Augur’s Unsinkable Death-Ship
“Assassination markets” are proliferating on Augur. If it gets bad, no-one can shut the platform down.
There’s trouble in Augur-town.
The decentralized prediction market, which allows traders to bet on virtually anything, was designed by the non-profit Forecast Foundation to help the uninsured poor hedge against misfortune. Such were the hopes, at least, of the buyers who invested $5.3 million into the platform when it issued its token sale in 2015.
But (some) punters have instead opted to bet on when certain celebrities will die. Want to know when Betty White, the beloved 96-year-old “First Lady of Television,” is going to croak? By January 2019, say 30 percent of bettors here, each of whom could get a payout if they’re right.. Elsewhere, on the site, users are betting on the deaths of Trump, Maduro and Warren Buffett.
Since the app was released on July 10, only Betty White’s market, bizarrely, has yet seen much action. Yet when the markets pick up — and with some $1.5 million already at stake on Augur, they likely will — could the courts, governments, or the Forecast Foundation itself prevent them?
No, it turns out.
Tyranny of the Masses
No matter how deeply compelled, the Foundation would be simply unable to shut down the markets. “We only wrote the software,” says Joey Krug, the Foundation’s co-founder. “We don’t host it, and we don’t run it.” Instead, the masses — 37,521 address holders in total — run it. Markets operate independently of any individual, and are verified with the consensus of a global network of “Reporters,” holders of Augur’s native Reputation (REP) token. Here’s how an assassination market would play out.
A “market creator” creates a market for Betty White’s death. Traders join the market, paying a small fee to the creator. They then make bets, each amounting to a percentage of one ETH. So if traders believe Mrs. White has a 50 percent chance of going gently into that good night, they’ll stake 0.5 ETH. If they’re right, they’ll get a dollar back, the initial deposit plus the opposite odds. So if a trader places $3,000 worth of ETH on Betty White’s head, they stand to win $7,000 if she dies. That’s a lot of motivation to, er, off her oneself.
When the time comes and the coroner discloses White’s tragic passing (or lack thereof), REP holders will vote on what has occurred. Reporters gain REP tokens for accurate reporting, and lose them for dishonesty. So they’ll be motivated to provide a true account of what happened. And once they’ve done this, and Mrs. White’s soul is laid gently to rest, the funds are released to the winners. Since every one of these reporters is a lone wolf operator and can profit from accurate reporting, there’s little the Foundation could do to stop the payout. All the Foundation can do, Krug says, is “update Augur’s user interface.”
Crime and Punishment
Could courts at least pressure the Foundation into fixing the problem? They’ve targeted platform providers in the past, says Robert Jappie, who runs the Crime and Regulation Department of London-based law firm Mackrell Turner Garrett, which has legal expertise in blockchain-related matters. That’s what happened to Ross Ulbricht, the so-called “Dread Pirate Roberts” who presided over the infamous black market Silk Road.
Though not selling narcotics himself, Ulbricht was “held responsible for the criminal activities taking place on his platform,” says Jappie. But unlike those working at the Foundation, a non-profit, Ulbricht was “benefitting from [the criminal activities] financially.” So the courts have less recourse here, too.
But let’s say the courts decided it was a practical option to indict every user across the globe. Well, they’d founder here, too. Online jurisdiction aligns with international borders. U.K. courts in March 2018, for instance, failed to get the U.S.-based Wordpress to take down two offensive web-pages. Governments would have a far harder time enforcing compliance across Augur’s vast user-base.
(Partially) Death Proof
Yet Augur does have one sort-of safety valve, if it ever comes to it: Reporters can vote to judge certain markets as “invalid,” says Krug. This could be for an ambiguous market (“The weather will be delightful 14 September”), or, as is the case here, potentially criminal markets. Invalidating a market then cancels payouts and renders all bets worthless.
Krug optimistically asserts that this would put off would-be assassins from creating and betting on future assassination markets, because they’ll expect their handiwork to go in vain. “Once it’s been marked as invalid, the precedent is already set,” says Krug.
The only catch? Markets can be invalidated only after a given event — or death, in this case — has or hasn’t occurred. So until the first death-payout is voided, assassination markets will continue to draw in upstart killer-punters (and may well continue to do so afterwards — Krug’s just hopeful, here). Could someone feasibly get killed before the first of these markets is invalidated? “Uh…yes,” says Krug.
So to nip murder markets in the bud, Betty White may have to take one for the team.