Augur Bets on Bright Future for Blockchain Prediction Markets

“You say prediction market and people are like ‘What’s that?’ – it doesn’t sound that important or lucrative or interesting.”
That’s Jeremy Gardner, best known as the director of the College Cryptocurrency Network, talking about the first reactions some may have to his latest project, Augur, the decentralized, blockchain-based prediction market founded by Jack Peterson and set to launch a token crowdsale this spring.
Common perceptions aside, Gardner and core developer Joey Krug are out to prove that a platform that allows participants to bet on the outcome of real-world events can be a vehicle for social good, rather than simply another outlet for digital gambling.
In conversation with CoinDesk, Gardner and Krug sought to portray Augur as a project that plans to use decentralized public ledgers to create a way for anyone in any field, from finance, healthcare and governance, to tap into the collective forecasting power of a global user base.
Gardner said:
“With bitcoin, it’s a better money than what we have, but it’s a version of what we have today. We’ve never really had a wildly popular prediction market. We’ve never had these open-source tools to be able to bet on the Internet and turn that into a social good.”
Both Gardner and Krug have left college to launch the six-person project, one that boasts financial support from Ethereum creator Vitalik Buterin and the guidance of Ron Bernstein, founder ofIntrade, what was until the time of its shutdown in 2013 one of the more well-known prediction markets.
Speaking to CoinDesk, Bernstein said he expressed an early interest in the project as he views it through the lens of his own struggles trying to launch a similar, though centralized, platform.
The Intrade and Tradesports CEO compared the challenges the project faces to tech giants like Uber, which have tested regulatory boundaries in order to ensure they are first to market with a potentially powerful idea.
“The potential for Augur is really about the distributed participation from the exchange operators as well as from the exchange users and the ability to distribute that in the way that they propose has never been done,” Bernstein said.
A tumultuous history
At present, there are more immediate hurdles for Augur. One of which is ensuring that the public can get behind a prediction market, especially when their rocky history has clouded public perception about what they are and what they aim to achieve.
Prediction markets allow their users to buy and sell shares in the outcome of an event. The current market price of a share is then an estimate of the probability that event will occur. Already, many academic researchers attest that such platforms, while incorporating aspects of gambling, do have practical value.
“Prediction market prices have informational value because they aggregate the beliefs of market participants and reveal what the market overall forecasts are the odds of the event at hand occurring,” a 2014 report by Mercatus Research explains.

This post was published at Coin Desk on Pete Rizzo /n March 1, 2015.

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