With 100% Certainty, I Predict there’s a future for Decentralized Prediction Markets

Jeremy Epstein
Sep 5, 2018 · 6 min read

TL:DR; Decentralized prediction markets continue to get real. Augur enables you to bet on future events and get paid if you are right in a censorship-resistant environment, which has pros and cons. Here’s one prediction that I will bet on. This market will continue to mature.

As I shared the other day, I have been spending a fair amount of time recently playing around with the earliest versions of the 1st generation crypto products out there.

One of them is Augur which was a project co-founded by Jeremy Gardner who contributed to the Decentralized Marketing Organization e-book.

Augur was actually launched well before the major ICO boom and its concept, a decentralized prediction marketplace, really caught my interest.

You would be able to place bets on events and, with the money secured by the blockchain and not held in custody by another entity, you would get paid when the event occurred as you predicted.

Of course, you lose if you were wrong.

There is the question of “how do you verify that something actually happened” and this uses a combination of “oracles” (external feeds into the system) and then a challenge/adjudication that uses token economics (REP is their native token) to ensure that the accurate answers are reported.

It’s not perfect, but it would definitely require a fair amount of money and coordination to pull off a fraud/scam. That’s true with anything, but not the point here.

A few weeks ago, Augur announced that it was, in fact, ready for prime time (as much as a 1st gen crypto project can be ready for prime time).

Naturally, I decided to give it a shot.

The first thing you need to do (both on Windows and Mac) is download the Augur software from their GitHub repository and install it. Easy enough.

Once you get that done, you need to sync the blockchain. That took me a few tries and some time.

Managing to get through that challenge, a browser window opened pointing to a localhost and I was able (eventually) to log into the system. Note: you need MetaMask to make this happen and you’ll need some Ether as well.

Once you are in the system, you can start exploring the various prediction markets. You can actually take a look at all of the prediction markets that are currently live without having to install Augur at all by just going to the Predictions.Global site. There you can sort by volume, liquidity, and time to closing, etc.

You’ll see there, as you see in Augur an entire range of questions that people can (and, in some cases, are) betting on. Many of them, not surprisingly, are crypto-centric, but there are sports ones (who will win the Super Bowl or World Series), political questions (will Trump get re-elected) and so on.

Of course, being decentralized, there’s no singular point of authority to decide if a given market is appropriate or immoral which is why something like an assassination market is not only possible, but present. There are ways (through the voting of REP token holders, for example) for community policing as it were of certain markets, but this is definitely one of the downsides of crypto and decentralization.

That is to say, if the bet were high enough, someone would have an economic incentive to ensure that someone else was killed or, worse, do a mass shooting or terrorist attack.

Hopefully that stuff gets sorted out though it won’t be by government-led regulators because it’s simply not possible.

In the meantime, the good news is that you can make wagers from anywhere, anytime on events and you’re going to be able to do so with far lower fees than a centralized bookmaker could provide.

Also, if you are a REP token holder, you can make a market, say “will there be a Never Stop Marketing blog post every week day for the rest of 2018?” that expires on Jan. 1, 2019 and use the RSS feed of this blog as the oracle to determine the winner.

Then, you can take different sides of the bet with the payout changing depending on how much money is wagered on each side.

My experience with the site was not the best.

First of all, I really would have liked to see a search function, something that a competing site (which is far more immature) called BX has in their demo version and I think is critical. Gnosis is another prediction market that launched its alpha a few months ago, so you can see the entire space maturing simultaneously.

Secondly, I found the betting process to be somewhat confusing. I am sure that in the future versions the UX and terminology will be simplified, but today if you are betting “No,” you sell a share. When you bet “yes,” you buy a share. Figuring out exactly how many shares and at what price to bet wasn’t super intuitive for me. Plus, every time you are making a bet, you pay some gas fees in Ether, which can vary a bit.

Being an idiot, I should have done everything on a test net first, which I didn’t, so feel free to tip me the $3.50 I burned by doing my testing on the live site

Finally, when I was able to actually make a bet and get a confirmation, I didn’t see it show up in my portfolio initially. I realize it’s blockchain and all so it may take a bit of time, but that was annoying. I tweeted the Augur team and, as of the time of this writing, I haven’t heard back from the, but it has only been a few hours.

Still, you can see the pre-Cambrian stages of this thing happening and I know that a lot of Ether has already been wagered and a good friend of mine made about $5,000 betting on the outcome of the World Cup, so there you go.

Overall, I will say the site had a nice look to it and it shows that, with a few more revs, it can become a force.

I know that I plan to use it in a variety of ways down the road as I continue to get familiar with it.

Building something like this take a lot of work and I impressed by the stick-with-it-ness of the Augur team. Over a year ago, they said they were going to do it and, would you know it? They have done it.

The bigger thing to take away from all this is to remember that 10 years ago, no one even knew something like this was even possible.

Today, it is here.

What big tech revolutions enable is the morphing of the impossible to the possible. Decentralized prediction markets is just one of them.

Jeremy Epstein

Written by

Committed to Crypto since 2015. Linkedin.com/in/jer979 @jer979

Welcome to a place where words matter. On Medium, smart voices and original ideas take center stage - with no ads in sight. Watch
Follow all the topics you care about, and we’ll deliver the best stories for you to your homepage and inbox. Explore
Get unlimited access to the best stories on Medium — and support writers while you’re at it. Just $5/month. Upgrade