Wednesday, June 17, 2015
Augur Releases Alpha Version of Their Decentralized Prediction Market
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Tuesday, June 16, 2015
Augur Launches Alpha Version of Prediction Market Platform
Augur, a decentralized platform allowing individuals to create prediction markets on a vast array of topics, announced today that it was launching its alpha test.
“Traditionally, prediction markets have fallen short due to their need for volume in order to be valuable forecasting tools,” explained Jeremy Gardner, the Director of Operations at Augur. “Having a global, unstoppable, blockchain-based prediction markets platform means anyone in the world with internet can connect to Augur.”
However, Augur is not, itself, a prediction market. Rather, it is open-source code for a prediction markets platform. In essence, the team doesn’t actually operate the software nor does the team own it.
One of the concerns for prediction markets is that they will come under assault from the Commodities Future Trading Commission, which is very strict about new markets being launched. Other prediction markets, such as Intrade, have been forced to ban United States users from the site. Gardner doesn’t believe this will be an issue.
“We’re just writing open-source code for a [prediction market] platform. That is constitutionally protected activity,” he explained. “In addition to speaking to a former CFTC Commissioner, my lawyer and myself have spoken to one of the CFTC’s top prosecutors along with a couple of the great guys at Coin Center. What we’ll likely see is the CFTC going after market-makers like the RIAA went after torrent uploaders, not after Bram Cohen and BitTorrent.”
How Augur Works
The platform works by allowing anyone to download the client where they are then able to create a market. A market could be a scenario such as: “Will aliens come to Earth tomorrow?” The user would then set the deadline for the outcome as well as determine what the trading fees are for that specific market.
People would then bet on the likelihood that aliens were going to actually come to Earth tomorrow. In the event that no aliens came, the vast majority that likely bet against it happening would get their reward. However, if the majority of people bet that aliens wouldn’t come and then they actually did, the group that bet that they would come could wind up making a significant amount of money depending on how big the market was.
Users are able to make bets with cryptocurrencies such as bitcoin or ether. When the deadline for the outcome has come and gone, those that participate in the upcoming crowdsale will determine the outcome of the bet. These people who participated in the crowdsale will own a token referred to as REP. This token allows the holders to act as “judges” of the outcome.
In the above example, if aliens did, in fact, come to Earth, those with REP would say yes and the rewards would be allocated accordingly. The trading fees, which the market maker sets up, would then be split evenly between the market maker and the reputation users.
Crowdsale
In an effort to raise funds to continue working on the platform, the team has deployed a live-action model for crowdfunding. All told, there will be 11 million REP software licenses, which are what allow for the completion of all markets. The founders will receive 16 percent and the Forecast Foundation will receive 4 percent. The other 80 percent will be sold to people that want to be reputation users.
In the live-action model, the amount of licenses a user gets is directly contingent on the amount of money donated in comparison to the total amount donated. If there are 8,800,000 total pieces (80 percent of the total 11,000,000 REP) and someone donates $10, they would have all 8,800,000 licenses. However, if someone else came along and also donated $10, now both parties have 4,400,000 licenses.
The idea here is that a user gets a percentage of the licenses directly correlated to the percentage that the user’s donation was in comparison to the total pot.
To encourage early buying of the licenses, Augur will give bonuses to people at the start. The schedule of the event and the bonuses are:
- July 1-5: 10%
- July 6-15: 7%
- July 16-31: 4%
- August 1-15: 0%
Users can participate with cryptocurrencies through Shapeshift.io or by purchasing bitcoin from exchanges/broker-dealers.
The Future of Augur
This open-source software is completely free for users. However, Gardner revealed that the plan is to create a for-profit product similar to the model that OpenBazaar recently announced.
“We will create a search website with for-profit [expectations],” Gardner said. “There’s also a huge amount of investor interest. Correspondingly, we’ll be raising a round for a for-profit sometime in the fall.”
For now, though, users are allowed to download the Alpha tool and start experimenting with creating markets.
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Cape Innovation and Technology Initiative Launches Digital Currency Hub in South Africa
The Cape Innovation and Technology Initiative (CiTi) has announced it will launch South Africa’s first digital currency hub, BitHub. It will serve to be a center point for anyone currently involved in digital currency or interested in learning more.
CiTi has already made a name itself in its nearly 20 years of serving the local South African community where it has been a pioneer of new technologies. The nonprofit organizes tech meetups and events, such as a recent virtual reality community gathering, provides resources to developers and runs an incubator for local tech startups.
“In South Africa, we are faced with different challenges from the rest of the world,” says Sonya Kuhnel, organizer of the recent Bitcoin Africa Conference and collaborator in the BitHub launch, “and understanding our market is as important as the technology behind it. BitHub will guide and mentor entrepreneurs whilst they develop and shape their Bitcoin businesses to fit our unique market needs.”
The BitHub’s first event happened today in their already established co-working space, Bandwidth Barn, where future events will also be located. The event featured several speakers from the local digital currency industry and community, including Roslyn Lavery from PayFast and Andrew van der Nest from Landmark Computers. The institute also announced it will be bringing one Bitcoin developer into their startup incubation program.
Both have been instrumental in the rise of bitcoin in South Africa. Landmark Computers, a South African computer retailer, was among the first businesses to accept bitcoin in the country and continues to support its adoption. PayFast, on the other had, is the first and only payment processor to accept the digital currency, making merchant adoption much easier. The company has played a role in supporting other digital currency businesses, such as South Africa-based mobile bitcoin wallet Zapgo.
Today’s event is just one of many that CiTi plans on holding about digital currency. Each event will aim to educate participants about how digital currencies work and what they are used for; the relevant regulations startups working in this sector need to comply with; and connecting out with the country’s business leaders and demonstrating how the technology could be useful to them. The institute believes the currency and technology has many potential use cases in the African country.
“We believe that fintech innovation is going to be the cause of considerable disruption to the traditional banking model in Africa,” says Ian Merrington, CEO of CiTi. “We particularly believe that innovation within fintech has the ability to dramatically reduce transactional fees and lower barriers and the cost of remittance. The decentralized blockchain technology also has huge transformative potential. Reducing corruption is one potential application that comes to mind!”
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BitShares 2.0 Plans to Adapt New SmartChains Cryptotechnology
BitShares, a blockchain-based financial smart contract platform has announced the upgrade of BitShares 2.0. The platform is now built on a system known as “Graphene toolkit,” which is developed by an independent blockchain development company founded by the core developers of BitShares, called Cryptonomex Inc.
With the implementation of a new crypto-technology called SmartChains, the soon-to-be released BitShares 2.0 reportedly is set to have the “Speed of the NASDAQ,” with a new “high-performance protocol and engine, capable of handling over 100,000 transactions per second.”
To test its efficiency and capability of the technology, the BitShares team had set up a pilot blockchain with 200,000 accounts, and issued an asset to every account, which involved around a million operations/transactions. After the creation of the blockchain, the BitShares team timed the duration of reindexing the blockchain without signature verification.
According to the press release of BitShares, “A single core of a 2.6 Ghz i7 is able to validate 10,000 signatures per second. Today’s high-end servers with 36 cores (72 with hyper-threading) could easily validate 100,000 transactions per second.”
Criticisms and Improvements
Previously, BitShares received criticisms from the cryptocurrency community and blockchain developers that the slow and inefficient performance of the platform negatively affects user experience, and that the model object fails to engage real-world usage.
As a response to the suggestions, the core developers of BitShares have designed a high performance blockchain technology specifically for cryptocurrencies and smart contract transfers. According to its developers, the newly built platform is designed to confirm transactions in just one second, allowing the system to process more transactions per second than MasterCard and VISA combined.
During the beta operation of BitShares, users also indicated two major problems with the previous version of BitShares:
- Nonstandard market matching algorithm discourages traders
- Insufficient incentives for new stakeholders to help grow the network.
Incentives and Rewards
To better incentivize and reward its users, BitShares has also introduced a referral rewards program, built directly into the software. Recognizing that the value of the BitShares network is derived from its user base, the platform is set to reward its users that encourage others to join the network in an automated way.
BitShares 2.0 is set to enter a public testing period for community feedback upon its completion, which will continue until everyone in the community is satisfied with the platform.
BitShares core development team is also planning to outsource some of the platform’s operations to Cryptonomex Inc., to create a “more robust, sustainable, and fair” smart contracts platform.
Santander: Banks and Innovators Should Join Forces to Create Fintech 2.0
Santander InnoVentures, Oliver Wyman and Anthemis Group have today published “The Fintech 2.0 Paper: Rebooting financial services.” The paper is presented as “a call to action to banks, financial institutions and financial technology (fintech) businesses to work together to undertake a fundamental ‘reboot’ of the core processes, systems and infrastructure of the banking industry.”
“The research underpinning the paper has identified several markets with huge potential,” said Emmet Rennick, head of innovation at Oliver Wyman. “In these areas banks can realize efficiencies, customers benefit from better services and [fintech startups] can grow their businesses.” According to Andrew Veitch, Director of Anthemis Group, “the greatest opportunity in the industry lies at the meeting point of large financial institutions and young, ambitious startups.”
According to the paper, fintech 2.0 will offer substantial opportunities, such as streamlining the processes surrounding the creation of $25 trillion of new mortgages issued annually across the globe. Elsewhere, an estimated $4 billion is lost through inefficiency in global collateral management within the asset leasing sector. These are two of several opportunities identified in the paper, which also outlines opportunities for banking innovation based on the “Internet of Things” (IoT), smart data, distributed ledgers and frictionless processes beyond payments and consumer credit.
A problem identified by the paper is that financial technology developers and startups (fintechs) are still operating only at the edges of banking. To help engineer more fundamental improvements to the banking industry, they must now be invited inside, to contribute to reinventing core infrastructure and processes in the financial system. According to the paper, such reinvention can only be brought forward by a collaborative endeavor of banks and fintechs working together as partners.
“Funds alone are not enough,” said Mariano Belinky, managing principal of Santander InnoVentures. “To move to the next phase of evolution in financial services, banks need to invite fintechs to work within our industry, even inside our own businesses. Santander is committed to achieving innovation by partnering with fintech startups. That means investing in funding but also giving access to our expertise, as well as utilizing our client base and our own innovation initiatives.”
Distributed ledger technology could save banks $15 billion-$20 billion per annum by 2022
In contrast to today’s transaction networks, distributed ledgers eliminate the need for central authorities to certify ownership and clear transactions. Distributed ledgers can be open, verifying anonymous actors in the network, or they can be closed and require actors in the network to be already identified – which seems to be the approach currently favored by most banks and mainstream financial institutions.
The paper acknowledges that Bitcoin represents the best existing example of distributed ledger, and goes on to identify important advantages of distributed ledgers: near-realtime and irrevocable settlements, robust P2P transactions verified by tamper-proof networks without central management cost overheads, and permanent records of all transactions that can be monitored and audited by all participants. According to the paper, it’s only a matter of time before distributed ledgers become a trusted alternative for managing large volumes of transactions.
The paper notes that international payments remain slow and expensive, and significant savings can be made by banks and end-users bypassing existing international payment networks, and suggests that distributed ledger technology could reduce banks’ infrastructure costs attributable to cross-border payments, securities trading and regulatory compliance by between $15 billion and $20 billion per annum by 2022.
The message to banks and to fintechs is the same, concludes the paper: “If you can’t beat them, you should join them to achieve Fintech 2.0.”
Photo by Peter Clayton / CC BY-SA 2.0
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