Your Intention Doesn’t Matter. Perception is Reality !!! GNOSIS Bridging this Paradigm

This article is summary of my understanding of GNOSIS whitepaper. Feedback and Comments are most welcome.

With the boom in the internet the availability of data is instant and with lot of subjectivity and sometimes few pushing their own agenda making user more confused. To summarize, “ It is easy to find What People have Said but Hard to ascertain what they Actually Believe” [1]

This is the motivation for GNOSIS, with mission to build a truly impartial exchange for information aggregation to quantify the future.[1]

Basic Philosophy is inspired by the thought that asset prices fully reflect all available information. Speculative market requires effective information gathering without co-ordination and speculation closely reflects the individual mirror belief. The speculator buys when he think he has superior information of a undervalued company and sells when the company is overvalued. The is financial incentive to update the common data point i.e. price point and there is disincentive to misreport in terms of financial loss. Thus share price reflect the market sentiment about the company. In nutshell , in financial ecosystem the information aggregation happens with “Skin In The Game” [1] , a characteristic that:
1. effectively glues an individual’s action to their privately held beliefs and
2. is absent from other methods for information aggregation such as polling.

Prediction market can be thought of aggregation of the information about the outcome of future event, and frames themselves as a questions about the future.

Let’s taken an example,

Question : Which party Beta , Camma or Other will win the election in 2019 ?

Shares are divided among per-defined options in such a manner that sum of value of all distributed shares is $1 i.e. 100% . The price of each options in essence reflects its probability of occurrence.

So long as an individuals feels they have superior information about the possible outcome , they have incentive to purchase the shares and this belief is reflected in updating the prediction market.

At the conclusion of the set time for the prediction market, the winning option is redeemable for $1 and all other options looses their value. The individual who purchased the wining shares earn profit as (1- Purchase Price) * Number of shares.

Thus , Prediction markets aggregate expert opinion quickly, accurately, and inexpensively.

The primary requirement for the success of the prediction market is to have global liquidity pool for information in truly impartial manner. The companies which have resources and large user base, can create a situation of monopolies or oligopolies. Thus making the entry barrier of the small firms providing marginal benefits very high. Having a platform where these information is contributed democratically for the benefit for all, it is game changer. Blockchain’s innate nature make this platform a reality ie. a impartial platform open for all.

Gnosis’s mission statement is very crisp and self explanatory, one of the important thing to notice is the use of AI (Artificial Intelligent) agent along with Human. This provides hints that GNOSIS will be able to seamlessly integrate machines to create a large liquidity pool of information. AI has important role in aggregating relevant information to aid Human Decision making with the proliferation of IoT devices and advances in AI technology.

In short the aim of GNOSIS is to provide open, equitable and transparent access from anywhere and for anyone.

The whitepaper very clearly mentions the core objective of GNOSIS

1. World’s most Efficient Forecasting Tool : Based on Ethereum the platform aptly democratize the access and information aggregation. The prediction market as well as oracles will serve the authorative source of truth in the blockchain domain.
2. Customize Information Searching : The platform incentives everyone to participate help in the aggregation and the evaluation of relevant information in a curated manner with the help of subject matter expert. The user gets the appropriate answers not just search results which he or she has to go through to choose right one.
3. Standards for Predictive Assets : Prediction market based on single liquidity pool, enables it to be used as a flexible marketplace for blockchain oracle services. This services can be structured in a manner that can be consumed both by humans and machines for automatic decision making.

The advent of powerful and peer-to-peer computing technologies will act as a catalyst to scale market-based forecasting at faster rate. GNOSIS is well poised with their mission and core objectives aligned to make a global platform for effective information aggregation and empowering all to participate. They have taken first movers advantage in this domain. Thus we can make a hypothesis with high probability of success that — The GNOSIS platform can form the basis for all machine information economy of future.

In coming post we will dwell into the Platform Model, GNOSIS Products and future research activities and its status.

Credits :

GNOSIS Whitepaper [1]

Stefan George’s wonderful and inspiration session at ConsenSys India Developer Program.