Each week, Private Client Advisor Brian Belden highlights a new digital currency you want to pay attention to.
What is Augur?
Augur is a decentralized prediction market which can forecast the outcome of an event based on the ‘wisdom of the crowd’ principle. With this method, information collected from the crowd is averaged into the most realistic possibility and therefore the most probable outcome.
Correct predictions are rewarded by the network in cryptocurrency, while incorrect reports are penalized — thus incentivizing truthful reporting. Augur is aiming to revolutionize prediction markets by changing the way people verify the “truth.”
Why is Augur Revolutionary?
Augur’s decentralized cryptocurrency (REP) allows for a whole new way to participate in a prediction market. Anyone who joins the platform can create their prediction with probable outcomes. Once a prediction is established, the community can “wager” on the outcome with cryptocurrency. If the outcome turns out in your favor a smart contract rewards you for predicting the results correctly.
Here is an example from the platform: 39.5% of participants are currently predicting that Donald Trump will be re-elected in 2020. If that ends up being correct, that 38.4 % will be rewarded. As Augur continues to grow its user base, the predictions theoretically will become more accurate and thus could be commonplace for people to wager money and determine future outcomes.
Prediction markets have been around for a long time but have never truly incentivized people to participate like Augur. Because of the blockchain and cryptocurrencies, we are now able to create a worldwide prediction market that, if successful, can become an excellent resource for everyone. It’s gambling based model is undoubtedly revolutionary, but it comes with its downfalls.
Unfortunately, people are not able to purchase cryptocurrency on the Augur platform which in turn inhibits many people from using it. Although Augur has had a slow start, we believe they have created something that down the road will be very popular.
Find more about Augur here.