Cryptography: The Future of Forecasting, The Sharing Economy, and The Internet of Things
Author: Justin Zipkin
Abstract:
In this blog you will learn about how certain teams and projects have been making great strides to disrupt the forecasting industry, the sharing economy, and the internet of things from a utility and financial perspective.
Chapter I: The Future of Forecasting
Forecasting and creating prediction markets has proven to be more accurate when using the Wisdom of Crowd Principles than from so called “market experts”. Augur (REP, $28) has built their entire platform on this concept, on top of the Ethereum Network. Their platform is primed to disrupt the gambling industry and big casinos along with their sportsbooks should definitely be scared. Imagine being able to get compensated based off your prediction of the 2016 United States Election or the date of an ICO, with the probability of success being determined by the people who bet.
Their system is very simple, it starts out at 50/50 odds and the more people who bet one way the more the odds tilt. It’s exactly like football betting odds that change when the score of the game changes, but reacting to consumer sentiment. To put this into perspective, let’s pretend that it was just announced that someone has begun writing a script for “The Wolf of Wall Street 2: Belfort vs. Bitcoin” and you believe that it’ll hit the theaters and perform very well in the box office. In this scenario you can actually buy a token that allows you to place a bet on the future outcome of that asset. The potential outcome of hitting theatres starts out at 50/50. Then, depending on the volume of bets leaning towards one side or the other, the price to invest in this movie will either go up or go down. If the wisdom of the crowd dictates that this project will not go beyond the script phase, the price would then reflect that outcome, making the price drop (e.g., from $1 to $.2 per token) and the odds of success drop (from 50/50 to maybe a 20% probability of success). If, however, the script is greenlit, production starts, Leonardo Dicaprio is cast as Jordan Belfort, and Scorsese is brought in as the director, then the payoff per token could potentially skyrocket along with the probability of success.
The wisdom of the crowd will begin to replace analysts in the application of betting on every outcome of life. Investments can be made in countless sectors spanning movie production, an athlete’s career, or even simply betting on an outcome of an event like a beer pong game between friends or whether it will snow tomorrow. Current centralized prediction markets will be replaced as they have many flaws including the possibility of corruption or human errors. To learn more about Augur and the technology, check out this video!
Chapter II: The Future of The Sharing Economy
We all know about the sharing economy, and for those who don’t just think about Airbnb. Airbnb allows you to generate an income based off of an underutilized asset such as your apartment in another city that you never use. Simultaneously, they allow someone to utilize your asset without them having to pay the high fixed cost of purchasing their own apartment. This situation is a win-win-win: the consumer wins, the apartment owner (the supplier) wins, and Airbnb wins because they take a transaction fee. Blockchain technologies allow consumers and suppliers to circumvent Airbnb as a middleman. One such token in this space is Golem (GNT, $.35), which allows users to be compensated for their computing power when they are not using their computer. On the other end, Golem uses this massive amount of computing power to create supercomputers for businesses who can pay for their use at a fraction of the cost it would take to develop or purchase their own. Golem is an example of a worldwide supercomputer through a P2P network created through the blockchain that allows people to take advantage of the economies of sharing.
As we move into a world dominated by cryptography, which will act as the new infrastructure of the internet, this industry is one that is very important to keep an eye on. Uber, Airbnb, Spotify, and Netflix have all disrupted their respective industries and have experienced incredible growth as companies due to their offering as a sharing economy. Right now they are also at risk of being disrupted in the very industry they disrupted without the need of middlemen. Musicoin for example is looking to disrupt Spotify by charging users on a per listen basis and paying the musicians directly, thus circumventing Spotify’s gross margin and the music labels cut. Spotify has noticed these trends and has even purchased blockchain companies to ensure its stability in the market. Regardless of the outcome for Spotify — crypto-based economies of sharing tokens are key technologies to watch out for and potentially bet on in the coming future. While the concept is incredible, the real question behind these technologies is: can the tech actually take off.
Golem Explained
Chapter III: The Future of The Internet of Things
The Internet of Things is one of the most interesting cases of the three as the backbone for this economy is being revolutionized on a large scale. The driving force behind this revolution is The IOTA Foundation (MIOTA, $1.45), a project that has gone beyond blockchain and has created their own cryptography tech that goes by the name The Tangle Network. Compared to the blockchain, the Tangle Network allows for feeless transactions, unlimited scalability, unlimited data growth and is protected against the rise of quantum computers. Tangle is able to provide this as it does not run off of the traditional verification system such as mining in the case of Bitcoin. Instead, every time a consumer is involved in a transaction, their transaction automatically approves two others. In economic terms, with traders having a self-verifying system this means that the demand for transactions will be half of the supply of transactions in perpetuity, which allows the network to become faster and more scalable as more people use the system.
As a technology, IOTA can be easily compared to Ethereum, as it is made to be built upon to create apps and use cases. Where Ethereum is looking to be the backbone behind smart contracts on the blockchain network, IOTA is looking to become the backbone of the internet of things and the machine to machine economy. To build on this analogy, many tokens have built their technology off of Ethereum’s platform, utilizing their smart-contracts and base computing platform. In its pre-ICO phase there were more than 20 projects that started building off of IOTA’s network, showing both how it is used in a similar manner to the Ethereum network and its incredible potential.
A new project will see ordinary citizens having the opportunity to sell their data from IoT devices on the marketplace in the IOTA ledger. This will enable them to cash in on various data extending all the way to weather station statistics and more. What’s interesting is that not only can people trade their data, but machines can trade their data as well (I know — mind blowing). This means your machines can have intelligence of their own and pay each other for various services (hopefully not the start of SkyNet). Microsoft’s Blockchain specialist praised the network when he said that “This next generation technology will accelerate the connected, intelligent world and go beyond blockchain that will foster innovation, real world solutions, applications and pilots for our customers”. That was also said right after IOTA partnered with Microsoft, Fujitsu, and a number of other high-profile companies — including Deutsche Telekom, Bosch, Accenture, and PwC — to organize a data sharing demo of its technology.
IOTA is currently the eighth largest cryptocurrency by market share on Coin Market Cap, boasting a market cap of $4.7 billion. Those curious to know more about IOTA, Tangle, and its new marketplace ought to tune in to their upcoming TNW Answers session with co-founders Schiener and Sønstebø this Thursday at 10:00 AM EST, where they will be responding to questions from readers.
To check out a live visualization of The Tangle Network click here.
To learn more about IOTA, watch this video!
