions of dollars. Take your pick. There's something for everyone. It's no wonder why it is one of the most popular games in the world. Yet, considering there is a player base somewhere in the hundreds of millions of people globally, there has been little advancement in the industry since online poker burst onto the scene some 25 years ago.

Little has been done to rethink and advance an industry that has been riddled with scandals and schemes that have seen players' funds frozen or outright stolen by operators and competing players alike. In the United States, where the game is most popular, players are faced with limited options, nearly all of which involve trusting your money with some offshore operator in hopes they won't be the next nefarious operator and domino to fall.

It's time for a change.



A new type of poker site is coming

We are buildng Phenom Poker for a simple reason - as poker players and long time members of the poker community ourselves, we want to solve some of the biggest problems in online poker and return value back to the poker community. Phenom Poker is a decentralized online poker site that is built by the players, for the players, and owned and governed by the player community. Built with a trustless gaming architecture, it is not necessary to deposit your funds with a 3rd party or ask permission when its time to retrieve your funds. Rather, a player can simply connect the Web3 wallet of their choice to play the game of their choice. While in play, funds are held in a Smart Contract until the player is finished playing, at which point the funds are immediately returned to the player's wallet, after accounting for any winnings or losses. This groundbreaking concept eliminates the need to trust an offshore company with your funds and also removes one of the largest bottlenecks in online poker - deposits and withdrawals. Also by removing the need for traditional payment rails (like banks or traditional financial institutions), Phenom Poker will not violate any US federal laws.



Fair Gameplay and Player Protection
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Some of the biggest issues plaguing online poker today include RTAs (Real Time Assistance), Bots, and collusion. While we recognize that some of the sites have made efforts to combat these problems, it simply has not been enough. The end result is players getting cheated out of millions of dollars and nobody is clear on where is a safe place to play. Its unacceptable. This is among our biggest priorities in building a new site - figuring out how to take a truly technology-first approach to solving these issues and also having Zero Tolerance policies in place when bad actor behavior is discovered. If we expect the game we all love to thrive and grow, there is simply no room too allow those who seek to cheat and scam players out of the their money. We will take a proactive approach to solving these issues and use the latest in Machine Learning and other technologies to identity bad actors quickly and give the community a level playing field to battle on the digital felt. Phenom Poker also uses a P2P encrypted RNG engine for card shuffling. This approach removes the possibility of the anyone getting real-time hole card access (including developers or site admins). We believe this should have been the standard across all sites a long time ago. The technology has been available and yet we continue to see SuperUser scandals pop up in the industry. Phenom Poker will always make use of the most sophisticated available technologies to protect our player community and prevent these scenarios.



And it gets even better

At Phenom Poker, every player is an owner! Phenom Poker is a Decentralized Autonomous Organization (DAO) and is owned and governed through the Phenom Token. Phenom Tokens are distributed to players as a reward for playing poker on the site. That’s right, you can own a piece of the site simply for playing the game you love. Token holders will collectively receive 50% of site revenues and also hold voting rights that control the future of the site. The other half of site revenues will be used to operate and grow the platform. This amount can be adjusted over time via a governance proposal that is voted on and passed by token holders. Our goal is to be 100% owned by the poker community and to be the most player-centric offering on the market.

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I'll tell you about the ambassadors in the next post.

Phenom Poker has accumulated an impressive roster of poker pro ambassadors, including one regular PFA listener.

Joseph Cheong
Ari Engel (who listens to PFA Radio every week)
Brian Rast
Sergio Aido
Eric Baldwin
Chris Hunichen
Justin Young
Angela Jordison

Ari Engel is especially notable to me, as he is very honest and really hasn't been part of the whole poker endorsement game until now.

Joseph Cheong and Angela Jordison also have good reputations.

I don't know Sergio Aido.

Two of them have somewhat of a history of associating themselves with questionable poker companies. Eric Baldwin most notably signed with UB after the superuser cheating scandal. Brian Rast has been associated with various poker failprojects over the years, where presumably he traded his association for equity in these companies.

Don't know that much about Justin Young, other than him being around in poker for a number of years.

Chris Hunichen had a good reputation, but ran into a fair amount of Twitter controversy this summer, involving a Gofundme for his father's funeral. This controversy wasn't a huge deal other than bad optics, but it did sour some people's opinions of him.

Anyway, I'm not sure what compensation these eight people received. I'm guessing it was the "tokens" discussed in the post above, which could translate into decent money if the site takes off.

I'll give you my opinion of Phenom Poker in the next post...

Phenom Poker's opening blog raised a few concerns for me.

Most notably, there's this line:

Quote:

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Also by removing the need for traditional payment rails (like banks or traditional financial institutions), Phenom Poker will not violate any US federal laws.

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:wrong

This is simply not true. Any form of unregulated poker operating in the United States -- whether live or online -- is ILLEGAL if it takes a rake. It is irrelevant whether traditional "deposits" and "withdrawals" are made as part of the whole thing. This would only be (possibly) legal if they provided a real money online poker platform, but took zero rake or charges of any kind. Even then, they could be in hot water because of the online factor, and the fact that the three elements of gambling (chance, consideration, reward) all exist.



Then there's the whole "token" thing. You earn tokens while you play, which are small pieces of ownership in the company. Believe it or not, this has been done before. Pokershare, a UB skin, tried this tactic in the mid-2000s. If you played on Pokershare, you would slowly earn "shares" in the company, and become an "owner". This ended up being meaningless, as the company folded. But I never believed I was really an "owner" while playing on Pokershare. It was a dumb gimmick. I imagine the same is true here. Supposedly you will have "voting rights" as a token owner, but I imagine the players will "own" very tiny pieces of the company, and their "votes" will be mostly uselses. More importantly, this might violate US securities laws.



And what about the "trustless" claim? In crypto, trustless means that three is no top level authority figure or entity in charge, and the network is operated by a the entire community of users. Bitcoin, for example, is (mostly) trustless. When sending bitcoin to another person, you don't have to worry about the head of bitcoin (who doesn't exist) swooping in and possibly interfering in it. Trustlessness is important in cryptocurrency, as its entire basis centers upon not being owned or controlled by any organization or government.

But how does that factor in here? Phenom Poker claims to use "smart contracts" to manage player funds. A smart contract is a protocol on a blockchain which execute upon meeting certain criteria. This happens automatically without a human being or outside system having to make decisions whether that criteria has been met. Smart contracts are important because they cannot be violated. The criteria to make them execute is set, and they automatically complete when that criteria is met. In Phenom Poker's case, the smart contracts hold up the players' crypto while they're at the table, and returns their crypto (plus/minus any wins/losses) when they leave the table. That's how Phenom Poker claims to be trustless.

And I agree, from the financial standpoint, they actually are. It is true that when playing on Phenom Poker, you will always get paid your winnings.

However, that does not mean the entire system is trustless. They are still providing the games. They are still providing the security. They are ultimately the arbiters of who is cheating and who is not. That's not trustless.

Furthermore, there is a huge problem security-wise, which is brought on by the entire smart contract matter! Since you control your own funds, if you cheat and are caught, there is no money for them to seize and return to the victims! This makes it a virtual freeroll to cheat on the site, especially if it is fairly easy to create new accounts without an extensive KYC (know your customer) procedure.

Even today on traditional poker sites, cheaters have to worry about getting caught before they can withdraw their ill-gotten gains. Getting caught not only costs them some of their profits, but also can cost them their seed money they deposited in the first place. This is not a factor with Phenom. There is no way for Phenom Poker to punish any cheaters, aside from banning them from future play!

There's one more problem. Exchanges like Coinbase will never let this fly. They will shut down accounts super quickly which are caught playing on apps like Phenom. This leaves potential players having to utilize a middleman wallet in order to play without fear of their exchange account getting shut down. Few people are going to want to bother with this.



Do I think Phenom Poker will succeed?

No.

The entire trustless crypto stuff is too complicated for the average player, especially the fish who make poker games good. Crypto poker sites have existed for well over a decade. None of them have ever become big. It's always been a niche market, and it always will be. Crypto is great as a deposit/withdrawal method, but a site running entirely on crypto -- especially via this trustless scheme -- will not appeal to the masses.

The good news is that it's not likely anyone will get cheated. Since you are in control of your own crypto, there won't be a Lock Poker type situation where they run off with your money. This is also why the eight ambassadors don't have much to lose by promoting it. At the same time, this is unlikely to get off the ground, regardless of how enthusiastically these ambassadors tweet about it.

Good clip of crypto expert (and former poker pro) Jason Mo explaining why Phenom Poker isn't going to work out:

https://twitter.com/cuntycakes123/st...14074812039311


It's fairly technical, but he does a pretty good job stopping to explain the terminology and concepts to people not as knowledgeable. Even I learned some new things from this clip (and not just about Phenom).

If you understand nothing about crypto, some of this will go over your head, but if you even know a little bit about how it all works, you should get something out of this clip.

Among the points which I hadn't thought of:

- This sort of token uses a bridge, which is vulnerable to attack. So it's not as secure as people think.

- There are a ton of spoof type scams involving these type of smart contracts, and people will be scammed/tricked into their crypto being stolen if this site were to ever get popular.

- Even if they give away 50% of the ownership tokens to players, and allow voting regarding the site's direction, it will be meaningless. Why? Because insiders will own the other 50%, and if they all vote the same way, all they need is 1 of the many many many other token holders to vote their way, and they'll have the majority victory. Great point!


He made a number of other good points which I'm not remembering at the moment, since I watched this about 5 hours ago. But I agree with him for the most part.

As I said in my other post, I still think the two biggest flaws are their inability to punish cheaters and the complexity of the system which will discourage fish from playing.