Ana Sullivan

Augur`s Co-Founder Joins Another Project

by Ana Sullivan February 5, 2018

Self-titled the “future of forecast”, Augur (REP) is not the usual cryptocurrency that we are used to seeing on the market. It is described as an open-source decentralized platform that can predict the outcome of an even (like crypto prices) 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. The correct predictions are rewarded by the platform while the wrong ones are penalized.

Augur was developed by Jack Peterson and Joey Krug in 2014 and it is based on the Ethereum blockchain. Augur is said to allow anyone, anywhere and anytime to create and speculate on derivatives at low costs and thus decentralize and democratize finance worldwide. The main idea is to make more accurate predictions by large groups of people, rather than a small team of experts.

Reputation (REP) tokens are the backbone of Augur. The tokens were launched in August 2015 with a fixed amount of 11 million coins. The REPs allow people to report or weight in on the outcomes of events. Those, who provide correct reports are awarded more REP tokens while those who report untruthfully lose tokens. In other words, REPs are lost and gained depending on the reliability of voters with the consensus. However, like Augur says, the majority of users will never need REP tokens as they are only needed my market makers and by reporters when they report on the outcome of markets. The current price of the REP token is $47.86 USD after a major decrease from $107.70 USD (January 13th). This gives Augur a market cap of $526,480,900 USD.

Many people seem excited about the idea of being able to predict the outcomes of different events. That’s why the Augur project was welcomed quite warmly by most. Yet, there is always more to the picture. The thing that sounds great is that Augur is decentralized. However, some people argue that it is possible that Augur enters rough regulatory waters just like the ones Intrade (a prediction market that closed in early 2013 amid pressure from the US government) sank in.  

Jacob Eliosoff, the CEO of the Calibrated Markets LLC cryptocurrency investment firm, stated:
"Any prediction market that takes off is likely to attract unwelcome and possibly fatal regulatory attention for sports betting."

Eliosoff also added that even if Augur succeeds in steering clear of suck regulatory risks due to its decentralized management system, the platform`s decision to forego Ether and launch its own app coin would potentially ruin its ability to keep users interested long-term.

Also, the co-founder of Augur, Joey Krug, joined another project – Pantera Capital, as a Co-Chief Investment Officer. This rose questions among users and they started wondering whether or not he is still fully dedicated to Augur? Even though Krug tries to pitch joining the fund as a positive thing, fears and suspicion still remain.

In addition, even though the “wisdom of the crowd” is a real prediction method, it is not 100% accurate. Nothing is 100% accurate when it comes to forecasting. Forecast changes all the time. This means that even if the majority of people think that an event is going to turn out is a particular way, there is still a chance that all of them are wrong. It sounds a lot like gambling and betting and it is risky.

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