The following article was written by Luis Aureliano, a business writer and financial analyst. With over 15 years of experience in global finance and an MBA in economics and management, Luis’s areas of expertise include business, marketing, communications, personal finance, macro economics, stocks and emerging markets.
Blockchain technology is probably the biggest buzzword of 2017, and 2018 is not likely to be any different. Blockchain technology is advancing against the old order and it is leaving a trail of massive disruptions in its wake. The world has seen first-hand, the disruptive power of Blockchain in how Bitcoin is upending the global financial landscape. The concept of money is on the eve of a paradigm shift that will wrestle the control of the monetary supply and value chain from the grasp of governments and traditional financial institutions.
Interestingly, Bitcoin is only a small, albeit popular application of Blockchain technology; yet, there’s more to Blockchain than Bitcoin. One of the industries that might witness the disruptive power of Blockchain technology as 2018 gets underway is the decentralized prediction markets.
Prediction markets, which also go by the name information markets, event derivatives markets, or virtual markets are places where people place bets and exchange value on the expected outcome of events.
The prediction market is important to the global economic landscape because humans have an insatiable appetite to know and decode the future. Prediction markets could exert influence across a wide range of industries from economy to predicting who is likely to become the next U.S. President or how weather patterns will affect corn production. The prediction market currently survives under different guise that are somewhat mistaken as gambling. This piece provides insight into 3 blockchain solutions that could bring predictions to the mainstream fora.
If you missed the boat of the predictive markets on Augur and Gnosis in 2017, you should seriously consider getting involved with BlitzPredict. To begin with, Augur and Gnosis are trading up around $77 and $267.82 respectively. BlitzPredict is a blockchain-based solution being developed to change the face of sportsbook predictions by using blockchain to provide function and liquidity.
BlitzPredict seeks to aggregate data from different sportsbooks and prediction markets to provide a one-stop shop for users. BlitzPredict will syndicate updated lines from the prediction markets and other sportsbooks to provide users with the best odds for a given bet. The traditional sports betting market is under the control of centralized businesses where liquidity and transparency have been major challenges.
The liquidity issues of traditional sportsbooks stem from the fact that users are required to deposit money in order to make predictions. Their money is in turn tied down for long periods without earning interest. More disheartening is the fact that cashouts usually take multiple days or weeks to be processed. The worst part is that users don’t have any hopes of getting their deposits back if the sportsbetting company goes under the water.
BlitzPredict’s blockchain platform introduces an unprecedented level of liquidity to sports forecasting, predictions, and betting by pioneering a liquidity pool that will expedite instant payout for traders. Wagering, betting, and predictions on BlitzPredict will be carried out using the BPZ token, which has a hard cap of $6,000,000 and a capped supply at 1 billion tokens. The launch of the live platform of BlitzPredict is slated for Q1 2018 during which the sportsbooks aggregator and smart contracts will be implemented.
Augur (REP) is another interesting blockchain play bringing disruption to the global predictive market. Augur, created by Pantera Capital co-CIO Joey Krug and biophysicist Jack Peterson in 2014 is a decentralized blockchain platform for placing bets on the outcome events set to happen in the future. Augur is working towards building an accurate prediction market where people can get insights on the most likely future occurrences based on the wisdom of the crowd.
In 2017, Augur’s coin rose more than 2000% and it currently trades around $77 as interest in the predictive market continues to grow. Augur’s reliance on the “Wisdom of the Crowd” underscores the relevance of predictive markets to wide range of real-life scenarios. For one, the cumulative verdict of the average prediction made by a group is superior to that any single prediction made by an individual in that group.
Augur also goes a step further to price the shares of a trade (bet) to add up to one dollar; hence, buying the share of trade at $0.50 will earn you $1 if you are right while you won’t lose more than the original $0.50 if you are wrong. The best part is that the value of staked shares in the outcome of an event will rise as more people buy shares. Hence, users can buy shares low and sell high as more people show interest even before the actualization of the underlying event.
The team behind Gnosis (GNO) is convinced that the predictive markets has real world applications stretching from financial forecasting to sports betting, risk assessment to political polling. Unfortunately, the process of getting people to share the information they know about the odds of an outcome is often hard to initiate and sustain. Gnosis is fundamentally decentralized Ethereum platforms that gamifies the predictive interest of humans and AI to aggregate sentiment and provide trustworthy information on odds.
For instance, a statement such as “the price of Bitcoin will reach $30,000 by the end of 2018” will require a Yes/No response. Participants are required to put down money as a proof of stake before they make their predictions; hence, people saying Yes/No will only respond if they have quality information to make such assertions as opposed to the guestimates that currently abound. If the price of Bitcoin ends up reaching $30,000 by the end of the year, you get $1 for every winning share; conversely, you’ll lose your stake if Bitcoin doesn’t reach $30,000.
Gnosis is particularly interesting because it allows people to create their own events using Dapps such as Hunch Game and Ask Me Anything (AMA). The events can in turn be self-funded or crowdsourced for increase market interest and improved odds of reliable predictions. GNO is off to a good start with a 14.93% gain as it trades up around $267.82.