The Pressing Need for Augur

Will Iran test detonate a nuclear bomb within a year or two?
Will Israel attack Iran?

Will inflation in Greece soar above 20%?
Will Greece’s economy shrink by more than a third this year?
Will another Western government scalp people’s bank accounts, Cyprus-style?

Will an emergency Article V Constitutional Convention be called by at least three states in the US?

Will the US eventually raid private retirement accounts (IRAs) to cover its own massive debts?

Will ISIS launch a mass attack on a top-40 Western city causing more than 100 casualties by the end of next year?
Will Saudi Arabia’s monarchy be dethroned in a coup d’etat?

Will the Christian population of the Middle East shrink by more than 30% over the next 5 years?

Will the US dollar lose at least 30% of its purchasing power within the next three years?
Will the euro’s purchasing power collapse at least 30% within the next year?

Will Hillary Clinton become US President?
Will Carly Fiorina become US President?
Will Martin O’Malley become US President?
Will Scott Walker become US President?

Will there be a shooting incident between China and another Asian country within the next few years?
Will there be a shooting incident between China and the US within the next few years?
Will there be a shooting incident between Russian and NATO air, land or naval forces within the next two years?
Will Putin attack at least one Baltic State within the next year?
Are we stumbling toward World War III?

Will Germany get fed up and abandon the euro?

Will at least two EU countries abandon the EU's internal "open borders" policy?

Will Coinbase experience a massive security breach resulting in the loss of at least one million dollars' worth of BTC?

Will the Pentagon suffer a massive China/internet-related security breach?
Will another major Hollywood studio experience a major internet-related security breach?
…Will it be Marvel / Disney?

...Will it be Warner Brothers?

Will Chile get hit by a mega earthquake resulting in at least $1 billion in property damage and the loss of 100,000 Chilean lives?

Will the entire Pacific Northwest face a tectonic catastrophe that dwarfs it?

Will a miracle cure for diabetes be discovered?
Will a new global epidemic claim the lives of at least 1,000 on U.S. soil within the next two years?
Will scientists report the first successful implantation of a memory into a primate via optogenetics within the next year?
Will mind controlled cybernetic exoskeletons for the handicapped be available to a mass audience in two years?
Will a real blizzard lead to power cuts for more than 10 million Americans next year?
Will the Mars Curiosity Rover discover organic matter on Mars?
When will the first car equipped with vehicle-to-vehicle (V2V) safety technology be offered for sale to the general public in the US?
Will a NASA-funded ‘space taxi’ transport astronauts to the International Space Station before 2018?

Will Sears declare bankruptcy?
Will Foxconn lay off more than 25% of its workforce by January 1, 2017?

Will William and Kate, the Duke and Duchess of Cambridge, have a third baby within a year?

Will George and Amal Clooney divorce?
Will such-and-such in Hollywood and such-and-such in Hollywood divorce?
Will such-and-such in Hollywood and such-and-such in Hollywood marry?
Will such-and-such in Hollywood and such-and-such in Hollywood remarry?
Will Ben Affleck and Jennifer Garner remarry?

This is a dynamic world filled with risk and opportunity. It’s becoming more fast paced and less predictable – more exciting and more dangerous. Our security, success and well-being and our ability to effectively respond increasingly depend on a clear and quick understanding of where things stand and where they're headed in politics, finance, economics, international affairs, science, technology and on other fronts.

But too many of the surveys, polls, experts and other mass media we count on to get a sense of where things are going and to make good judgements about the right course of action are contaminated by “noise” — by bias, ego, error, flawed methods, ideology, groupthink, habit, inertia, political correctness, taboo, vested interests, ulterior motives, fragmentation, deception, intimidation, cults of celebrity, cliques of punditry, flat-out ignorance, inaccuracy and random fluff.

For starters.

Pundits are often wrong – sometimes catastrophically so. 

In just the past seven months, we’ve been beset with big surprises and even bigger questions about the future direction of the "United" States, the "United" Kingdom, the European "Union", Russia, China, Japan, South Africa, Cuba, Venezuela, Egypt, Iran, Israel and the rest of the Middle East, about the future role (if any) of human beings in their own economy, about how far (how soon) humanity intends to go in playing G-d... and about what the consequences of all of this will be.

We could all use a bit more clarity about the future.

What if we could tap into the “Wisdom of the Crowd” on demand and pool the vast reservoirs of knowledge, insight and awareness that rest in the minds of every one of us – of people across the world from various places with various perspectives and different levels of access to different sources of information – to get a more honest, better informed and instant read on the present and head start on the future? In real time? 24/7/365?

Two minds are better than one, right? Well, what about a thousand? How about a million? A billion….?

That’s what prediction markets do, that's what prediction markets are, and that’s what Augur will be: some much needed relief from This Age of Rampant Distraction, Confusion, Disinformation and Noise.

It will be an open platform where people can speculate on predictions about anything and where the rest of us can easily monitor that speculation to get a sense of where things are headed -- which big events of interest, that matter most to us, are likely or unlikely to happen.

In some sense, prediction markets are nothing new, because all markets are specific forms of prediction markets — prices in markets for all goods, all services (including all labor) and all assets are driven by expectations about the future.

For instance:

• investors in equity markets buy and sell stock in companies - driving share prices up or down - based on whether any particular expected event (CEO departure, new product launch, buyout/merger, etc.) will drive any given company's sales, profits and general value up or down

• speculators in the trading of coffee, oranges, pork bellies and other yummy futures buy and sell these commodities based on whether government policy, weather or any other expected development will lead supply to outpace or further outpace demand or vice versa. The same goes for resources like copper and natural gas. Just the hint of the risk of a possible war (rather than the actual reality of one) can buffet the price of a commodity (like oil) whose availability is seen as vulnerable to the risk of disruption.

• land prices typically soar on expectations new highways, commercial centers, new infrastructure or other big investments will be built nearby

• salaries (which are basically “prices” for labor) are based on the value added employers expect workers to bring in over the coming year.

However, a big challenge in analyzing these markets is that it can be hard and time consuming to figure out what specific issue, event or prediction is driving a price up or down at any given time - especially if you're not "in the know" and just an outsider, "on the outside looking in."

Pure prediction markets isolate and filter speculation to speculation about specific events. By making a share in a prediction worth 1 unit of cryptocurrency if it happens and zero if it doesn’t, the price of the prediction at any time becomes a rough measure of what "The Crowd” thinks of the odds of that specific event.

That’s why the biggest beneficiaries of prediction markets might not be the people who trade in them, but the rest of us who can use them as a kind of easy weather report on where things stand and where they’re headed on multiple fronts. In this sense, prediction markets can be a democratizing force that distributes access to valuable information more quickly and more widely.

Shouldn't this tool be made available to everyone? Wouldn’t it be useful before going to work in the morning to have a quick heads-up from a “Weather Report” that's about a lot more than just the weather and likely to be a lot more accurate?

• Since good trading performance is rewarded by financial gain and bad trading performance is “punished” by financial losses, prediction markets reward expertise and “punish” the not-so-knowledgeable who answer without having a clue. Over time, knowledgeable people who know earliest gain more of a voice than people who know less or later.

• Prediction markets pool diverse perspectives, so that even as knowledge on the system piles up, many of the biases cancel each other out.

• Their biggest rewards go to whomever gives “signals" earliest that stray furthest from the conventional wisdom. In other words, prediction markets give the biggest rewards to those who dissent the most and the earliest from erroneous groupthink.

For companies, intensifying global competition means that success (or, heck, just stayin' alive) requires tapping into such "out of the box" thinking - as soon as possible, and continuously.

George Mason University’s Robin Hanson, an adviser to Augur, is widely considered the modern inventor of the concept, grounded in part on the writings of Austrian economist Friedrich von Hayek, and says it best, when he describes the value added of prediction markets in the context of academia and pundits:

A central idea behind prediction markets is that large, diverse groups are collectively smarter than we are individually, most of the time. We benefit from pooling our awareness, wisdom and even our biases, because biases brought together tend to cancel each other out. That reduces the “noise,” clears up the “signal” and gets us closer to the truth.

This notion of “collective intelligence” should sound familiar – it’s one of the basic rationales for democracy, jury-based judicial systems and any collaborative group decision-making. The idea is that none of us has a monopoly on the truth about everything, so power, control and decision-making is often best distributed away from a single person or small group (be it a king, dictator, a single judge or select committee) and spread across a much larger, more diverse group of people to reduce exposure to individual character flaws, error,  ignorance and other defects. This tends to improve the average quality of decisions.

Prediction markets take that idea to a whole new level, allowing groups of people - rather than just a single person, pundit or posse - to convey their opinion on whether something is likely to happen… and put their money and reputations where there mouths are.

It will run on a decentralized network called Ethereum that allows for direct peer-to-peer transactions, automated/algorithm-enforced custody of funds and no intermediaries. It would run on code and decentralized consensus. That's a fancy way of saying that, much like bitcoin, BitTorrent and (to some extent) the Internet itself, it would be hard (and very unprofitable) for any one person to take down the network.

Augur could bring about much greater transparency on the big issues that matter most to all of us. The work being done is vital and vast in its potential implications. We all need better insight into the future.

The Augur Project intends to relentlessly make prediction markets broadly and widely useful, as vital and as indispensable a tool in people's lives as their smartphones, apps, maps and morning weather reports.