A few days ago I wanted to write a post on Augur: the self-proclaimed most complicated ERC-20 token on the market. I was wondering how an unregulated gambling platform wasn't attracting any negative attention. Give it time, I thought. Just wait for something bad to happen and then you'll have more to write about. LOL, boy was I right.
The Augur development team created a fail-safe contingency in case anything went horribly wrong when the platform went live. This kill switch is a form of controversial centralized control and was only meant as a very temporary measure (2 weeks). Shortly before they burned their kill switch to the platform the ultimate troll market appeared.
That's right... someone had the gall to create a market asking if our president would live to see 2019.
Similar markets, moreover, exist for a number of other public figures, allowing users to gamble on whether 96-year-old actress Betty White and U.S. Senator John McCain — who has been diagnosed with brain cancer — will survive until Jan. 1, 2019.
Unfortunately, these death-markets are a necessary evil if we want to have censorship-resistant decentralized platforms. Also, I think it's foolish to think that the Augur dev team would have even hit the kill switch for something this petty. The kill switch existed to mitigate the damages from a catastrophic technical bug, not stop trolls from using the system. Augur must have known that this kind of thing was going to happen. We all should have really.
Is this really that big of a deal, or is the situation just being blown out of proportion?
...creates a financial incentive for someone to place a large bet that a public figure will be assassinated and then murder that person for profit.
I highly disagree with this sentiment. Who in their right mind would place a public bet on an assassination and then go out and make it happen? You might be thinking you can remain anonymous, but who's really going to take that chance? Would someone really bait the FBI, CIA, NSA, and Secret Service like that? I highly doubt it.
...assuming these bad actors aren't state-sponsored trolls looking to discredit crypto in the first place.
Exactly, we have no idea who created this market. You can't run around saying Augur funds terrorism because fifty shares of some troll bet got traded. At the end of the day these death-markets are simply that: the work of undermining trolls. This is what I'll continue to believe until shown otherwise. Also, no one's going to care if the people creating and betting on these events gets prosecuted. They deserve it.
Reporters — the mass of for-profit individuals on the network who verify the outcome of events — can flag individual markets as unethical, preventing any bettors from profiting from them.
It's clear that the Augur team has already accounted for this "problem".
How does it even work though?
When I first started researching Augur I simply dumbed it down to unregulated gambling. This is exactly what it is, but at the same time it's also not peer to peer. You aren't betting against an individual person. It's a pool of shares.
The above video gives a good idea of what goes on. Shares are worth $1.00 a piece and get split into two parts, one for each side of the bet. A market starts out with even odds; a share costs $0.50 to buy and if you win you get $1.00 per share. However, if bettors think that one side is more likely then the other they'll buy more shares of that side, making shares on that side cost more and shares on the other side costing less. It's very similar to buying and selling crypto and stock.
This dynamic brings up a lot of new variables that don't exist in traditional betting. Let's say you bought shares at even odds (50/50) but now the odds have changed in your favor to 80/20 before the end of the time limit. You could choose to sell your shares back to the market and make money even if your bet turned out to be wrong later. Similarly, you could hedge your bet by buying some of the opposite shares at a huge discount. As you can see, the Augur market gives gamblers a lot more control than they would have on a traditional bet.
I think that this is a sign that Augur mass adoption is bound to happen (and with it, Ethereum). Not only is there no house skimming off the top of your bets, you also have far more control of the action. It's a worldwide decentralized gambling platform that can't be shut down. It's only a matter of time before this service proves itself and becomes a huge player in the cryptosphere. As we all know, the current foundation of cryptocurrency is gambling itself.
Also, it costs money to create a prediction. This ensures that the market won't be flooded with a bunch of predictions that no one wants to bet on. The interesting thing about this process is that a trading fee gets kicked back to the market creator for taking the risk. This means that you could make a lot of money on Augur if you were very good and guessing the markets that people would want to bet on. So, not only can you make money if you're good at predicting the outcomes of events, you can also make money if you know what events users want to predict.
Conclusion
Augur is amazing and actually works. How many people called it a shitcoin? How many people call the other ERC-20 projects in development shitcoins? How many of these shitcoins are actually going to deliver? I'm guessing quite a few. The future looks bright for Ethereum. Fiat is a desktop calculator. Bitcoin is a flip phone. Smart contract platforms are smartphones. The world just doesn't know it yet.
The one thing we have to watch out for with Augur is to make sure it doesn't turn into a platform of self-fulfilling prophecy. The entire platform will lose massive credibility if big players can use deep pockets to manipulate the market.
For example, what if there was a bet that Ethereum would be over $500 at the end of the year. This bet does exist and it's actually the biggest prediction on the platform right now. So, lets say it's December 31, 2018 and Ethereum is $1000 a coin. Because of this impending victory, the share to buy $500+ Ethereum costs $0.999 and the share for $500- is $0.001. Assume the market is so huge that an Ethereum whale like Block.One could flash crash the value of Ethereum at the last second to win the bet at staggering odds and still make a profit.
It's already a theory that Block.One might do this anyway to make its "competition" look weak and establish itself as a true "Ethereum Killer". Winning the Augur bet would just be icing on the cake. In truth, I find this scenario highly unlikely. It's already been shown that players in the cryptosphere don't undermine each other like they do in the corporate world. Undermining one blockchain undermines them all to an extent; there is no incentive to do so. We have little to worry about. Welcome to the cooperative economy. Welcome to abundance.
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