How would you like to make some Bitcoin by correctly predicting the next US presidential election? Maybe you want to bet some digital coin on who wins the next Super Bowl? Augur can make all those tempting bets a reality. Augur, (a fully decentralized prediction marketplace incorporating Bitcoin’s blockchain), is an ambitious projects started in late 2014 by an impressive roster of cryptocurrency professionals and academics. The team includes prominent Bitcoiners such as Vitalik Buterin of Etherium and Ron Bernstein, founder of now defunct Intrade, one of the most popular prediction marketplaces. Intrade made headlines when the platform correctly predicted the outcomes of several US state elections. Intrade was forced to close as a result of a 2012 civil suit filed by the CFTC, and various regulations that prohibited US based customers from participating. Ron Bernstein’s experience with Intrade was one of the main reasons for his interest in the Augur project. Centralized predictive exchanges became even more unfeasible with the Dodd-Frank law, passed in the aftermath of the 2008 financial crisis, which prohibited speculation in derivatives that were “risky/non-essential”. The CFTC made sure to cause plenty of problems for Intrade, but somehow managed to overlook the credit default swaps that precipitated one of the largest financial crisis in US history!
Are predictive markets just gambling?
Participants in predictive markets have a monetary incentive and are taking risks when they place their bets, but that is just one aspect of the market. When an individual places a wager on a certain outcome, that bet is akin to a vote: those votes when taken in large samples from significant groups of market participants; are very indicative of the likelihood of a particular outcome. That kind of statistical information is very valuable from a researcher’s point of view. A research paper published by Adam Ozimek (Director of Research and Senior Economist at Econsult Solutions, Inc.) argues that, “Prediction markets have generated forecasts for a wide variety of purposes beyond elections: who will win the Academy Awards, sales of a particular product, and how bad the flu season will be. This information is useful not only to traders wishing to profit from their forecasting and information-gathering abilities, but to researchers, businesses, governments, and others.”
Statisticians and scholars understand the inherent value of predictive markets such as the one proposed by Augur, but the general public and government regulators do not seem to be aware or convinced of this fact. This is why Tony Sakic, a former marketing veteran at BitPay, has joined the Augur team to help bring awareness of the potential benefits predictive technologies can have on society. Bitcoin currently has a large following and plenty of media hype surrounding it, the timing could be right for a blockchain-based predictive marketplace to make it’s presence known. The potential applications of this type of technology as too numerous to theorize, let alone list.
Augur is currently in the alpha stage of development, but there is a prototype that is available for testing by interested parties. The development team can be reached by email and irc (#augur). Bitcoin’s blockchain technology has been compared to the invention of the Internet, in it’s potential to affect every aspect of human existence. Augur is the perfect example of just one fascinating application of this technology, which promises an almost limitless potential. The blockchain just keeps on giving.
Image source: http://www.augur.net
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