Edit: See Chapter 2 for a more recent discussion of Augur.
So far 2017 is shaping up to be a historic year for the crypto space with nary a dull moment. Bitcoin has whipsawed up and down, as first China’s PBOC froze withdrawals and sparked panic selling, after which the price spiked to new all-time-highs in a FOMO frenzy in anticipation of the Winklevossening, which was then denied. The price has since fluctuated a bit but now bitcoin seems content in its place as a virtual $1,000 bill as the infighting continues about how to scale it.
At the beginning of the year ETH was still in recovery mode from last year’s DAO fiasco, but has since skyrocketed nearly 600%. There is talk of a “flippening,” the idea that ETH will soon surpass Bitcoin’s market cap. While it certainly has a ways to go before this happens, the gains made by ETH year-to-date are astounding.
In short, there is drama a plenty in the crypto world, and I’ve loved every second of it. The ever-shifting landscape, in combination with the knowledge that blockchain technology will change the world, makes for a lot of interesting reading and imagining. There are so many interesting and important projects that it can be hard to keep track of all of them, and it can be difficult to separate the wheat from the chaff. Certainly some, if not most of these projects are destined for failure. Some are simply offering ICO’s as a way to cash in on the fact that people are throwing money at any new project around.
But there are definitely some gems out there, and as the title implies, I believe Augur is the shiniest gem in the heap. I’m writing this towards an audience who is generally already familiar with Augur, but in a nutshell Augur is a decentralized prediction market. If you are unfamiliar and wish to learn more, please visit:
Decentralized Prediction Market | Augur Project
Augur is a decentralized prediction market built on the Ethereum blockchain. It allows you to forecast events and be…
While Augur itself has doubled in value already in 2017, I believe it is just starting its upward movement. Allow me to explain why:
- Any good news in the crypto space is good news for Augur. In general, any increase in the overall market cap of cryptocoins is good news for Augur, regardless of whether its BTC, ETH, or DOGE. Flippening or no Flippening, new fiat in is money that can be used on Augur to predict, gamble, hedge, and whatever other use cases may arise. And the overall market cap itself is going crazy. Just one year ago, the total crypto market cap was about $5 billion. It’s at $25 billion now, with no signs of slowing down:
2. People who buy cryptocoins are already gamblers to some extent. And just from the price action we’ve seen over the past year, there are a lot of newly-rich (or newly a-lot-more rich) token holders out there with profits to gamble with. Offer them a functioning decentralized platform on which they can wager on just about anything, with low fees- it’s a recipe for success.
3. It is one of the few tokens that actually offers a return in any way other than pure speculation. As amazing as the gains have been for both ETH and BTC, holding those tokens offers nothing except price action on the underlying token. Holding Rep (Augur’s token) offers both that and a percentage of the fees that will take place on Augur’s platform. One could argue that the recent gains in ETH are purely speculation that killer Dapps will be developed on the network- but as of this second, no such killer Dapp actually exists. I believe Augur will the be the first. Certainly by holding ETH, one tangentially gains exposure to ALL of the underlying projects that will use the Ethereum network, and I would not argue against holding some ETH. But holding the tokens of the projects that succeed will offer much higher gains, and I believe Augur will be one of the hallmark successes.
4) Augur will be first to market, and appears to have some huge advantages over the likely second-to-market, Gnosis. While a complete discussion and comparison of the two is beyond the scope of this article, I will say that Gnosis’ token system is extremely convoluted and appears to have been created mainly for the purpose of having an excuse to hold an ICO and cash in on ICO-mania.
5) Scarcity. There are only 11 million tokens and will only ever be 11 million tokens. The dev team and many of the largest token holders are holding for the long term. Polychain capital (an amazing crypto hedge fund) holds a chunk that they’re not selling. With a small token count and an even smaller number available on the market, it takes much less net buying to really move the needle on the price. To use the overused “moon” analogy, Rep is a rocket with a lit fuse.
6) Expansive use cases. While gambling will be the primary use, at least in the beginning, there are so many other ways it could be used. It could be used to offer exposure to price action on just about anything, to anyone anywhere. It could be used to hedge against an existing position. And in the long run, it could be used by businesses to offer internal incentives to employees, or to gauge the likelihood of projects being completed on time or on budget. In an interesting discussion on the team’s Slack, one user described how Augur could be used to incentivize weight loss by opening a market based on a target weight and date. The use cases are nearly unlimited, and some of the more interesting ones have likely not yet have even been conceived.
So how much is Rep worth? I’m going to refrain from an analysis where I show you that the world’s gambling market cap is 10 kazillion dollars and that if Augur could capture only 1% of that then Rep holders will all be billionaires. It remains to be seen how widely adopted crypto-currencies will become, and how quickly. The creation of a decent stablecoin will certainly be a milestone that will help (looking at you MKR people, get cracking!). But given the pace of innovation we’ve seen thus far, I like the chances that Augur will be a smashing success, and I believe that REP is the token to buy and hold in the long run. I wouldn’t even consider selling until it is at parity with the price of ETH.
(Disclosure, yes I own Rep).