From Diablo Wiki
Blood Shards (AKA "Shards" or "BS") are a form of currency introduced in Reaper of Souls. Shards' only use is to gamble on items with the NPC Kadala. Shards can not be spent elsewhere and have no other purpose.
Shards are earned for completing Bounties in Adventure Mode, sometimes drop from Horadric Caches, and are always dropped by Rift Guardians. The quantity of shards awarded or dropped scales up with the difficulty, with more per Bounties and many more dropped by Rift Guardians on higher difficulty levels.
- Patch 2.0.5 buffed the legendary return rate from Gambling, and enabled Kadala to drop Torment-only items as well, though the odds of gambling such are quite low.
- See the Gambling article for full details.
The costs to gamble were adjusted repeatedly during the Reaper of Souls beta, but were largely stabilized upon launch. As of Patch 2.0.4 in early April 2014:
- Armor (all slots): 5 shards.
- Off-hand items: 5 shards.
- Rings: 10 shards.
- Weapons: 15 shards.
- Amulets: 20 shards.
Gambling Item Quality
Gambling is a great way to gear a character up after they reach level 70, since they can quickly assemble good quality Rares in every slot. Legendary items can be gambled (the drop rate was buffed twice shortly after release), then again in Patch 2.0.5 when Kadala became eligible to drop Torment-only gear.
Patch 2.0.5 also boosted the likelihood of characters gambling class-specific weapons, so Demon Hunters will see more bows, xbows, and hand crossbows, Monks will get more Fist weapons, Crusaders more flails, etc.