Why blockchain-based betting platform Augur is entering dangerous territory

Why blockchain-based betting platform Augur is entering dangerous territory
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3 Aug, 2018

San Francisco-based Augur, which offers a blockchain-based platform to make predictions and bet on their outcomes, has raised serious concerns after some people used it to predict the deaths of celebrities including US president Donald Trump.

Augur’s open-source software relies on blockchain-based computer programs, called smart contracts, which allow users to set up their own prediction markets. These markets pool cryptocurrency bets and distribute the winnings without the need for participants to identify themselves, according to a report in MIT Technology Review, the tech magazine of the Massachusetts Institute of Technology.

Augur was founded in 2015 and launched an Ethereum-based protocol on July 10. Since then it has already led to markets forecasting the demise of Donald Trump, Amazon.com founder Jeff Bezos and billionaire investor Warren Buffett, among others. However, these markets have seen very few transactions and the amounts wagered have been quite insignificant.

According to the report, prediction markets are generally not permitted in the US and there is a fear that the platform may led to the creation of “assassination markets” because of this technology and may even inspire real killings.

“In many ways the line between prediction markets and gambling is not that clear,” says Aaron Wright, a professor at the Cardozo School of Law in New York City.

Further, some Augur contracts allow users to bet on other events, such as the future value of the Ether cryptocurrency. Ether, which is based on the Ethereum platform, can be transferred between accounts and used to compensate participant mining nodes for computations performed.

According to a July 31 Forbes report, around $1.53 million has been staked across over 800 bets in the first month. Apart from assassinations, the World Cup results and predictions on the future price of bitcoin and ethereum received the most interest.

The MIT report also said that Augur’s creators claim they don’t have control over what its users choose to do with the protocol and that they don’t have the ability to shut it down.