Cryptocurrencies are changing. While first generation currencies like Bitcoin and Litecoin were designed to allow people to buy goods and services, new currencies like Augur are taking a different approach.
Augur believes blockchain technology can be used to harness the wisdom of the crowd to help predict the future. It’s created a marketplace where users can make predictions on the outcome of events, and other others can bet on the likelihood of that prediction coming true.
What is Augur?
Augur is a predictions market built on Ethereum. Its entire premise is to create a decentralized hub where users can collectively bet on what the future might look like.
Currently, prediction industries - like the stock market or weather forecasting - rely on small groups of experts. In Augur’s vision, it wants to let anyone have a go at guessing what tomorrow brings.
Did you know?
Augur is named after a group of Roman officials whose job it was to study the movements of birds to predict if a proposed course of action might affect Rome’s future.
Who invented Augur?
The two people most directly responsible for Augur’s founding are computer scientist Joey Krug and software developer Jack Peterson.
A brief history
- 🔮 Summer 2014 - co-founders Jack Peterson and Joey Krug release a white paper outlining their vision for the world’s first decentralized, open-source prediction market.
- 💰 September 2015 - Augur’s token sale raises $5.2 million
- 📡 March 2016 - the first version of Augur is released onto the Ethereum testnet.
- ⚡ July 2018 - Augur’s main network goes live
What’s so special about it?
Most prediction market places are centralised. That means users can only bet on outcomes chosen by the site owners, and have to trust the site administrators not to steal funds and pay people on time.
Augur meanwhile, is decentralised, meaning anyone can create their own futures market without Augur’s oversight. Additionally, because the markets are built on smart contracts, they automatically pay out without relying on a third party to release funds.
How is Augur produced?
Augur’s native token, the REP, isn’t mined like Bitcoin. Instead, at launch Augur’s creators issued 11 million ERC-20 tokens. Unlike other networks, holders of REP tokens have to take part in the maintenance and upkeep of the network. If they don’t, they lose their REP.
Did you know?
The Augur team counts Ethereum co-founder Vitalik Buterin and Lightning Labs co-founder Elizabeth Stark as advisors.
How does Augur work?
An Augur market has four distinct stages:
🌅 Creation - anyone can create their own market. They need to spend a small amount of Ethereum and a description of what the market is about to get started. Once they’ve done that, they set how much it costs to bet on the market.
💱 Trading - Trading is the term used to describe people making bets on the market created in stage one. Rather than place money or tokens directly, bettors buy shares in the outcome. The value of a share rises and falls as the event becomes more or less likely to come true.
📣 Reporting - once an event has happened, Reporters are members of the network who verify the outcome. They place a bet on how much they believe their reporting is true. If they’re right they get a share of the pot. If they are wrong - or are at odds with how other reporters have documented the outcome - they are penalized and lose REP.
🤝 Settlement - once the reporting has been complete, and it’s verified by the community, the bettors who bought shares on the correct outcome are paid - as is the market creator.
Did you know?
In 2015, Vitalik Buterin called Augur the “Uber for knowledge”
What can you do with Augur?
While people have used the network to create markets on everything from sporting events, to the price of Bitcoin and even what the weather will be like, the potential for Augur’s market is almost limitless.
Farmers could hedge their bets against poor harvests to mitigate a loss of earnings and people could even create a marketplace to help them lose weight.
Did you know?
If Augur ceased to exist today, because it’s open-source anyone else would be able to use the code and create their own version of the network.
Augur, while one of the oldest crypto tokens built on Ethereum is facing a number of challenges. The first are gambling laws. In order to allow people to make bets on events, a website needs to hold a gambling license. Augur currently does not. The company is due in court in California in September 2018 to determine whether Augur will be allowed to continue to operate.
Other issues are popping up around the types of market that are being created. In the summer of 2018, assassination markets became popular among bettors. If those markets are seen to incentivise people to take illegal action, Augur could be shut down completely.
If it does manage to navigate through these legal waters, Augur could become one of the most successful dApps on Ethereum to date.