That's mostly true, with a caveat. By default the oracle is not decentralized, but what is decentralized is the "backstop". If I create a market, I can also be the one to report on the outcome of the market (versus it being decentralized in the original plan). What they introduced is the concept of a "dispute". So if I report on a market you can dispute it and say "Hey you are lying" and if enough people agree that I lied, you get a portion of the market fees. So you are correct, it's no longer decentralized, but it's also not centralized. Not perfect, but still pretty good.
It's consensus all the way down: ultimately a cryptosystem is what the majority of the voting/staking/hashing nodes say it is. Remember the DAO reversal?
This is true, so it comes down to how well the consensus process reflect reality. It's a pretty interesting process: there are multiple layers of dispute escalation, and the ultimate backstop is that Augur splits in two. You keep REP only on the side of the split you voted for.
The theory is that the version of REP that reports the truth will be more valuable on the open market, and that the split is a credible threat which keeps everyone honest, so it will seldom actually happen.
> > if enough people agree that I lied, you get a portion of the market fees
> This creates a host of post-closing political incentives. You are no longer betting on an event outcome, but on a consensus process.
even on scicast, which was running (largely) apolitical questions and had impartial academics resolving the questions, you needed to be aware that you weren't betting on the outcome, you were betting on how somebody would decide the outcome.
it tended to be more of an issue the fuzzier the question, or the the punchier and more news-headline-y the short version of the question was. (which also made it more likely to attract the newer, less sophisticated users.)
seeing the problems that even scicast had with poorly worded questions, i don't have much hope for augur.
In what real-world prediction market / sports gambling / poker tournament etc are you betting on anything other than the output if some consensus process?
Augur (with their REP token) is a decentralized Oracle, with two caveats:
1. the price feed used by Augur for USD/REP is currency centralized, but will become decentralized in v2.
2. Augur v2 will use the DAI stablecoin, so that markets are effectively denominated in USD. DAI uses a semi-centralized price feed for the collateral backing the stablecoin.
> Vitalik Buterin–the person most people consider the godfather of Ethereum
What kind of retarded reporting is this? The godfather of Ethereum? What does that even mean?! Why not just say, the founder/creator of Ethereum (skipping "most people consider").
This article, like most other crypto related posts is a thinly veiled ad. Anyone who just focuses on how the price graph for something moves isn't worth listening to.
I sat through some early presentations of Augur at the big monthly Bitcoin meeting that's been running for years in Amsterdam, and my first thought upon seeing it was, "who says what the factual outcome is?".
Sure in some cases it's black and white, but like most things in life there is a lot of weight in the interpretation.
So it's back to the original problem with smart contracts - you still have to trust an oracle, and I would bet ;) that if the stakes are high enough, an oracle will be manipulated in some way.
Let's take an election for example. We've had enough madness just in the US in the last 20 years to be skeptical of initially reported outcomes. In fact, some elections get reversed after study and investigation. Augur isn't going to reverse a funds exchange. And if someone has enough riding on an outcome, they may find it worth spending extra money to at least temporarily cause the outcome to match their bet. They just need to win briefly, even if the results get overturned later.
> I sat through some early presentations of Augur at the big monthly Bitcoin meeting that's been running for years in Amsterdam, and my first thought upon seeing it was, "who says what the factual outcome is?".
Is that a genuine question, or are you confused about the consensus mechanism? The answer to 'who says' is the core of what Augur is: people vote on what the outcome was, in a way that incentivizes them to vote for the answer they believe to be correct.
> So it's back to the original problem with smart contracts - you still have to trust an oracle, and I would bet ;) that if the stakes are high enough, an oracle will be manipulated in some way.
No, you do not have to trust an oracle. The whole mechanism is actually quite cool, you should check it out:
> Let's take an election for example. We've had enough madness just in the US in the last 20 years to be skeptical of initially reported outcomes. In fact, some elections get reversed after study and investigation. Augur isn't going to reverse a funds exchange. And if someone has enough riding on an outcome, they may find it worth spending extra money to at least temporarily cause the outcome to match their bet. They just need to win briefly, even if the results get overturned later.
That's easy to solve. You simply define the question in a way that obviates those kinds of issues. In Augur, people vote on the outcome they believe is correct. The outcome of this process is defined as the truth, within the system. Since this is transparent, you place your bets with this in mind. You aren't betting on who will win the 2020 election, you're betting on which answer people will converge on for the winner of the 2020 election. A subtle, but important difference.
Just to update, it seems my knowledge is also wrong, or at least, out of date. The way I thought it worked was an earlier draft, but they have some new mechanism that I haven't read about yet.
> You aren't betting on who will win the 2020 election, you're betting on which answer people will converge on for the winner of the 2020 election. A subtle, but important difference.
To me, this undermines the argument that prediction markets are a source of truth.
The thing with prediction markets, though, is that you're not just betting on which answer people will converge on. You're betting on which answer people will converge on, weighted by their confidence in their choice.
FYI, chainlink will solve this problem. They are working on a decentralized oracle solution. You should really read the white paper. Your concern is addressed by having set a collateral demand for nodes participating. So for example the stake is x you want to have an even distribution of x/n nodes to actually insure your off-chain data.
If they deliver, smart contracts will actually take off because they can reliably use external data. Right now, there is no way to do so.
Genuine question, why is this called a "prediction market" and not just a gambling exchange?
As far as I can tell, this is no different from BetFair et al who let punters bet against each other on the outcome of the next football match? (apart from "oooh! blockchain!" and "oooh! decentralised!")
I've read a lot of articles about this over the years and seen lots of lofty words about how this will change X/the world forever, or enable some new economic model Y or whatever, but as far as I can tell its just the same old grotty gambling we've had for thousands of years already except its better because blockchain?
I would expect a gambling exchange not to be transparent. The stock market is fundamentally a gambling exchange too, but it provides valuable information about the economy for free, funded by the gamblers taking part.
I would say a prediction market and a gambling exchange are both built on gambling, but a prediction market has a purpose beyond money changing hands.
> The stock market is fundamentally a gambling exchange too, but it provides valuable information about the economy for free, funded by the gamblers taking part.
A stock exchange is no more a gambling den than a flea market is, although one may choose to engage in speculative activities at both.
I feel it's also a stretch to say that an equities market provides information about the economy. The information produced by trading activity on a stock exchange is principally indicative of what price people are willing to trade given stocks at. Without augmenting the transaction data with other sets of data (company fundamentals, economic reports, etc.), it's hard to draw meaningful conclusions about the economy from these transactions alone.
If you consider the valuation of a stock according to a standard modeling technique (DCF), in which the price paid for a stock is equal to the net present value of all future cashflows, you can see how a change in a stock's price may indicate nothing at all about current economic conditions. Consider, for example, a company that is prohibited from selling widgets for a year due to a patent dispute with another firm. The price of that company's stock will fall, even though we know nothing about levels of widget consumption in the economy.
This is because the payoff depends on the accurate prediction of an outcome of an event. Therefore, people will put in more effort to come to the most accurate conclusion.
As a larger number of people do more market research to come to the most likely conclusion, the predicted outcome will lean more favorable to one side.
If you place a bet on a coin flip, the outcome will always be 50% heads, 50% tails. There are no external market conditions that will influence the outcome. Luck plays a major role, and this is called gambling.
But prediction markets rely on the collective wisdom held by a group of people on the probability of a future event materializing."
Can you show that predictions are true rather than just being perturbations. To me it looks like trading drives markets to respond (beyond large obvious fundamentals changes), rather than providing usable predictions.
Moreover, assume they are predictive, do they target funds to where society needs them.
Finally if people are good at prediction, using algorithms for example, then those algorithms provide the required prediction and we should use those to target resources and retain wealth in the market rather than giving out 40% of the wealth (UK) just to get some predictive power.
I think the value added by the market is vastly over-stated in the present model.
>>To me it looks like trading drives markets to respond
Respond to what? The markets are about events that have not happened. The payout is directly proportional to the predictive power of the market purchase.
>>Finally if people are good at prediction, using algorithms for example, then those algorithms provide the required prediction and we should use those to target resources and retain wealth in the market rather than giving out 40% of the wealth (UK)
How do we incentivize people to generate these predictive methods, let alone release them for public use, without a compensatory scheme like a prediction market?
It actually does add value in this case. It makes it impossible for governments to shut the market down because it's decentralized (Unlike Intrade which was shut down). Also, anyone in the world can participate, even people with no access the financial system or a government ID.
Actually from what I can tell, it is a more liquid model.
In Augur you buy shares of an outcome, and the value of those shares can change day to day, and you can sell at any time. Whereas with a bookie, you bet on the outcome with fixed odds. Bookie lines may shift, but your bet will be locked in and unable to appreciate in value.
I'm not sure why bookies haven't implemented this share model, maybe its needlessly complicated.
Bookies have implemented this. Betting exchanges have existed for over a decade now, you can lay off your bets to lock in a profit if the odds have moved. Even 'traditional' bookies offer various forms of cashing out a bet.
Some gambling (e.g poker, blackjack, roulette) doesn't give predictions about the real world.
Prediction markets are a specific form of gambling that yields predictions about the real world. So all prediction markets are gambling, but not all gambling is a prediction market.
One noteable difference between 'prediction markets' and the normal operation of bookies is who sets the prices.
Usually, bookies offers odds on a bet, and for every new bet, they can set new odds taking the previous bets into account. This is called 'fixed-odds' betting.
In 'prediction markets' people on all sides of a bet put money into a pool. Suppose the total pool has a value of $Z, you put in $X on outcome A, and in total people put $Y on outcome A, then if outcome A is the true outcome, you get $ Z * (X / Y) for your bet. This is called parimutuel betting.
Beyond parimutuel betting, the idea is that once the pool is fixed, you can sell your bet. So in the above scenario, I could sell my X/Y share in outcome A to someone else. Later, the price of such shares allow us to track the markets opinion on changing odds.
In reality, I think they tend to skip the parimutuel part, and instead just auction of an equal amount of shares for each outcome. The proceeds of this initial auction then become the shared pool.
Prediction markets are a form of gambling, but there is a key difference; whilst the purpose of traditional gambling markets is entertainment, the purpose of a prediction market is information discovery.
Some prediction markets can even be subsidised in order to incentivise participants, where the house (ie the entity running the market) expects to lose money in exchange for the information that the market is revealing. It is extremely rare to find this in a traditional gambling setting, where the house usually always reserves an edge.
This fact seems to have been largely missed by the guys behind Augur though, who seem to have focused more on the "blockchain" part of "prediction markets on the blockchain" than the "prediction market" part, and this shows through their clunky UX and relatively simple platform. Prediction markets have been around for decades (30 years ago the University of Iowa ran a market on the 1988 US election and is still running them today - https://iemweb.biz.uiowa.edu) and Augur doesn't seem to offer anything new above decentralisation, which I dont think anyone was asking for.
"The IEM is operated for research and teaching purposes. All interested participants world-wide can trade in our political markets. Other markets--such as the earnings and returns markets--are open only to academic traders."
"Trading accounts can be opened for $5 to $500."
These constraints are presumably why they got their no-action letter from the CFTC. If there's demand for markets other than political markets, or for larger accounts, then there's demand for a decentralized prediction market.
You seem to be suggesting that the point of decentralisation is to avoid legislation and regulation. While this might be true for Silk Road and other criminal transactions, that does not seem to me to be a valid argument for running a prediction market on blockchain software.
Blockchain as a technology has a valid use-case where you cannot trust a third party to manage a centralised database and where you need an immutable history of events. I can just about buy into putting transactions for real-world things (eg property) onto a blockchain - after all its a lot easier to prove you own something in the case of a dispute if you can show on a distributed and trusted event log that you were the last person to purchase it than it is to dig out some old documentation and prove its not forged.
There is an argument that applies to prediction markets, which is that you might not trust the market to actually pay out your winning contracts (though believing in this relies on a distrust of the regulators and court system). Augur is not actually solving this problem though, as neither oracle contracts nor the market owner defining the settlement conditions are trustworthy, and when you have user-defined markets such as "Does God Exist?" there is huge scope for arguing about the true outcome. At least with the centralised case you have an organisation with a reputation to maintain, that is therefore motivated to police and administrate the markets properly.
You might also argue for long-running markets that the company running the market might collapse and be unable to pay out, but in the case of crypto there is simply a parallel that your currency could simply collapse and be worthless by the time your contract paid out. Given the volatility of most ETH and REP, your winnings are likely to either be dwarfed by gains in the currency or destroyed by a collapse in the currency.
Prediction markets that trade using real money are gambling, and hence are controlled by various regulators. In addition, certain markets can also catch the attention of other regulators, for example if a market involves speculation on financial instruments or commodities. There are certain ways to avoid this, such as restructuring the incentives; for example, a market using credits instead of real money and run as a competition where the most successful players receive monetary prizes does not constitute gambling. Obviously in this case the players are not risking their own money, and this relates back to my previous points about subsidising prediction markets in exchange for valuable information. The regulation issues should be dealt with in an ethical way by developing the technology and working with regulators and not by avoiding the issue via decentralised blockchains.
Actually Augur does attempt to solve the trust problem.
Regarding settlement conditions, there's an allowed outcome of "null," where the judges can decide that the outcome can't be determined. In that case all bettors get their money back.
There's no oracle. Augur's main innovation is its decentralized resolution system. Initially a small number of randomly-chosen REP holders vote on the outcome. That outcome can be disputed, which escalates to a larger number of REP holders.
This goes through several rounds. Disputers have to post bonds to make a dispute, which they lose if the dispute fails.
If they're determined, they can escalate to the ultimate resolution: Augur splits in two, one with each outcome. At this point every REP holder has voted one way or the other, and each holder only gets REP on the version he voted with. The theory is that the version of Augur which reports the truth is the one where REP will have the most value. This gives REP holders an incentive to vote for the true outcome.
I may be wrong on some details, so check their whitepaper for more, but the general idea is to make the incentive strong enough so most REP holders will vote for the truth and disputes will happen rarely, mostly when small groups of REP holders actually get it wrong. Whether it works in the real world, we'll have to see, but I think it's an interesting experiment at least.
Over the past few years, the increase in zero-effort contributions have all but destroyed the quality of discussions on HN. And you aren't doing anything about it. HN is looking more indistinguishable from Reddit and I'll be damned if I let that happen.
Civility should be reserved for people who are looking to argue and discuss in good faith.
No, you're just having a bad day. There is no reason whatsoever to say "Why couldn't you just fucking google it?" on a site meant for intellectual curiosity.
"Your inane rant disguised as a question"
This kills the curiosity. Don't do that.
By the way:
And you aren't doing anything about it.
You lose credibility with this kind of statement. I may deeply disagree with policy, but it would be ridiculous to accuse the mods of inaction.
As HN has gained increasing prominence in mainstream media and the wider tech community over recent years, it has attracted a vocal and sizable mass of users that think it is fine to display a lazy and wilfully ignorant attitude.
The existing HN mechanisms to discourage such low quality content are no longer effective, because this mass of new users is now self-reinforcing.
I interpret low-effort comments as the output of individuals who are disrespectful towards the goals of a good faith discussion community, because they willfully or carelessly contribute noise and dilute the signal.
Because I interpret this behavior as antisocial and disrespectful and an act of initiating incivility, I have grown increasingly hostile towards such users, and have started attacking them openly "in response".
We're going to have to part ways here. Because I don't think I am going to back down on this principle. I believe it's fair and just to punish this bad behavior by making these people feel bad for harming the commons.
I know if I continue doing this, it is not going to be acceptable, and I know I will no longer be welcome here.
The only cryptocurrency "apps" with meaningful users are the exchanges like Coinbase or Binance with millions of users. The actual ethereum dapps have basically zero usage.
How do you measure "daily users" in this context, though? Prediction markets are often looking way out into the future. Someone may place a bet one day and then not log in to check the next day, but that doesn't mean that he is no longer "using" the market.
While I agree many of these apps have their values overly inflated if you look closely at their usage, I think measuring web 3 apps with web 2 metrics like DAUs is a bad premise. Most of these services arent replacing social networks or content providers, but are instead providing financial instruments (which users spend a high amount of value on, but don't necessarily use every day.)
Augur may not have a high volume of pure users but there's still a decent amount of money on the line in markets at any given time (1.1 million in USD, at time of writing, according to https://predictions.global/)
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[ 2.7 ms ] story [ 136 ms ] threadThis creates a host of post-closing political incentives. You are no longer betting on an event outcome, but on a consensus process.
The theory is that the version of REP that reports the truth will be more valuable on the open market, and that the split is a credible threat which keeps everyone honest, so it will seldom actually happen.
> This creates a host of post-closing political incentives. You are no longer betting on an event outcome, but on a consensus process.
even on scicast, which was running (largely) apolitical questions and had impartial academics resolving the questions, you needed to be aware that you weren't betting on the outcome, you were betting on how somebody would decide the outcome.
it tended to be more of an issue the fuzzier the question, or the the punchier and more news-headline-y the short version of the question was. (which also made it more likely to attract the newer, less sophisticated users.)
seeing the problems that even scicast had with poorly worded questions, i don't have much hope for augur.
1. the price feed used by Augur for USD/REP is currency centralized, but will become decentralized in v2.
2. Augur v2 will use the DAI stablecoin, so that markets are effectively denominated in USD. DAI uses a semi-centralized price feed for the collateral backing the stablecoin.
I'm a dev of https://predictions.global
What kind of retarded reporting is this? The godfather of Ethereum? What does that even mean?! Why not just say, the founder/creator of Ethereum (skipping "most people consider").
Sure in some cases it's black and white, but like most things in life there is a lot of weight in the interpretation.
So it's back to the original problem with smart contracts - you still have to trust an oracle, and I would bet ;) that if the stakes are high enough, an oracle will be manipulated in some way.
Let's take an election for example. We've had enough madness just in the US in the last 20 years to be skeptical of initially reported outcomes. In fact, some elections get reversed after study and investigation. Augur isn't going to reverse a funds exchange. And if someone has enough riding on an outcome, they may find it worth spending extra money to at least temporarily cause the outcome to match their bet. They just need to win briefly, even if the results get overturned later.
Maybe I'll even get to see it in real life. What a time to be alive.
Is that a genuine question, or are you confused about the consensus mechanism? The answer to 'who says' is the core of what Augur is: people vote on what the outcome was, in a way that incentivizes them to vote for the answer they believe to be correct.
> So it's back to the original problem with smart contracts - you still have to trust an oracle, and I would bet ;) that if the stakes are high enough, an oracle will be manipulated in some way.
No, you do not have to trust an oracle. The whole mechanism is actually quite cool, you should check it out:
https://www.augur.net/whitepaper.pdf
> Let's take an election for example. We've had enough madness just in the US in the last 20 years to be skeptical of initially reported outcomes. In fact, some elections get reversed after study and investigation. Augur isn't going to reverse a funds exchange. And if someone has enough riding on an outcome, they may find it worth spending extra money to at least temporarily cause the outcome to match their bet. They just need to win briefly, even if the results get overturned later.
That's easy to solve. You simply define the question in a way that obviates those kinds of issues. In Augur, people vote on the outcome they believe is correct. The outcome of this process is defined as the truth, within the system. Since this is transparent, you place your bets with this in mind. You aren't betting on who will win the 2020 election, you're betting on which answer people will converge on for the winner of the 2020 election. A subtle, but important difference.
I will review it again.
To me, this undermines the argument that prediction markets are a source of truth.
If they deliver, smart contracts will actually take off because they can reliably use external data. Right now, there is no way to do so.
As far as I can tell, this is no different from BetFair et al who let punters bet against each other on the outcome of the next football match? (apart from "oooh! blockchain!" and "oooh! decentralised!")
I've read a lot of articles about this over the years and seen lots of lofty words about how this will change X/the world forever, or enable some new economic model Y or whatever, but as far as I can tell its just the same old grotty gambling we've had for thousands of years already except its better because blockchain?
What have I missed?
I would say a prediction market and a gambling exchange are both built on gambling, but a prediction market has a purpose beyond money changing hands.
A stock exchange is no more a gambling den than a flea market is, although one may choose to engage in speculative activities at both.
I feel it's also a stretch to say that an equities market provides information about the economy. The information produced by trading activity on a stock exchange is principally indicative of what price people are willing to trade given stocks at. Without augmenting the transaction data with other sets of data (company fundamentals, economic reports, etc.), it's hard to draw meaningful conclusions about the economy from these transactions alone.
If you consider the valuation of a stock according to a standard modeling technique (DCF), in which the price paid for a stock is equal to the net present value of all future cashflows, you can see how a change in a stock's price may indicate nothing at all about current economic conditions. Consider, for example, a company that is prohibited from selling widgets for a year due to a patent dispute with another firm. The price of that company's stock will fall, even though we know nothing about levels of widget consumption in the economy.
"The outcome becomes more predictable over time.
This is because the payoff depends on the accurate prediction of an outcome of an event. Therefore, people will put in more effort to come to the most accurate conclusion.
As a larger number of people do more market research to come to the most likely conclusion, the predicted outcome will lean more favorable to one side.
If you place a bet on a coin flip, the outcome will always be 50% heads, 50% tails. There are no external market conditions that will influence the outcome. Luck plays a major role, and this is called gambling.
But prediction markets rely on the collective wisdom held by a group of people on the probability of a future event materializing."
[1] https://cointelegraph.com/explained/prediction-markets-expla...
Moreover, assume they are predictive, do they target funds to where society needs them.
Finally if people are good at prediction, using algorithms for example, then those algorithms provide the required prediction and we should use those to target resources and retain wealth in the market rather than giving out 40% of the wealth (UK) just to get some predictive power.
I think the value added by the market is vastly over-stated in the present model.
Respond to what? The markets are about events that have not happened. The payout is directly proportional to the predictive power of the market purchase.
>>Finally if people are good at prediction, using algorithms for example, then those algorithms provide the required prediction and we should use those to target resources and retain wealth in the market rather than giving out 40% of the wealth (UK)
How do we incentivize people to generate these predictive methods, let alone release them for public use, without a compensatory scheme like a prediction market?
In Augur you buy shares of an outcome, and the value of those shares can change day to day, and you can sell at any time. Whereas with a bookie, you bet on the outcome with fixed odds. Bookie lines may shift, but your bet will be locked in and unable to appreciate in value.
I'm not sure why bookies haven't implemented this share model, maybe its needlessly complicated.
Prediction markets are a specific form of gambling that yields predictions about the real world. So all prediction markets are gambling, but not all gambling is a prediction market. One noteable difference between 'prediction markets' and the normal operation of bookies is who sets the prices. Usually, bookies offers odds on a bet, and for every new bet, they can set new odds taking the previous bets into account. This is called 'fixed-odds' betting.
In 'prediction markets' people on all sides of a bet put money into a pool. Suppose the total pool has a value of $Z, you put in $X on outcome A, and in total people put $Y on outcome A, then if outcome A is the true outcome, you get $ Z * (X / Y) for your bet. This is called parimutuel betting.
Beyond parimutuel betting, the idea is that once the pool is fixed, you can sell your bet. So in the above scenario, I could sell my X/Y share in outcome A to someone else. Later, the price of such shares allow us to track the markets opinion on changing odds.
In reality, I think they tend to skip the parimutuel part, and instead just auction of an equal amount of shares for each outcome. The proceeds of this initial auction then become the shared pool.
Some prediction markets can even be subsidised in order to incentivise participants, where the house (ie the entity running the market) expects to lose money in exchange for the information that the market is revealing. It is extremely rare to find this in a traditional gambling setting, where the house usually always reserves an edge.
This fact seems to have been largely missed by the guys behind Augur though, who seem to have focused more on the "blockchain" part of "prediction markets on the blockchain" than the "prediction market" part, and this shows through their clunky UX and relatively simple platform. Prediction markets have been around for decades (30 years ago the University of Iowa ran a market on the 1988 US election and is still running them today - https://iemweb.biz.uiowa.edu) and Augur doesn't seem to offer anything new above decentralisation, which I dont think anyone was asking for.
"The IEM is operated for research and teaching purposes. All interested participants world-wide can trade in our political markets. Other markets--such as the earnings and returns markets--are open only to academic traders."
"Trading accounts can be opened for $5 to $500."
These constraints are presumably why they got their no-action letter from the CFTC. If there's demand for markets other than political markets, or for larger accounts, then there's demand for a decentralized prediction market.
Blockchain as a technology has a valid use-case where you cannot trust a third party to manage a centralised database and where you need an immutable history of events. I can just about buy into putting transactions for real-world things (eg property) onto a blockchain - after all its a lot easier to prove you own something in the case of a dispute if you can show on a distributed and trusted event log that you were the last person to purchase it than it is to dig out some old documentation and prove its not forged.
There is an argument that applies to prediction markets, which is that you might not trust the market to actually pay out your winning contracts (though believing in this relies on a distrust of the regulators and court system). Augur is not actually solving this problem though, as neither oracle contracts nor the market owner defining the settlement conditions are trustworthy, and when you have user-defined markets such as "Does God Exist?" there is huge scope for arguing about the true outcome. At least with the centralised case you have an organisation with a reputation to maintain, that is therefore motivated to police and administrate the markets properly.
You might also argue for long-running markets that the company running the market might collapse and be unable to pay out, but in the case of crypto there is simply a parallel that your currency could simply collapse and be worthless by the time your contract paid out. Given the volatility of most ETH and REP, your winnings are likely to either be dwarfed by gains in the currency or destroyed by a collapse in the currency.
Prediction markets that trade using real money are gambling, and hence are controlled by various regulators. In addition, certain markets can also catch the attention of other regulators, for example if a market involves speculation on financial instruments or commodities. There are certain ways to avoid this, such as restructuring the incentives; for example, a market using credits instead of real money and run as a competition where the most successful players receive monetary prizes does not constitute gambling. Obviously in this case the players are not risking their own money, and this relates back to my previous points about subsidising prediction markets in exchange for valuable information. The regulation issues should be dealt with in an ethical way by developing the technology and working with regulators and not by avoiding the issue via decentralised blockchains.
Regarding settlement conditions, there's an allowed outcome of "null," where the judges can decide that the outcome can't be determined. In that case all bettors get their money back.
There's no oracle. Augur's main innovation is its decentralized resolution system. Initially a small number of randomly-chosen REP holders vote on the outcome. That outcome can be disputed, which escalates to a larger number of REP holders.
This goes through several rounds. Disputers have to post bonds to make a dispute, which they lose if the dispute fails.
If they're determined, they can escalate to the ultimate resolution: Augur splits in two, one with each outcome. At this point every REP holder has voted one way or the other, and each holder only gets REP on the version he voted with. The theory is that the version of Augur which reports the truth is the one where REP will have the most value. This gives REP holders an incentive to vote for the true outcome.
I may be wrong on some details, so check their whitepaper for more, but the general idea is to make the incentive strong enough so most REP holders will vote for the truth and disputes will happen rarely, mostly when small groups of REP holders actually get it wrong. Whether it works in the real world, we'll have to see, but I think it's an interesting experiment at least.
https://en.wikipedia.org/wiki/Prediction_market
Your inane rant disguised as a question doesn't add anything to the discussion.
On HN, if someone doesn't know something, please either politely inform them or leave that for someone else to do.
https://news.ycombinator.com/newsguidelines.html
Civility should be reserved for people who are looking to argue and discuss in good faith.
"Your inane rant disguised as a question"
This kills the curiosity. Don't do that.
By the way:
And you aren't doing anything about it.
You lose credibility with this kind of statement. I may deeply disagree with policy, but it would be ridiculous to accuse the mods of inaction.
The existing HN mechanisms to discourage such low quality content are no longer effective, because this mass of new users is now self-reinforcing.
I interpret low-effort comments as the output of individuals who are disrespectful towards the goals of a good faith discussion community, because they willfully or carelessly contribute noise and dilute the signal.
Because I interpret this behavior as antisocial and disrespectful and an act of initiating incivility, I have grown increasingly hostile towards such users, and have started attacking them openly "in response".
We're going to have to part ways here. Because I don't think I am going to back down on this principle. I believe it's fair and just to punish this bad behavior by making these people feel bad for harming the commons.
I know if I continue doing this, it is not going to be acceptable, and I know I will no longer be welcome here.
This is why I am moving on from HN.
The only cryptocurrency "apps" with meaningful users are the exchanges like Coinbase or Binance with millions of users. The actual ethereum dapps have basically zero usage.
Augur may not have a high volume of pure users but there's still a decent amount of money on the line in markets at any given time (1.1 million in USD, at time of writing, according to https://predictions.global/)