Augur, the decentralized prediction market and one of the hottest Ethereum apps, has begun their token crowd sale on August 17, raising over US$600 thousand equivalent in BTC and ETH in the first day, at the time of writing.
(Update: Now at $1.3 million USD)
The crowdsale will run from August the 17 until September the 5, 2015 with discounts diminishing along the way:
- Aug 17 - Aug 22, 12:00pm (EST) 15% Discount True Augur
- Aug 22 - Aug 27, 12:00pm (EST) 10% Discount Prophet
- Aug 27 - Sep 5, 12:00pm (EST) 5% Discount Nate Silver
- Sep 5 - Oct 1, 12:00pm (EST) No Discount Weatherman
REP -- short for reputation -- is the back bone token of Augur and serves the purpose of ensuring the honesty of “reporters” who tell the Augur whether an event actually happened or not. This can be compared to how miners in the Bitcoin network determine which transactions are legitimate by contributing their resources to the network in the form of computing power.
Reporters will have to put REP as collateral to their claims about what happened in the real world. For example, if 65% if the reporters disagree with you about what actually happened, then you will lose your collateral.
REP will have a total of 11 million units, all distributed proportionately to contributors and investors when the platform launches. If, let’s say only 11 people donate 1 bitcoin each, they will each receive one million REP. However, the sale has surpassed that mark at over 1,600 bitcoin and close to 100,000 ETH contributed so far.
ETH and BTC are the only tokens that Augur accepts directly, however investors can contribute with any other cryptocurrency they wish, thanks to their partnership with ShapeShift.
Once the platform launches (estimated date: Q1 2016), users can expect to be able to bet on the outcome of definable events (as well as submit events) while putting a variety of cryptocurrencies on the line. Similar to how reporting works, “Wagerers” will put their coin on the line about what they think will happen. Those who are wrong will lose their money; those who are correct will of course make a profit.
Eventually the team aims to support betting in bitcoin, ether and any other popular coins. Since the code is open source, other communities can always make an implementation specific to their preferred blockchain.
This cat is out of the bag.
Why does Augur matter?
Whether you are deciding which road to the grocery store has less traffic today, if you should take your rain coat, or how many avocados to purchase for the week, speculation about out social and natural environment is fundamental to the human experience.
Augur, using a scientific principle called “the wisdom of the crowd” aims to bring unparalleled certainty to predictions that every day people care about. Eventually, this will present you with a prediction containing a very small margin of error on whether it will rain this afternoon, whether the local highway will be jammed packed with traffic. Though, as far as avocados go, you are probably on you own.
In short, it has been demonstrated that if you aggregate enough speculative opinions about a definable event like “Will Donal Trump or Hilary Clinton win the 2016 elections?” and ask a large enough group of people, the average of their total responses will blossom stunning levels of accuracy.
The potential applications of this kind of social resource are incredible and in some ways, hard to imagine. While it is true that sports betting will be a no brainier use of the platform, political policy and market predictions are bound to take their place in peoples’ speculative attention.
Most notable of all may be the confidence that it can give its users about the deep sentiments and believes of their fellow man. After all, if enough people are willing to put money on the line to bet that this outcome will take place over the other, then why would you doubt their honest belief?
This does not mean that Augur-like tech will be a kind of “truth algorithm” per say, but it can give us very accurate statistics and mathematically supported crowd sentiments, also creating the potential for some very interesting applications to be built on top.
Why isn't this already happening?
The fact that we have this incredible social resource, and are not taking full advantage of it is, troubling. This is not because of technical limitations or lack of accuracy, but rather because of policy and regulatory restrictions.
As reported by Reason Magazine:
“InTrade [. . .] the best-known prediction market until federal regulators forced it to stop serving U.S. customers in 2012, beat the pollsters and pundits by foreseeing the outcome of the 2008 presidential elections in 48 out of 50 states.”
That same year, -they add- the Commodity Futures Trading Commission (CTFC) sued Ireland-based InTrade “to prevent it from accepting bets from U.S. customers.” The company complied shortly after. In 2013, the CFTC and the Securities and Exchange Commission (SEC) jointly sued the prediction market Banc de Binary for allowing U.S. customers to make bets on commodity prices.
This is one area where Augur is particularly resilient, given that the core algorithms and code is open source and that it’s designed to function on top of decentralized blockchain technologies, arguably raising the costs of enforcement.
Nevertheless, Augur spokesman Tony Sakich, told CoinTelegraph:
“We have been in contact with various regulators and from what I’m told, they have been communicating with us regarding this and we do hope to work with them in the future. Our goal is to follow all existing regulatory frameworks and we have relied on our top notch legal team to ensure this is happening.”
The team has some well connected and experienced support, including Joe Costello, the successful tech entrepreneur who was once Steve Jobs' top pick to become CEO of apple. Costello is reported to have invested roughly US$300,000 thousand into Augur.
How governments, regulators and markets are adjust and adapt to this boon in decentralized technology will continue to be fascinating and quite possibly disturbing to watch.