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Augur Raises Over $500,000 on First Day

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Aug 172015

Augur, the decentralized prediction marketplace to be built on top of Ethereum, has raised over half a million dollars on the very first day of the crowdfunding. The crowdfunding program has been eagerly awaited by investors, as they bet on future applications of cryptocurrency beyond just currency. The team had to wait for an official Ethereum launch before announcing their own crowdsale, since Augur is built on Ethereum (owing to a higher programming flexibility of smart contracts on Ethereum than Bitcoin). The team promises that people can use Bitcoin to place their bets on events.

As of this writing, Augur raised over 1750 BTC and over 99,000 ETH, the two ways to crowdfund this project. The team has also partnered with ShapeShift in order to accept other altcoins, which are then immediately converted into Bitcoin. The total raised so far (at BTC/USD of 257.77 and ETH/USD of 1.17 reported by Coinmarketcap) is around $567,788. The crowdfunding seems to be quite successful so far, and based on the incentive schemes (15% extra for first 5 days), it appears that most of the money will be raised within the first 5 days.

Long-Awaited Crowdfunding

Augur’s crowdfunding has been awaited by many in the community, with it being postponed initially after Koinify pivoted from providing a crowdfunding platform. Originally, Augur crowdsale was supposed to take place on Koinify, which had hosted other successful crowdsourced projects in the crypto space such as GetGems and Factom. Also, the launch of this crowdsale was delayed due to delays in the production release of Ethereum, although the Augur team built an alpha application to test on top of the Ethereum testnet.

Also, the current crowdfunding will be managed by the Augur Forecast Foundation, BitGo and Vitalik Buterin, the founder of Ethereum. Vitalik has been one of the early funders of the project, and seems to be fairly involved in the project and the team. Augur also appears to be the first major release on Ethereum, so will be closely watched.

Prediction Markets

Prediction markets in a decentralized, uncensored manner, will provide for very interesting intelligence from the so-called ‘wisdom of the crowds’. The phenomenon has been studied quite extensively in academia, but researchers have been limited in their research because they are considered illegal in the United States. With the opening up a platform like Augur, this might easily change in the future, providing an invaluable tool to researchers to gather intelligence.

The idea of Augur is based on the Truthcoin whitepaper, although it has been modified substantially by now. The reputation tokens (which is what the presale is for) called REP will be distributed among the masses, and they will vote on event outcomes. Everyone has an incentive to vote for the ‘right’ outcome i.e., with the crowd, which gains them more reputation points. Otherwise, they lose reputation points.

Recently, Reason ran a detailed article on Augur, exploring how it could be a betting platform, especially sports betting.

Augur Announces Crowdsale of Reputation Tokens

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Aug 082015

Augur, the decentralized prediction marketplace that aims to create a fully decentralized oracle by aligning the economic interests of participants reporting on events so they are honest, has announced its crowdsale of reputation tokens that are central to the working of Augur.

Augur is being built on top of the Ethereum blockchain, and since Ethereum has officially launched, Augur is looking to build out its crowdsale on top of Ethereum. It seems like a higher-risk endeavor compared to using more traditional token systems, for instance built on top of Counterparty (which would have been the original plan, since Augur was originally to launch its crowdsale on Koinify, which uses Counterparty in the backend).

Crypto 2.0

Augur is one of the more ambitious projects coming out of the crypto world and a decentralized oracle holds a lot of promise and potential. It is one of the ‘Bitcoin 2.0’ projects, although well-known members of the crypto community like Vitalik Buterin the founder of Ethereum don’t like to use that term to describe their projects. Its success will depend on a number of factors, and it remains to be seen how secure and honest the system will be.

Augur was initially built along the lines of Truthcoin, which was outlined in a paper by Paul Sztorc. Paul Sztorc was an early adviser to the Augur team, but the two have since had a public falling out. Paul Sztorc has since said that he would work on a version of Truthcoin on the Bitcoin blockchain, instead of using Ethereum like the Augur team is doing, when the sidechains are launched by Blockstream.

Crowdsale

The crowdsale itself has been announced at Augur’s blog. The crowdsale is for the REP tokens (reputation tokens) that users of Augur will use to be rewarded for correctly reporting outcomes of events. The crowdsale starts on August 17, 2015 and lasts for 45 days. The pie will be divided into a total of 11 million REP tokens during this period, out of which 80% goes to the crowdsale, 16% to the founders and 4% to the Forecast Foundation.

The team initially incorporated a referral system to reward the initial adopters who might evangelize about the project to others, but that has since been cancelled. There is also a bonus for people who donate early, keeping with the same spirit as Koinify which also has the same system of rewards. For Augur, there are three tiers of bonuses – the first 5 days get you a 15% bonus, the next 5 days get you a 10% bonus and the next 5 days get you a 5% bonus. Everyone after this period will get the standard percentages, based on the total money raised in the crowdsale.

To go to the Augur crowdsale, visit http://sale.augur.net/

My Thoughts

I’ve been following the Augur project for a good while now, and really like the premise of a decentralized oracle. Truthcoin is a promising concept and idea as well. I haven’t followed the whole episode about the falling out between Paul (the creator of truthcoin) and the Augur team, but I will admit, it makes me a little uneasy. Also, given a choice, I would prefer something built on Bitcoin than Ethereum, simply because Bitcoin is more ‘battle-tested’ than Ethereum, which has been up for less than a week. Also, Paul seems eager to launch his own competition soon.

I am not sure how much premium the first-to-market will fetch in this category, since inherently you want the system as decentralized and as spread out among participants as possible. Augur seems to be on the right track there. Weighing all the pros and cons, I would say this is one of the better projects in the community worth funding. However, do know the risks before you invest in this project.

Augur Launches Alpha on Ethereum Testnet

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Jun 162015

Augur, the decentralized prediction market system built around the truthcoin whitepaper, has officially launched its alpha on Ethereum Testnet. The alpha allows users to perform basic functions that are expected in the final product, including adding a new prediction market and betting on existing ones. Since Ethereum is yet to launch its final version, this was built on the Etherum Testnet instead.

Ethereum is expected to launch sometime next month, and is already in the final stages of testing. Ethereum, founded by Vitalik Buterin, raised $18 million in its initial crowdfunding platform, which was the second largest crowdsale recorded until then, trailing only Star Citizen, a video game. It has been the most successful crowdfunding in the cryptocurrency space.

Prediction Markets

Prediction markets tap into the wisdom of the crowds to predict the probabilities of future events. It is important to give the participants an economic incentive to participate, namely they get real money if they are right (as opposed to passive surveys and paying a flat-fee for user input).

Prediction markets were previously illegal in the United States, and therefore a lot of research in this area is only now coming to the forefront as researchers, scientists and social scientists realize the prediction powers of these markets for certain areas. Prediction markets were popularized by Intrade, a UK-based company, which is no longer operational. However, the site, which was very popular at one point of time, was credited with predicting election races to within a percentage point.

Today, several companies are using prediction markets, internally and externally, to understand their markets and users better. For instance, Estimize, a company that crowdsources financial data, has done better than most Wall Street analysts when it comes to understanding corporate earnings, using predictions from ‘amateurs’. Companies from Google to Ford have been known to run prediction markets internally, to understand their products and how they might perform in the outside world.

Decentralized, and Using Bitcoin

Augur is built using the principles and concepts laid out in the truthcoin whitepaper. The author of this whitepaper, Paul Sztorc, is an adviser to Augur. The Augur whitepaper is written by Dr. Jack Peterson & Joseph Krug, co-founders of Augur.

There are centralized solutions for prediction markets today that use Bitcoin, such as Predictitious. However, these suffer from the same old problems known to us – countless Bitcoin prediction markets have closed down over the years, vanishing with the users’ money. They can also easily be pressured to close down by powerful actors.

Augur decentralizes prediction markets and therefore makes it secured by the mathematics and economics of cryptocurrencies instead of trusting central institutions or human actors.

The Idea of Decentralized Oracle

One of the major achievements of Augur/Truthcoin is the idea of a decentralized oracle. This is perhaps the hardest part to get right in a decentralized prediction marketplace. The oracle is simply an entity that answers a yes or no to a question posed to it, which is then used to resolve the bet. In current human-curated prediction markets, the moderators or admins are the final decision authority on resolving bets. However, this system is easily corruptible.

Augur does something quite clever – it builds out incentives for people to vote the ‘right’ way, along with a majority of the people, so you’re rewarded for honestly (unless of course if the majority are dishonest, and can collude), and also incentivized to cast your vote on all event resolutions that you’re able to. This, in my mind, is the key feature of Augur and hopefully the system isn’t easy to game – you never know unless it’s tested out there in the wild with all the human greed and emotion.

Augur is a great idea and the startup has some very talented people working on it. We all look forward to how the project unfolds in the coming months.

Interesting Upcoming Crowdfunded Projects: Factom and Augur

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Mar 222015

The ‘altcoin’ space has evolved quite a bit since its initial days, when every day would bring three new announcements for new coins, all called ‘innovative’ while the only innovation was their name and logo (anyone remember junkcoin? Yes, the coin was literally called junkcoin and it was in the top 100 at Coinmarketcap!) Today, the scene is quite different. Love them or hate them, new technology and teams trying out the blockchain technology are always very interesting, irrespective of whether they succeed.

There were, of course, several of the ‘altcoins’ that have seen varying degrees of success. Some of them that did very well, from an investment point of view, include NXT, Mastercoin, Maidsafecoin, Ripple/Stellar, Bitshares, Counterparty, Peercoin, etc. Again, you might or might not like all of them, but these are some good ideas and bold teams working on the products.

The altcoin stream has dried up, somewhat, in the past few months as the Bitcoin price has languished in the $200s range, in spite of a lot of good news and new developments throughout the world. There are still some new and exciting projects in the pipeline. I’ll briefly mention a couple here, and perhaps do an in-depth article on them at a later stage.

Both these projects are doing their crowdsale on the Koinify platform, which is build a name for itself in the industry by being very selective when it comes to featuring projects and ensures the projects are funded only when they meet certain development milestones. You’ll need Bitcoin to invest in these. Check out the page on Buying Bitcoin if you don’t have any.

Note: This should not be construed as investment advice. If you didn’t already know, ‘investing’ in Bitcoins is extremely risky and investing in ‘altcoins’ is even riskier. Investing in a crowdfunded token that gives you the right to a software is riskier still. Take your precautions.

Factom

Factom is a “Factom is a distributed record-keeping network for securing millions of realtime records in the blockchain with a single hash”. This means it allows you to store the hash of several works, in the Bitcoin blockchain, through a singular hash. It is more efficient than a proof of existence type system. Currently, for example, the entire Gutenberg collection of eBooks are stored as a hash in the Bitcoin blockchain through Factom.

Factom announced its crowdsale at the end of March 2015, so be on the lookout on Koinify. Purely from an investment perspective, the tokens may or may not be a great investment, considering there is already a lot of hype and expectations built into this project, and the fact that they have taken a good amount of venture money already. Still, these things are hard to predict, and it is entirely possible that the initial investors will see a good return on their investments.

Augur

Augur is an implementation of truthcoin, which is a “Trustless, Decentralized, Censorship-Proof, Incentive-Compatible, Scalable Cryptocurrency Prediction Marketplace”, so basically a decentralized prediction marketplace. The whitepaper I linked to is very interesting, so if prediction markets interest you, definitely give it a read.

Augur is a very interesting project both conceptually and from an economic viability point of view. I see there are many right elements from an economic incentive point of view, built into the concept, and I think there is a good amount of upside to the concept in the coming years if it can work as promised in the real world. Augur is expected on Koinify in May 2015, so keep an eye out.