Wednesday, May 3, 2017

What is Augur A Search Engine for the Future

Augur is a decentralized prediction market platform built on the Ethereum network. Although this may not sound very exciting at first, it actually is. The platform brings together old and new concepts and technologies to create a useful tool for some and a revenue stream for others.

The concept of a prediction market isn’t new. The idea is to speculate on future events (think of sports betting but for everything else) in a market where supply and demand create the odds and market prices indicate what the crowd thinks the probability outcome will be for x or y.

As so, prediction markets allow people to “gamble” or “invest” in outcomes of certain events, but they also allow participants to know the probability of a certain event or outcome taking place. This concept is known as the wisdom of the crowd, a theory that states that if you ask a large number of people something, their collective answer is often better than the answer given by an expert.

Augur, however, takes this concept to the next level and provided a completely decentralized platform built on Ethereum smart contracts. In this platform, users can create markets for certain events by providing funds to ensure liquidity. The user that creates the market receives funds from the fees generated by that market.

So, let’s say a user created a market for the U.S national election. Two types of tokens are issued, in this case Hillary and Trump. These tokens can be priced from $0 to $1 and the price is driven by market forces. In the beginning, tokens may have been valued at 0.70-0.30, setting the odds at 70/30 which is an estimate of the probability of one or the other candidate winning. As things progress in the election campaign, prices may change and eventually, once the results are announced, the Hillary token would be valued at $0 and the Trump token would be valued at $1.

This creates a place where users can earn money by correctly predicting the outcome of an event but also a sort of search engine of the future that allows us to have an estimate on the probability of a certain outcome taking place.

So what exactly makes Augur new? Not only can users earn from their predictions, they can also earn from the platform’s fees, since the service is decentralized. Furthermore, since the Augur platform is not hosted on any centralized server, hacking or server downtime are not possible. This aspect, along with the use of crypto tokens, also make Augur a truly global platform.

However, what really makes Augur stand out and brings transparency into an otherwise old system is the way that information is introduced into the system. Traditional prediction markets required the users to trust an entity that would insert the outcomes of the real world into the system which can lead to fraud or sheer incompetence. In Augur, however, a network of thousands of REP token holders do this, ensuring that mistakes and fraud are basically impossible.

Augur had a successful ICO in 2016 and is currently in beta. You can check the beta version out here. The Augur platform is scheduled to be released during 2017. To learn more about Augur, visit the official website.

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