How Augur and REP work
Augur is function a betting platform, but in outcome it’s more of a soothsaying device augur if you will.
Augur the wisdom of the crowd to consistently outperform expert predictions on everything from market movements to sports.
It costs REP to make a bet. Correct predictions reward gamblers with more than they bet, while incorrect predictions aren’t rewarded at all.
The end result is a decentralised prediction marketplace. You ask it a question, the question is put to the crowd, and the wisdom of the crowd pumps out an answer that’s statistically more accurate than any expert answer.
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Where to buy Augur (REP)
How does Augur work?
The main question on your mind might be whether Augur can really outperform experts. The remarkable accuracy of aggregate predictions has been known for decades. DARPA and the CIA even started their own project in 2001 but lost funding in 2003 after being accused of wasting millions of taxpayer dollars on “terrorism betting parlours”.
Fortunately, blockchain technology has now allowed for an exceptionally cost-effective, flexible and secure decentralised terrorism (and sports, politics and everything else) betting parlour in the form of Augur.
Bets are placed through the purchase of “shares” in an event, and the prediction itself takes the form of a price tag for each likelihood, showing the respective odds of each outcome according to the crowd.
- The system is designed to indirectly give more weight to more confident answers, with the effect of encouraging more research among participants and encouraging better-informed users to bet bigger.
- The betting odds are dynamically updated in line with previous bets. This is because all shares are routed through an interface that adjusts prices based on previous share purchases. In short, riskier and less popular guesses net higher rewards.
- The sustainability of the system is mathematically ensured by the above. It can’t be gamed or otherwise compromised, and the integrity of results and fairness of the system is provable.
How it works
Someone creates an event and specifies the outcomes on which users can bet. Users place their bets by purchasing shares in each outcome.
For example, say someone wants to predict the outcome of a Red vs Blue sports match with no chance of a draw.
The shares on sale here will be “red team wins” and “blue team wins.”
The cost of the share will depend on the previous purchases. If everyone’s buying the “red team wins” shares, then those will be considerably more expensive than the “blue team wins” shares, and consequently pay out less.
For example, if the cost of a Red share is and the cost of a Blue share is , then the crowd is predicting a 90% chance of Red winning. It might be a safe bet, but they’d only be getting $1.10 back for every $1 spent on shares.
Someone might also buy a share in “blue team wins” for . If they were correct with those odds, they’d get back $1.90 for every dollar put in.
The cost of each share is dynamically adjusted based on previous shares purchased. The wisdom of the crowds doesn’t immediately whip up a guess. Instead, it vacillates on the issue eventually settling on an answer, constantly changing rewards to incentivise those with the most knowledge or subject experience to bet more, and therefore have a larger influence on the prediction.
For example, Red’s star player might get injured, so people start buying up a lot of Blue shares, and the price swings around until Blue is selling for and Red is selling for . This means it’s now predicting a Blue victory with 70% confidence following the injury.
The beauty of Augur is that it can be used for much more complicated bets than this. In this case, the betters sell shares for specific margins of victory, specific players scoring goals or the chances of the entire game being cancelled alongside the plain victory prediction of others.
The end result, depending on the types of events being created, is a set of rich, detailed predictions dynamically change until they settle on a final answer at the specified end time.
Things to consider before buying Augur
The REP token itself is an ERC20 token that functions as a license to use the platform and the main currency of exchange on Augur for buying shares and paying the nominal fees associated with participating and creating events.
The total supply of Augur is 11 million, without any kind of program ’s a divisible token.
most interesting as a soothsaying platform, but its most commercially viable applications are as a straight-up sports betting system and a very interesting type of futures trading platform.
As a simple betting platform, the use of blockchain technology makes Augur a reasonable alternative to sports betting sites, it in a transparently fair manner and with much lower fees than current online betting systems. The Augur system automatically runs the numbers on sustainable betting odds, automating what used to be an arduous process.
Futures trading is also betting. If you go long, you’re betting the price will go up. If you’re shorting, you bet that the price will go down. Augur is extremely similar to these and stands to disrupt that market. For all the talk of cryptocurrency futures trading, there still aren’t too many purely blockchain-based futures trading platforms and Augur stands to disrupt those too.
Traders will need to decide whether Augur’s relatively low supply of 11 million tokens as well as its ability to be used as a trading platform will help it grow. The growth of 0x, in particular, will start unlocking extra features in Augur and expand its functionality.
tends to be subject to serious regulations around the world, and traders will need to decide if a high-roller sports (and terrorism) betting parlour/futures trading platform will escape a government crackdown.
One concern traders need to consider is whether established industries will oppose Augur. Traders may find that Augur’s potential for gambling, insider trading and accurate predictions will give lobbyists a lot of ammunition.
also to how long its auguries will continue being accurate. to ignore the clear overlap between Augur’s crowd-sourced wisdom and the mechanisms behind machine learning.
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