Augur, the decentralized prediction market, launched its alpha version on Tuesday.
Augur users can wager on the future — whether on the outcome of a soccer match or on an election. If they guess correctly, they win money, if they don’t they lose. By aggregating these bets in advance of an outcome, the idea is that users can make accurate predictions about the future, by tapping diverse opinions.
Lead Developer Joey Krug said:
“This is the culmination of eight months of work since we started writing Augur, and we're glad to finally release something people can play around with and give us feedback on.”
In the alpha version, users can test out the prediction market platform. They can wager in an event, create an event, and receive payouts from successful bets. But more advanced combinatorial markets, which are used for more specific information, will come later, Krug said.
The team wants as many eyes on the alpha version as possible, to test the platform and provide feedback.
“The ability for the general public to check out Augur and try it for the first time is really huge for everyone involved,” said Director of Marketing Tony Sakich.
Wisdom of crowds
The platform, which runs over the Ethereum network, uses a principle called “wisdom of the crowds,” partially inspired by James Surowiecki's book by the same name. The upshot is that crowds can often predict the future more accurately than any one person or expert can.
The “Web 2.0” concept has been criticized by computer philosopher Jaron Lanier, who argues that it can only work for simple decisions and that focusing on the power of the collective diminishes creativity.
On the other hand, researchers think prediction markets have a potential that has yet to be fully explored. Prediction markets aren’t a new idea, so how is Augur any different than the older versions? Centralized prediction markets like Intrade have failed, but Augur is an uncensorable, decentralized platform, kind of like Bitcoin, with no single point of failure. Oh, and Augur can be used anywhere. It’s global, as is Bitcoin or the Internet.
Augur demoed the alpha version at the Exponential Finance conference in New York City, where it reached the “breakthrough” category in the XCS finals. But this is the first time outside users will have a chance to test it.
As soon as Ethereum launches its Frontier Release, Augur will launch its crowdsale.
“We'll also be doing a sale of rep two weeks after Ethereum's Frontier release, which allows you to report on the outcomes of events (to do payouts) and earn trading fees from those markets,” Krug said.
“We are going to keep rolling along to get the final product released,” Sakich said.