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The Weirdest Prediction Markets on Augur Right Now

Do you believe in God? Would you put your cryptocurrency holdings on it?

Augur, an ethereum-based platform for betting on the outcome of real-world events, aims to be a repository of crowd-sourced knowledge for journalists, investors and policymakers, as well as an effective tool for hedging against adverse outcomes.

But it’s also become one other thing: a hilarious place to troll.

Forums for questioning a higher power are just one of many markets that currently exist on the decentralized prediction market, developed by the non-profit Forecast Foundation and funded with one of the world’s first token sales in 2015.

That token sale took place before people were even using the word initial coin offering, or ICO, to refer to these types of crypto fundraising schemes, and the project went through the ICO boom in beta – with the developers testing and vetting one of the most hotly-anticipated launches in crypto history.

As such, when it launched on ethereum’s live blockchain last month, it briefly surpassed the most famous decentralized application, CryptoKitties, in terms of the number of users. Although enthusiasm has since dipped markedly.

So far, most of Augur’s markets – and the vast majority of the trades on the platform – deal with relatively vanilla topics like the outcomes of sporting events or the prices of crypto assets. But a few take a truly dark turn, gauging the likelihood that prominent figures will be assassinated or that terrorist attacks and mass shootings will occur.

Others, though, are just goofy, evoking the cryptocurrency community’s peculiar obsessions, wild rumors and the sorts of riddles a bridge troll might ask before letting you pass.

So here’s to the Augur users who have selflessly donated their time and potentially their funds – market creators post a bond in the platform’s native REP tokens, which they lose if a market is deemed “invalid” because the outcome cannot be verified – all just to brighten their fellow users’ days.

In no particular order, here are a few of the weirdest markets on Augur today.

Vitalik’s girlfriend

Vitalik Buterin, creator of ethereum, the world’s second-most valuable blockchain, enjoys the kind of wealth and notoriety few 24-year-olds have.

But does he have a girlfriend? And if not now, when?

These questions have vexed the crypto community enough to spawn a dedicated article – one that’s apparently been viewed over 18,000 times. And now, indelibly etched into Buterin’s own creation, there’s an Augur market for it too.

Buterin himself must confirm the relationship, according to the market’s terms, and the couple must have been together for at least one full day.

It’s worth noting here that (as with many Augur markets) nobody has bet on this one at the time of writing.

Are you there, God?

Ostensibly, Augur markets must be based on verifiable events, but Augur is a platform without moderators, so that’s become more of a guideline.

As mentioned above, the perfect example: someone has posed the question, “Does god exist?”

They’re apparently in no hurry to find out, as the market expires at the beginning of 2020. And the resolution source must be the “news media.”

The heathen users that initiated the market give the creator of the universe a 10 percent chance of existing. No money is at stake at the time of writing.

SAFU or not SAFU

Naturally, Augur users haven’t passed up on the chance to sprinkle the platform with their particular flavor of memes.

Titled “FUNDS ARE SAFU?” one market references a bizarre – but popular – YouTube send-up of Binance CEO Changpeng “CZ” Zhao’s attempt to reassure users that their crypto holdings on the platform were safe.

Looking at the market’s details, however, it appears not to be a joke, but a serious – if vaguely worded – question about whether Binance will be hacked: “Will the security of https://www.binance.com/ be negatively affected such that there is a newsworthy loss of money?”

The market expired without any bets having been placed.

Does not compute

Competition is stiff, but the trolliest market currently active on Augur may well be this restatement of the liar paradox – the sort of query one might use to incapacitate a murderous supercomputer.

For the uninitiated, the statement “this sentence is false” is a paradox because, if the statement is, in fact, false, that means it checks out. So it’s true.

If the statement is true – by being false – then it violates its own premise: it has to be false.

Thinking about this paradox goes back to at least the fourth century BCE, making it one of humanity’s longest-running time wasters. Adding a pinch of circular meta-salt to this concoction, the market creator made the point of reference for this market Predictions.Global, a site that scrapes data from Augur.

The pee tape

The allegation that Russian authorities possess compromising material on U.S. president Donald Trump is one of the stranger stories to emerge from the 2016 election.

The existence of this compromising material – originating from a collection of documents prepared by a former British intelligence officer working (indirectly) on behalf of Democrats – is often known as the “pee tape” due to its alleged content.

But it hasn’t been proven.

Judging by an Augur market on the topic, though, chances are around one in four that such a tape will emerge before the end of Trump’s first term.

Betting volume on the market has been very low, however, at the equivalent of less than $60.

McAfee’s bold prediction

Many of the most liquid and valuable markets on Augur deal with the prices of cryptocurrencies.

So at first glance, it’s hard to see what’s remarkable about one particular market predicting that the price of bitcoin will pass $1 million before 2020.

But there’s a clue in the fact that it’s tagged “McAfee.”

The anti-virus-software-creator-turned-cryptocurrency-hype-man has published many inadvisable tweets. Topping the list, however, is one from late 2017, when he predicted that bitcoin would hit $1 million and reiterated a promise he’d made earlier to “eat my dick on national television” if he proved incorrect.

Yet another Augur market gets to the, um, meat of the story.

And that’s probably enough Augur for today.

Monkey with banana image via Jeremy Bishop on Unsplash

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

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Where Have All the Augur Users Gone?

The day Augur launched it breezed into the rankings of top ethereum dapps by daily active users – but the momentum didn’t last long.

Released on July 10, Augur allows users to create and bet on prediction markets tied to real-world events, such as World Cup games, elections and – unfortunately – murders. Having waited three years for Augur to be developed and tested, users rushed to try it out, briefly pushing it past the most famous dapp, CryptoKitties, in terms of users. It’s worth noting that dapp userbases are uniformly tiny, though, with Augur and CryptoKitties each boasting around 300 users on the day in question.

Over the following weeks, however, Augur has shed users and slipped in the rankings.

At the time of writing, it’s had 66 users over the past 24 hours, putting it in an uninspiring 22nd place, according to data provider DappRadar.

The dwindling userbase has also raised some uncomfortable questions about the valuation of Augur’s native REP tokens, which are used to create markets and challenge reported outcomes (bets are placed and paid out in ether).

“I like Augur and what it represents,” Edan Yago, founder and CEO of the bitcoin-focused software company Epiphyte, tweeted. “BUT,” he continued:

“The protocol is valued at $308 million and has 64 daily users. That’s $4.8 million per user.”

It’s up for debate how useful that metric is (the valuation could reflect expectations of future user growth, or not be directly connected to users at all), but the Augur community plainly has user numbers on its mind. The project’s Discord forum was mulling the topic at the time of writing, and the question of whether Augur has “failed” was broached at least once.

Joey Krug, the project’s co-founder, put on a brave face, telling CoinDesk he’s “not super concerned” about user numbers “as long as markets are getting resolved correctly.”

He cited short-term factors that could have fed the decline, including the end of the World Cup (which dominated betting volumes early on) and the fact that user experience is still clunky.

“I imagine lots of people tried it and decided they’d come back in six months to a year when it’s more mature,” Krug said.

The liquidity problem

However, Ryan Berckmans, co-founder of Predictions.Global, a site that displays Augur markets and data, thinks the issue goes deeper than UX or FIFA’s schedule.

“Pretty much no one is using Augur,” he said bluntly, continuing: “A big reason why is it’s difficult to find markets with liquidity.”

To illustrate what he means, Berckmans compared markets to grocery stores. Customers go shopping at a grocery store because they expect to find shelves full of food. Grocery stores, in turn, stock their shelves with food because they expect shoppers to come buy it. If one or the other is missing, the store is no good to anyone.

It’s the age-old “chicken-and-egg problem,” he said.

As a first step towards solving that problem, Predictions.Global has rolled out a new feature, which lets users sort through open Augur markets by liquidity.

“Traders will be able to discover a short list of desirable markets to trade in,” Berckmans told CoinDesk, which may encourage trading and boost liquidity.

According to the feature – which is based on a closed-sourced algorithm – 33 open Augur prediction markets currently have at least 10 ether in liquidity and four have at least 250 ether in liquidity (the exact liquidity figures for each market are not shown).

The most liquid market at the time of writing deals with the price of ether at the end of the year:

Whatever the current trends in user numbers, Augur has been live for less than a month, and Krug, for one, is willing to be patient.

“I think it’ll be a two-to-three-year process before this is usable from an average user standpoint,” he told CoinDesk.

Desert image via Unsplash

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

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Pantera Capital Posts 10,000% Gain Over 5 Years, Calls For Bitcoin To Head Higher

Pantera Capital, one of the foremost cryptocurrency and blockchain-centric investment firms, recently announced that it has reached its five-year anniversary, issuing a report on the progress it had made in that span of time.

Humble Origins: The 2013 $5k Bitcoin Call 

Shortly after the grand opening of Pantera, Dan Morehead, the firm’s fervent leader and CEO, released an email to his investors, highlighting the first price prediction they made for the foremost, and most successful digital asset. In the email, titled “Bitcoin Forecast V” on August 21, 2013, Morehead wrote:

I was discussing bitcoin with an investor yesterday and he replied somewhat dismissively “It’s just like buying gold”. No, it’s like buying gold in 1000 B.C. 99% of the financial wealth has yet to address bitcoin. When they do, bitcoin is either going to be worth zero or $5,000 /BTC.

The Pantera CEO went on to talk about how there is a “north of 50% chance” that the world will adopt a cryptography-based payment system, replacing the high fees charged by traditional institutions. Dan also noted that if a cryptocurrency, whether it may be Bitcoin or not, can succeed, it will become the first global currency since gold and the first borderless payment system.

It is important to note that at the time this email was released, Bitcoin was a mere $104, with a $1.4 billion market capitalization. While it wasn’t clear what time frame the CEO was allotting to the prediction, looking back, we can clearly see that Bitcoin had surpassed his original price prediction.

However, despite going above and beyond the $5,000 mark, the “July Blockchain Letter” noted that this logic remains true to this day.

Pantera’s Lifetime Return = 10,000%

According to the aforementioned report, the fund now has a return of just around 10,135.15% net of fees and expenses, a gargantuan feat that goes without saying.

The success of the firm can be attributed to a variety of investments made into an array of crypto firms and projects, including Augur, Brave, ShapeShift, 0x, Circle, Earn, Xapo and Ripple. It was also noted that the investment fund has a close relationship with Augur, as Joey Krug, the Co-Chief Investment Officer at Pantera, co-founded Augur just four years ago.

Pantera plans to continue investing in innovative new startups through the firm’s third venture round, which is set to occur within the upcoming months after a series of lunches held all across the world.

Bitcoin To Hit 21k By The End of 2018, And $67.5k By The End of 2019

To the minds of many, a highlight of the report was the firm’s Bitcoin price prediction, which forecasted Bitcoin hitting $21,000 by the start of 2019, and seeing a further three-fold gain to reach $67,500 by December 2019. While this may not be the most outlandish prediction, it still stands above and beyond the current expectations of many industry leaders. 

Releasing a statement alongside the chart seen above, the firm wrote:

This chart plots bitcoin’s price history since July 2010 in log scale to show its very consistent exponential growth. The gold line is the trend line during this period. Projecting price through the end of 2019 using this historical trend line as a guide would put the price of bitcoin at around $21,000 by the end of 2018, and $67,500 at the end of 2019. Seems eminently reasonable to me. Those are our current bitcoin price forecasts.

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Blockchain-Based Betting Platform Augur Now Features ‘Assassination Markets’

So-called “assassination markets” have now popped up on blockchain event betting platform Augur, Mashable media outlet reported July 24. Users are now betting on when certain public figures will die.

Created by the non-profit Forecast Foundation, Augur launched its Ethereum (ETH) mainnet-powered predictions platform on July 9, according to Fortune. On the platform, users can make a prediction about the outcome of any event.

If a user believes the outcome will happen, they buy shares with ETH. If a user believes the event will not occur, they can short the bet by selling shares. In either case, should a user’s prediction come true, they can profit from the result.

Users have recently posted bets on Augur regarding the deaths of a number of public figures, such as the U.S. president Donald Trump and CEO at Berkshire Hathaway Warren Buffett. The bet “Will Donald Trump (President of The USA) be killed at any point during 2018,” has acquired 50.3 shares as of July 23.

Augur “Assassination Market” Screenshot. Source: Mashable

Augur “Assassination Market” Screenshot. Source: Mashable

To ensure that a bet is settled properly, Augur has created a system of “reporters” who state the truthful outcome of a posited event. Reporters are essentially holders of Augur’s own REP token.

In order to report an event, users must stake REP on an event’s correct outcome to receive any of the settlement fees. If REP holders incorrectly report a result, they lose their tokens. If they do not participate in a ‘fork,’ or a highly disputed outcome to an event, they lose five percent of their REP. Passive holders of REP who do not participate in the bet settlement process are also penalized.

REP is trading at $30.16 at press time, having hit its peak of over $107 in January 2018 according to Coinmarketcap.

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The First Augur Assassination Markets Have Arrived

“Killed, not die of natural causes or accidents.”

Pretty much everyone saw them coming, but it was no less disturbing when assassination markets actually began to appear on Augur, a decentralized protocol for betting on the outcomes of real-world events and that launched two weeks ago on ethereum.

The markets – which allow users to bet on the fates of prominent politicians, entrepreneurs and celebrities – in some cases explicitly specify assassination, as the quote above shows. (CoinDesk is intentionally not providing links to these markets or naming the individuals concerned.)

In addition to targeting individuals, some markets offer bets on whether mass shootings and terrorist attacks with certain minimum numbers of casualties will occur.

Augur was created by the Forecast Foundation and funded through an ICO in 2015. It is an uncensorable platform where users can create prediction markets based on the outcome of any verifiable event, from World Cup games to elections to cryptocurrency prices to the weather.

Augur became one of the most popular applications on ethereum shortly after launch. At the time of writing, it has nearly $1.5 million staked on over 600 markets, according to Predictions.Global, a site that displays data on Augur markets (and has censored the assassination markets).

Since Augur consists of smart contracts on ethereum, a blockchain network that is not controlled by any single party, users from around the world can place bets on its prediction markets – without governments being able to stop them.

This quality appeals to gamblers in jurisdictions where sports betting isn’t allowed. It could also appeal to people who want to incentivize – or simply purchase – the assassination of a public figure.

By creating a market for an assassination and placing a large “no” bet (actually, selling shares in the outcome), an individual or group could in effect place a bounty on the targeted person. The would-be assassin could then place a bet on “yes” (buy shares) and manipulate the outcome, to put it delicately.

What’s next?

Long before the first assassination markets appeared, users on Augur community forums frequently discussed their eventual creation, as well as potential responses by the community and the authorities.

One response would be for Augur’s “reporters” – the users designated by market creators to determine the outcome of the event being wagered on – to step in and quash the markets.

“The Augur Reporter community has a powerful tool in their ability to mark a market as ‘invalid,'” said Predictions.Global co-founder Ryan Berckmans.

Holders of Augur’s “reputation” or REP token could dispute the decision to call these markets invalid, Berckmans continued. In other words, they could insist that the markets be settled (users bet in and are paid out in ether, not REP tokens).

But ultimately, he added, reporters “are incentivized to report in a way with which they expect the REP-holding community will agree.” In other words, it’s up to token holders’ consensus to decide whether taking out life insurance on other people is acceptable on Augur.

That opens the possibility that Augur could fork into two platforms, one – call it Augur Dark – that tolerates assassination markets, and one that doesn’t. The white paper describes the procedure for forking when REP holders cannot agree on how to report an event.

Judging by Reddit commentary, the consensus appears to be that incentivizing murder is “100 percent immoral.”

Then again, one user wrote: “I think you’re overestimating the number of people who would seriously put money down to see another person killed unless said person REALLY did something nasty and wasn’t going to be brought to justice otherwise.”

No control

Another potential route to shutting down the death markets appears to have closed. Augur’s developers announced Monday night that they had given up ownership over the “escape hatch” function, which would allow a designated party to shut the system down.

“If the Forecast Foundation is compromised by a state agency,” Micah Zoltu, a developer working on the platform, remarked, “the system can’t be turned off.”

In other words, governments may not be able to threaten Augur’s creators with prosecution in order to alter or shut the platform down (they could of course threaten them with prosecution anyway).

The individuals facing the most immediate legal risks may be the users who created these assassination markets. Someone, according to a person with close knowledge of Augur, used a wallet funded through Binance, an exchange, to set one market up.

They can almost certainly be traced and identified, the person added.

Gun image via Shutterstock

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

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Augur Platform Pays Out First Prediction Rewards, Totaling to 20k

As reported by Ethereum World News last week, the long-awaited Augur prediction platform has finally gone live, after nearly three years in development.

What is Augur?

For the uninitiated, Augur is a decentralized predictions platform based on the Ethereum network, that allows for users to create and place bets on any event. Whether it be the next American president or the weather in New York tomorrow, users of the platform will be able to place their hard-earned cryptocurrency funds on an outcome.

The prediction platform utilizes Ethereum and its in-house token to facilitate markets, rewarding users who ‘stake’ their REP tokens on a market, only if they correctly report the outcome of an event. Inversely, if a user reports an incorrect outcome, they will be subject to lose their REP tokens.

Augur was one of the first successful ICOs in the cryptocurrency space, raising upwards of $5.5 million in 2015. However, since then, Augur’s in-house REP ERC-20 tokens has ballooned to become the 43rd largest cryptocurrency, at a collective value of $330 million.

The project’s team, from the Forecast Foundation firm, released a statement alongside the official platform release that encapsulates their mission, with the mission statement reading:

Augur’s purpose is to democratize and decentralize finance. We’ll do this by enabling anyone, anywhere, at any time in the world to create and speculate on derivatives at a low cost for the first time.

Augur Finalizes First Prediction Markets 

On Wednesday, the team behind the Augur project announced that a milestone had been reached, pointing out that the “first markets have successfully resolved.”

It quickly became apparent that the first prediction market was the result of the France/Belgium semifinals soccer match from the recent World Cup event. Augur co-founder Joey Krug told CoinDesk that the users who selected France to win have won approximately $20,000 in Ether collectively, indicating that the first market resolution was an outstanding success.

Many Twitter users were quick to congratulate the project on achieving this milestone. Bryan Rathouz summed up the community’s thoughts on this news, issuing the follow kind words to the team at Forecast Foundation:

Congratulations! I’ve been following Augur since before the ICO. You guys have been impressive every step of the way, and now with the mainnet release and first markets resolving I’m even more excited. The future ain’t what it used to be!

Total Money At Stake Is Now Over $1 Million

Despite only launching last week, Augur has already gained traction from many in the cryptocurrency industry, with information from Predictions.Global showing that over $1.1 million in Ether has been staked across 508 markets at the time of press.

These figures show that the project is beginning to spread to all corners of the industry, with many users wanting in on the prediction market action.

The aforementioned co-founder of Augur, staying ambitious with his vision for the platform, expects for the platform to expand even further, stating that “next week should be bigger.”

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Augur Betting Volumes Just Topped $1 Million (And They're Accelerating)

Prediction platform Augur is fast attracting fans, at least if new data is any indication.

Revealed exclusively to CoinDesk, figures from Predictions.Global, a website that allows users to view Augur markets without installing the app, show the platform, built on the ethereum blockchain, saw a spike in “open interest” from Sunday to Monday. A metric that denotes how much is being risked on the outcome of real-world events, open interest leapt by 51 percent to more than $325,000 over the period.

That news comes less than a week after Augur’s launch, at which time it quickly (but briefly) became one of the top 5 applications on ethereum. One of the first large-scale applications to be deployed on a blockchain, it’s believed the market could one day become a large-scale vehicle for the crowd-sourcing of human knowledge and expertise.

Still, while it’s early days for that aim, the data makes clear Augur has enjoyed rapid growth in the sum of money users have put on the line, and that the number and variety of markets is increasing. Predictions.Global’s data also underscores the speed at which Augur markets are attracting funds.

Open interest surpassed $100,000 on July 11 – the first full day of betting – then rose to $200,000 on Sunday and $300,000 Monday.

In this way, the figures add to the growing data on the new product, most of which paint a similar picture.

Another data provider, DappRadar, which measures the total transaction volume passing through Augur’s smart contracts (rather than open interest), has found over 3,000 ether has traded on the platform since launch (worth nearly $1.5 million at the current exchange rates), with more than one-third of that total trading within the past 24 hours.

God and ether

Still, in other ways, uses of Augur are arguably becoming more diverse. Predictions.Global’s data shows a steady rise in the number of prediction markets created by Augur users, to nearly 320 at the time of writing.

total markets augur

To be sure, money at stake is heavily concentrated in a small number of markets, and most have seen no betting activity at all.

A single market – for whether the price of ether will exceed $500 at the end of the year – accounts for around half the open interest on the platform (nearly $150,000) and drove most of the increase in open interest over the past 24 hours.

And of course, as one might expect from an open, decentralized platform, users have offered some frivolous predictions.

For example, more than one market solicits bets on the existence of God, to be determined (in one case) by news media reports before January 1, 2020. (Interestingly, the app shows that someone is willing stump for a “yes” on the God question, if they can find someone to take the bet.)

Virus spreads

The variety of markets that have sprung up is notable, too.

“We’ve seen terrific US dollar volume, terrific market creation growth, innovation in the types of markets created and their characteristics in terms of how folks are starting to use the platform,” said Ryan Berckmans, co-founder of Predictions.Global.

He specifically pointed to Liquidity Health, a user that has created markets for the spread of epidemic diseases such as human-borne Nipah virus. Liquidity Health’s goal is to “fight disease with better predictions,” according to its Twitter account.

While skeptics might worry that it’s creating a financial incentive to spread viruses, Augur co-founder Joey Krug told CoinDesk that such applications of the platform are “actually really interesting” and could provide “a lot of useful information.”

He added:

“I’m less concerned about a person trying to spread a disease to make money off of it.”

Other creative uses of the platform have emerged, including an attempt to introduce accountability to the ICO space. MedCredits, which plans to raise money through a token sale, has created a market to bet on whether it will adhere to its roadmap, releasing an application on ethereum’s “mainnet” – or live blockchain – by October 15.

Around $5,000 is at stake, and the odds of MedCredits succeeding have climbed from 20 percent to 85 percent at the time of writing.

Users vs bugs

But while Augur the data above might give the impression that Augur is thriving, there’s one important metric that’s less encouraging.

According to DappRadar, the platform’s daily userbase peaked at 265 the day it launched, briefly pushing Augur past CryptoKitties in rankings of the most popular dapps. User numbers have declined since, and at the time of writing, the figure stands at 113 over the past 24 hours.

Krug offered a potential explanation, though he said it was just an “intuitive guess.” People might have tried it during the first couple of days, but been discouraged by bugs, he said, which is reasonable to assume, based on complaints about Augur’s user experience on forums and social media.

The Forecast Foundation has issued four updated versions of the app since launch, as well as working with the ethereum node provider Infura to improve connectivity.

As these bugs have been fixed, Krug said, it is possible that users – even if there are fewer of them currently – have become more comfortable that Augur is reliable, so they’ve put more capital onto the platform. The first markets are scheduled to settle this week, paying out users who bet correctly. If all goes well, that milestone could make users even more willing to stake their money on the platform.

The ultimate goal, said Krug, is for Augur to allow users “to create markets on essentially anything” without paying high fees to financial intermediaries. For now, high gas costs on ethereum and other technical limitations mean that goal is years away. But Krug is confident that the technical issues can be sorted out.

He concluded:

“Right now, what we’re doing is looking up the exponential curve.”

Crystal ball image via Shutterstock

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

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​​Market Mania Is Unavoidable, But Crypto Must Get Past It

Michael J. Casey is the chairman of CoinDesk’s advisory board and a senior advisor for blockchain research at MIT’s Digital Currency Initiative.

The following article originally appeared in CoinDesk Weekly, a custom-curated newsletter delivered every Sunday exclusively to our subscribers.


The financial bubbles of 17th and 18th century Europe are favorite references for those, among both believers and detractors, who warn of the excesses in crypto-asset markets.

The events of those times long past capture the same problems of information asymmetry and irrational speculation that leave many seasoned observers concerned about this moment. The South Sea Bubble, the Mississippi Bubble, and Tulip Mania were all examples of how, during money-crazed manias, unscrupulous entrepreneurs and early investors exploit their privileged access to information to do great harm to an ill-informed investing public. This, at its essence, describes the risk inherent in initial coin offerings (ICOs).

But the historical context behind those centuries-ago events is also important: they were a direct, almost unavoidable side effect of the invention at that same time of limited liability companies, stock markets and derivatives, some of the most game-changing financial innovations of all time.

On the one hand, these inventions – spearheaded by the Dutch – created vast new opportunities for a growing middle class to engage in wild, ill-conceived speculation. But on the other, they unlocked a giant, previously unavailable pool of collective capital, offering a much more efficient way for entrepreneurs to fund their ventures.

Vast worldwide enterprises were launched on the back of these new money-raising tools. They gave us the global capitalist economy we now take for granted.

This context is important because everything that looks like investor mania in cryptoland today – the 2017 bubble in token prices, the scam coins, the vaporware, the 10-figure ICO raises without a line of code written – might similarly be viewed as the unpleasant but unavoidable side effect of a major technological transformation.

If crypto-assets, smart contracts and blockchain technology fulfill their potential to decentralize the economy, the change they promise could be just as profound, if not more, as that sparked by those inventions during the Dutch renaissance. This technology represents a radical re-imagining of record-keeping, fundraising, organizational design and of money itself.

At times like this, you just can’t stop the unsavory, get-rich-quick types.

Tech lures speculation

As I’ve noted elsewhere, if you examine moments through history when a new, general-purpose technology upended the economic order, they were almost always accompanied by periods of intensified financial speculation.

It was the case with railroads, with electricity and, of course, with the rise of the internet in the late nineties. The Venezuelan economist Carlota Perez has even argued that the social phenomena of bubbles and speculation are necessary elements in how societies fund and build the infrastructure upon which transformative technologies become entrenched in the economy.

But the opposite causal relationship does not necessarily hold true.

Tracing every moment of hype and speculation that has been associated with a new technology will not at all find that it’s always associated with the successful deployment of a powerful new technology. History is rife with supposedly “revolutionary” ideas that captured people’s imaginations but weren’t ultimately deployed in a widespread, society-altering way.

The past 50 years are full of them: the Segway, Google Glass, Betamax, the Concorde, to name a few. Note: all of these were impressive technologies and some have gone on to be important components of subsequent inventions. But for various reasons – the cost of production, marketing, fashion, etc. – they never took off in a way that matched the hype.

Gambling as a service

I was thinking about all this as I read about Augur’s impressive launch of its prediction market. In one day, its ethereum-based decentralized application processed $400,000 in bets on everything from U.S. elections to the World Cup.

The question to me is whether the initial enthusiasm for decentralized prediction markets – in which contracts can be written for payouts between parties on the outcome of any particular event – will go beyond human beings’ natural proclivity to gamble and ultimately deliver on Augur’s real promise to society: a crowd-sourced, market-based forecasting system and an incentive, reputation token model for rewarding honesty.

In this case, the market Augur is developing literally requires speculation to function. Gambling is not just a byproduct; it is integral to its success. But just because people want to bet in this way does not mean that the price discovery around their predictions will be widely used by society at large to process and value information about occurrences that matter. Only time will tell on that one.

You could ask similar questions about other sectors of the crypto industry that attract significant speculation but also represent potentially powerful, cutting-edge ideas. While I’m convinced that the underlying concepts of incentivized consensus, cryptographically secured distributed ledgers, digital assets, and decentralized exchange will succeed in some form, I see no guarantees yet that any of the various manifestations of those ideas – including bitcoin – will necessarily survive and make an impact on the world.

So, let’s ask these questions:

  • Are ICOs just enabling scammers and founders of doomed-to-failure projects to get rich on the greater fool theory of bubble-nomics? Or is this truly the killer app of blockchain technology, the one that emancipates capital from Silicon Valley gatekeepers and creates a global market for ideas?
  • Was the recent enthusiasm for Cryptokitties a fad, a crypto Beanie Babies moment, or will it go down as the vital use case that proves the value of digital scarcity and fosters markets in which producers of unique creative works can monetize them
  • Will bitcoin be forever viewed as a fanatic passion of “To the Moon” HODLers or can it truly be the foundation of a new global reserve asset and payments platform?

These and others like them are vital questions to answer if we are to ensure that blockchain technology’s vast potential plays out to the benefit of matters to society at large.

Value to society

Answering these questions comes down to how the technology itself is integrated into the wider economy.

That notion itself can refer as much to a new type of market as any other kind of technology. (The early Dutch stock markets offer a good analogy here for Augur’s prediction markets – organizational technologies in their own right.) Regardless, there still has to be broad-based value to society if the technology (and the market it supports) is to survive and prosper.

Here the history of Europe’s early capital markets is again valuable. The fallout from the disastrous South Sea Bubble didn’t kill the idea of public capital markets for funding new ventures, but it did bring order and societal interest into play. These came in the form of new rules from governments on who could issue public stock and how. From that evolved the entrenched, regulated stock exchanges and related asset markets that we use today.

This is not at all to say that government regulation must be the answer to crypto’s aspirations to go mainstream – the very concept of a censorship-resistant system tends to run counter to it. But it does mean that those of us involved in developing this technology should encourage protocols, best practices, standards and norms of behavior that have at their core the interests of society at large.

History suggests that naysayers like Nouriel Roubini who scoff at the hype and speculation in crypto communities could be blind to the major transformational moment that underpins it. But it equally offers a warning to crypto enthusiasts: don’t get lost in the hype; create something that lasts; build something that matters to everyone.

South Sea Bubble image via Wikimedia Commons.

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

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Augur Passes CryptoKitties: Ethereum App Enters Top 5 with $400K Debut

One Augur user was so eager, they didn’t even wait for the user interface.

That may have summed up the slapdash state of affairs Tuesday, hours after the Forecast Foundation, the non-profit behind the Auger protocol, announced the launch of its decentralized platform for betting on the outcome of events. By 5:00 UTC, the first prediction markets were being created, and by day’s end, new bets were being placed on everything from U.S. elections to World Cup soccer games, all with the help of bleeding-edge tech.

“Someone must’ve really wanted to be the first,” another user remarked, as the discussion turned around how exactly the market (for betting on the winner of the England-Croatia World Cup match) had been created. (Spoiler: The game was already over).

However, it’s hard to say if the wider crypto world shared this early adopter’s enthusiasm.

As decentralized applications (apps powered by blockchains but operated by no single entity) are a new phenomenon, there remain few ways to gauge whether one could meet any criteria for success. Still, a useful comparison might be to compare Auger’s use to that of other major dapps, and on that front, there’s an argument Augur is doing well.

Just over 12 hours after Augur’s launch, the platform has become the fifth-most popular dapp on the ethereum blockchain, according to DappRadar, putting it ahead of CryptoKitties, which has arguably been the market leader since it went mainstream in December.

That makes Augur a big fish in a very small pond, though, with just 200 wallet addresses (a flawed proxy for users) interacting with its smart contracts. It does a little better – third place – in terms of the volume of ether those smart contracts have processed, but the figure is 910 ETH (or around $400,000).

But metrics aside, Augur’s promise of low-fee gambling that governments can’t easily disrupt surely has its fans (and detractors) who were there to assess the launch. On the latter front, it seems that Auger didn’t live up to the outsized demands of some of its supporters.

One user posted to the project’s Discord forum following the launch:

“I was hoping institutions would be on Augur right away, but I guess that was naive.”

Defining success

Still, viewed in the context of its cryptocurrency peers, there’s a strong argument Auger’s launch was a success.

Gaining a couple hundred daily users is rare for a dapp (just look at the hundreds of single-user examples listed on DappRadar). And a smooth launch – a launch of any kind – counts for something in the world of blockchain, where so many projects spectacularly self-immolate, or simply never materialize.

Nic Carter, co-founder of Coinmetrics.io, a site that provides and analyzes data on public blockchains, seemed to endorse this view when he tweeted, “Real volume on Augur already!”

On the other hand, there were high hopes around Augur, so more-than-zero is unlikely to have satisfied everyone.

Kyle Samani, co-founder and managing partner of Multicoin Capital, a cryptocurrency investment fund, told CoinDesk in June, “I think Augur’s going to be probably the most widely used dapp when it launches.”

He added, “I know a lot of my friends that are pretty excited about Augur who are not in the crypto space. They work in finance on Wall Street and they want to go place bets and make markets on Augur, so I think Augur’s going to be a pretty resounding success when it launches.”

Then again, Samani’s tone was more muted a few weeks later. “Not sure how much demand there will be,” he told CoinDesk a few days prior to the launch. The team, he said, wanted the process to be “slow and steady.”

UX issues

But as is often the case with ethereum – and blockchain networks broadly – complaints about Augur come down to user experience.

Posts in the Discord forum revolved around a few repeated gripes: high gas costs (in fact costs tended not to be as high as estimated costs, which put users off), the Augur app repeatedly disconnecting (this was certainly our experience) and slow syncing (including, cruelly, getting stuck for minutes at 99 percent).

A popular Reddit post addressed “dear Augur guys” urged them to “put yourselves in the shoe of the end user,” who – the post’s author argued – were likely to run into problems, give up, and not return.

Some issues – the Augur app’s tendency to repeatedly disconnect, for example – may not be the developers’ fault, at least not directly. Users who are not running their own ethereum node were given the option to connect through Infura, which some users in Discord said was experiencing more traffic than it could handle.

An Infura spokesperson told CoinDesk that the “entire team is on a video chat with the Augur team working on the issues,” adding, “It is premature to wholly attribute the issue to one particular cause.”

And Brendan Bernstein, a founding partner at Tetras Capital, argued that the problems with using Infura go beyond poor connectivity, writing, “Apps like Augur will further centralize Ethereum, by effectively forcing users to rely on trusted validators” such as Infura.

Give it a minute

Still, Augur’s team was quick to put forth the argument that all will be better with time.

Platform founder Joey Krug, in particular, took to Twitter to answer critics of the app’s user experience, tweeting: “Everyone knows the Augur UX is bad right now because of issues that only appeared on mainnet in production, pointing it out on twitter isn’t saying anything useful/productive.”

There’s still plenty of time for Augur to work out its user experience kinks and attract more gamblers – including perhaps Wall Streeters – developers involved in the project emphasized.

“This is the first step of a long journey,” Forecast Foundation co-founder and senior developer Joey Krug told CoinDesk a few minutes before announcing Augur’s launch.

Meanwhile Ryan Berckmans, co-founder of Predictions.Global, which provides a web-based user interface for Augur markets, concluded:

“A platform like Augur needs to build a history of reliability before serious money moves in, this is a trend we’ve seen with blockchains in general like ethereum and bitcoin.”

Casino image via Shutterstock

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

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Augur Is Live: Decentralized Prediction Market Launches After 2-Year Beta

Augur is finally live.

The decentralized platform for betting on real-world predictions was one of the first applications built on top of the ethereum blockchain, and its creators  sold “reputation” (REP) tokens for over $5 million in 2015 – a time when few were talking about “ICOs” or “utility coins.” A public beta version of the platform came out the following year, and its team published a revised version of its white paper in January.

Now, the Forecast Foundation, the not-for-profit behind Augur’s development, has announced the launch of the long-awaited platform, which was accompanied by the release of the final version of the Augur application as open-source software.

The years-long delay in reaching this point may have been frustrating for token holders, but it has allowed the Augur team to aggressively vet their code through internal audits and a generous bug bounty program. Notably, Augur offered $200,000 for bugs that qualified as “critical” (though the team hasn’t announced any rewards larger than $5,000).

The project has good reasons for being so circumspect.

As Tom Kysar, operations lead at the Forecast Foundation (which was created to support Augur), told CoinDesk in February:

“We’ll probably be the largest and most complex application to be attempted to be deployed on ethereum.”

At the same time, he added, “Once Augur is live on the mainnet” – that is, once it’s live on the ethereum blockchain – “we have no more control over Augur than anyone else does.”

So, the risk that a serious vulnerability could cripple a complex decentralized application like Augur aren’t just academic. After all, the entire DAO saga – ICO, launch, hack, ethereum fork and ensuing divisions – unfolded in the time between Augur’s token sale and its launch.

How it works

Augur allows participants to bet on anything.

As long as the outcome can be verified in the real world, users can create a prediction market for anything from ether’s price, an election in Brazil or the outcome of Iceland v. Argentina in the World Cup.

What distinguishes Augur from a traditional betting market is that no single party sits in the middle, meaning that users are likely to pay lower prices.

Removing the centralized intermediary from a betting market presents a problem, however: how to bring dispersed, financially interested parties into agreement about the actual outcome of the predicted event?

In Augur’s system, the creator of a prediction market designates a “reporter” to vet the outcome. This designated entity puts down a deposit of REP tokens, which they lose if they incorrectly report the outcome and other REP holders challenge them. The reporter is compensated through fees.

Day-to-day betting is not done in REP, but in ether, the native token of the ethereum blockchain (though, eventually, the plan is to support other ethereum-based tokens). Users can buy and sell shares in particular predictions, which are priced according to the likelihood the market attaches to each outcome.

More than just cheap bets

Augur’s white paper argues that fees on the platform will go “as low as market forces can drive them,” providing those placing bets with an attractive alternative to current offerings.

The platform will also likely be difficult for governments to block or censor if, as Kysar argued, no single party is in control of it – even the Forecast Foundation. That could make Augur appealing in jurisdictions where sports gambling is illegal, for example.

Augur’s creators see it as more than just a rival to gaming sites such as Paddy Power, though. The project’s website suggests its usefulness for forecasting – whether elections or quarterly product sales – and hedging against high-impact, low-likelihood events such as natural disasters.

Forecast Foundation co-founder and senior developer Joey Krug summed up the team’s ambition last year, when he wrote:

“If Bitcoin gave us decentralized currency and Ethereum brought decentralized computation, Augur will enable a decentralized financial system.”

Another CryptoKitties?

Before Augur can overhaul the global financial system, though, it has to attract users.

Kyle Samani, co-founder and managing partner of the cryptocurrency investment fund Multicoin Capital – which he said does not currently own any REP tokens, but is following the project closely – told CoinDesk that the Augur team wants a “slow and steady” launch – nothing “loud [and] crazy.”

“Not sure how much demand there will be,” he continued, given that “they are not doing mainstream consumer marketing.”

That said, if demand does materialize, Augur could put considerable strain on ethereum, according to Corey Miller, an investment analyst at cryptocurrency investment firm BlockTower Capital.

Echoing Kysar, Miller said Augur would be “the most complicated dapp to ever launch on ethereum.”

But he added:

“Ethereum doesn’t handle complicated so well.”

In Miller’s view, even modest demand for Augur could lead to a situation similar to the one caused by CryptoKitties at the height of its popularity, when the ethereum network slowed to a crawl and transactions became inordinately expensive.

In other words, the launch could turn out to be loud and crazy after all.

Ribbon-cutting via Shutterstock

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.