As cryptocurrencies bubble, esports are looking to take advantage.

Two companies announced initial coin offerings of cryptocurrencies on the Ethereum blockchain for esports gambling within a week of each other in June. Their developers said the burgeoning industry of professional video gaming and soaring value of virtual currencies have fed the interest for such ventures that could further develop the betting community within esports, including on competitive matches such as the new Overwatch League.

"People want to bet, and they want to bet on esports," John T. Holden, a visiting scholar at Florida State University's department of sports management, told TheStreet recently. "What we're seeing in North America is a legitimization of esports."

As an industry, esports is expected to grow 41% in 2017 to nearly $700 million in revenue and to $1.5 billion by 2020, according to video game research company NewZoo. That does not even include gambling, which is estimated to contribute billions more.

Meanwhile, Bitcoin has increased 142% in 2017 to date, and Ether, another cryptocurrency, is now worth 25 times more than it was on Jan. 1, trading now at around $210. Ether's platform allows developers to create their own virtual currencies based off its blockchain, which makes starting a virtual currency easier.

An initial coin offering, or ICO, is an unregulated way for startups to raise funds for a project, selling a percentage of the cryptocurrency to its backers in return. From March to May, the number of ICOs multiplied by six times, TechCrunch reported.

UnikoinGold from Unikrn, the world's most comprehensive esportsbook, and Skincoin, whose developers operate several gaming-related websites, are two new cryptocurrencies based on the Ethereum blockchain that are altering how people gamble in esports.

"The esports audience have the propensity for [cryptocurrencies]," Rahul Sood, CEO and co-founder of Unikrn, told TheStreet. "Those into esports are into gaming are into crypto. It's connected in thoughts and interests. They love to play games, and they like betting."

Sood -- the founder of Microsoft Ventures, Microsoft Corp.'s (MSFT) venture capital arm -- founded Unikrn in 2014. The company has attracted $10 million in investments from Mark Cuban Co., Ashton Kutcher and Guy O'Seary's Sound Ventures and more. In 2015, the company introduced Unikoin, a free token without monetary value with which users of Unikrn's platform could bet on esports matches. Users have turned more than 250 million Unikoins.

With the introduction of one billion UnikoinGold coins in September, users will be able to exchange Bitcoin, Ether or U.S. dollars for UnikoinGold. This virtual currency will allow them to bet on live esorts matches in countries where the company is licensed, purchase raffle tickets to win prizes and gamble on Unikrn's new skills platform, where players can bet on their own gaming skills.

"Crypto allows us to expand faster and creates more incentive for our communities to participate," Sood said. "If you are going to do a token like a cryptocurrency, the best ones are going to have high utility that people want to use and not just speculate on. For us, it's focusing on the user finding value from this token. And if the user finds value, anyone will find value."

Unikrn currently operates fiat-based betting in Australia and the United Kingdom, where it is licensed. UnikoinGold, however, will now allow people in countries such as the United States to gamble with money on its skills platform for the first time. The currency is also easier to manage over fiat, Sood said.

"This will make our business much more seamless and much more transparent because what we are doing will be on the blockchain," he said.

Skincoin, whose one-billion-coin ICO is set for July 21, is looking to ease the process by which gamers can gamble with virtual skins, the purely aesthetic decorations for avatars and weapons in popular esports games from Valve Corp. such as Counter Strike: Global Offensive and Dota 2. Players can win and buy skins and trade them on Steam, Valve's digital distribution platform.

Steam's application programming interface, which allows developers to incorporate Steam's functions into their platforms, has created a market for gambling with skins on esports matches, coin flips and casino games. In 2016, people wagered more than $6 billion worldwide in skins on third-party gambling sites, according to Eilers & Krejcik Gaming LLC, a video game research company.

Two lawsuits against Valve in June 2016, which alleged the company enabled underage and unregulated illegal gambling by opening Steam's functions to developers, brought the company to threaten to terminate the accounts of websites running illicit gambling for violating the Steam Subscriber Agreement. Valve has closed off access to some gambling sites, according to Totally Gaming.

Since then, however, third-party websites have developed their own tokens for which players can trade in their skins and then use the tokens to gamble within their site without violating the Steam agreement, according to Skincoin's developers.

As a cryptocurrency, Skincoin seeks to allow players to trade their skins for Skincoins and then use the Skincoins on various gambling websites or other platforms that accept Skincoin, the developers said. The exchange rate is 6,000 Skincoins per Ether.

"We are trying to create a universal cryptocurrency," Skincoin Founder Alexey Zakharov told TheStreet. "This is a good time, because this [cryptocurrency] market has grown. It's a good opportunity to find money to start this coin, so it's a good time for companies to make their products an ICO."

But because of the gray area surrounding skin gambling, Sood from Unikrn said he does not see Skincoin as competition.

"Valve doesn't condone skin gambling in any way," Sood said. "People will learn there are good operators [of cryptocurrencies] and there aren't...I think you'll see skin gambling shutting down, and I think the ICOs are going to fizzle at the gate."

Zakharov said he does not believe Valve will shut down skin trading because of the billions of dollars in it. He said Skincoin is merely a tool for exchanging skins into its cryptocurrency and that it is up to the websites themselves to determine how to use the currency and to instigate regulations on that activity.

"They will have no question for [Skincoin]," Zakharov said. "If Valve shuts [skin trading] down, they would lose billions of dollars."

Igor Solomatin, CEO and co-founder of Skincoin, told TheStreet he actually hopes Valve will partner with Skincoin in the future.

Valve did not reply to multiple requests for comment.

"Valve's response is to be determined," Holden said. "I haven't seen any response from them."

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