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Offline hpenvy2

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Prediction Market
« on: February 06, 2015, 10:30:17 PM »

What does everyone think of the prediction market feature BM discussed in today's Mumble?  Forget gambling, this looks like the post 1.0 feature that could really drive BitAsset usage.

Offline Ander

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Re: Prediction Market
« Reply #1 on: February 06, 2015, 10:37:17 PM »
Imo, prediction markets are amazing and will change the world for the better. 

They are a potentially huge feature that bitshares should work on after its immediate priorities of stable release / light wallet / gateways.  They should be one of the things in the next tier of goals for bitshares, along with voting, smart contracts, etc.

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Offline graffenwalder

Re: Prediction Market
« Reply #2 on: February 06, 2015, 10:41:47 PM »
Not saying it's right or wrong. But it's still gambling (betting on an outcome)

However if a third party where to launch a unibet like site running on BTS with sportsbets etc..
It could be huge.

Side question:
How would the judges be elected/trusted?

Offline Stan

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Re: Prediction Market
« Reply #3 on: February 06, 2015, 11:01:49 PM »
Not saying it's right or wrong. But it's still gambling (betting on an outcome)

However if a third party where to launch a unibet like site running on BTS with sportsbets etc..
It could be huge.

Side question:
How would the judges be elected/trusted?

Life is a gamble.
The financial markets are a form of betting on which way the value of a product or service will move. Many of its most successful products used to be illegal due to misguided labeling of them as "gambling".  We want to develop the prediction market as a legitimate information fusion mechanism right there beside our pegged asset and polling/petition/voting services.

We should avoid associating gambling terms with it.

As for selection of judges...

The person who defines and registers the question to be posed also defines the judges to be used (up to 110 of them).  They don't have to be delegates, but they do have to be registered accounts whose "feeds" the blockchain will then recognize.  Presumably people willing to be judges will emerge over time and build reputations akin to professional referees. 

Obviously, if you want your poll question to be taken seriously by your target participants, you will choose judges with good reputations.  You will want to make sure they agree to serve as judges of the final outcome and arrange for their compensation, if any.

Presumably the voting records of those who have served as judges will become matters of public record, and those with the best records will be the most sought after for important questions.








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Offline BunkerChain Labs

Re: Prediction Market
« Reply #4 on: February 06, 2015, 11:04:38 PM »
Imo, prediction markets are amazing and will change the world for the better. 

They are a potentially huge feature that bitshares should work on after its immediate priorities of stable release / light wallet / gateways.  They should be one of the things in the next tier of goals for bitshares, along with voting, smart contracts, etc.

 +5%

I really never followed markets like that, just heard about them. Now that it's part of bitshares though, I am glad it is. I think it will be an exciting part of the ecosystem. I sometimes feel like with all these features bitshares is passively turning me into an economist. :P
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Offline graffenwalder

Re: Prediction Market
« Reply #5 on: February 06, 2015, 11:26:24 PM »
@Stan thanks.

But the prediction market could be applied to anything, as long as there is interest right?

1. What party will win the elections?
2. Who will win AS Roma or Man United?
3. Will graffenwalder be asking stupid questions tomorow?

Offline Bitcoinfan

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Prediction Market
« Reply #6 on: February 06, 2015, 11:34:04 PM »
Not saying it's right or wrong. But it's still gambling (betting on an outcome)

However if a third party where to launch a unibet like site running on BTS with sportsbets etc..
It could be huge.

Side question:
How would the judges be elected/trusted?

Life is a gamble.
The financial markets are a form of betting on which way the value of a product or service will move. Many of its most successful products used to be illegal due to misguided labeling of them as "gambling".  We want to develop the prediction market as a legitimate information fusion mechanism right there beside our pegged asset and polling/petition/voting services.

We should avoid associating gambling terms with it.

As for selection of judges...

The person who defines and registers the question to be posed also defines the judges to be used (up to 110 of them).  They don't have to be delegates, but they do have to be registered accounts whose "feeds" the blockchain will then recognize.  Presumably people willing to be judges will emerge over time and build reputations akin to professional referees. 

Obviously, if you want your poll question to be taken seriously by your target participants, you will choose judges with good reputations.  You will want to make sure they agree to serve as judges of the final outcome and arrange for their compensation, if any.

Presumably the voting records of those who have served as judges will become matters of public record, and those with the best records will be the most sought after for important questions.

Stan,

Like to hear your thoughts.  In your mind, does having publicly known judges increase the risk of collusion, since it is then convenient for them to contact each other?  I'm coming from the experience before us with mark karples of mt gox who built up trust in the community only to mishandle funds it when he had adequate marketshare.  That was not a small sum either, to the tune of $600mm.  We know everything about mark but he still got away with losing everyone's money.  It has yet to be seen that transparency has held mark accountable.  Can we trust a bitshares prediction market with $2mm let alone $600mm?  Should I have concerns about the risk of sabotage in this system that incrementally increases as the market cap in a prediction market expands?


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« Last Edit: February 07, 2015, 12:21:58 AM by Bitcoinfan »

Offline hpenvy2

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Re: Prediction Market
« Reply #7 on: February 06, 2015, 11:38:41 PM »
Could the potential judges put up some type of bond?

Offline Ander

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Re: Prediction Market
« Reply #8 on: February 06, 2015, 11:40:19 PM »
Not saying it's right or wrong. But it's still gambling (betting on an outcome)

There are forms of gambling which create no positive benefits for the world, but simply create addicts who end up feeding their money to the house due to the house edge, who then simply parasites off these people's lives.


Then there are prediction markets, which have the potential to create a lot of public good.

http://mason.gmu.edu/~rhanson/futarchy.html


With Bitshares, with both prediction markets and voting/elected delegates, we have the opportunity to make a grand experiment.  We can attempt a new form of government, a decentralized governance system which does not use the power of physical violence to enforce itself, but instead uses the power of math (to run the blockchain to enforce ownership, smart contracts, etc), voting (for trusted delegates), and prediction markets (to determine better solutions to problems).  This allows us to solve the very difficult problems of coordinating all humans together for mutual public good.


The prediction market serves the important role of allowing us to aggregate information together in order to determine the truth of beliefs.  This provides us with the best information on what plan can best achieve the most benefit for society as a whole.  Prediction markets are more accurate than direct voting, as they reward rationality and impose a penalty on incorrect ideas.


This is how Bitshares will change the world, if we succeed.  A future governance system which is decentralized, nonviolent, protecting of ownership rights on the blockchain, fairly enforcing smart contracts on the blockchain, enabling the election of trusted representatives in a reputation system, voting on public proposals on the blockchain with no voting fraud, and using prediction markets to find the best solutions to the problems faced by humanity.
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Offline Bitcoinfan

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Prediction Market
« Reply #9 on: February 06, 2015, 11:43:07 PM »
Could the potential judges put up some type of bond?

This hits limitations as the payout from rigging the market would just have to be greater than the bond itself. Who determines that the judges have defaulted on the bond?  The traders themselves?  You've effectively made them the reverse judges.  And what when l a majority of traders all hate the outcome of a correct event. 


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« Last Edit: February 06, 2015, 11:49:41 PM by Bitcoinfan »

Offline Stan

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Re: Prediction Market
« Reply #10 on: February 07, 2015, 12:46:34 AM »
I think in most (not necessarily all) cases people will prefer to know who did the judging so they can hold them accountable.  This is because most answers are unambiguous after the fact.

In cases where the judges must use judgement (e.g. who is the best singer) the market will want to know the credentials of the person(s) making that judgement.

But some use cases might demand secret judges.  We'll see.

I expect there will be serious and not-so-serious issues that bubble up to the top of the trading volume charts.  There will also be experimental research questions of interest to very few.  Local governments and schools and clubs and small businesses may use them in creative ways.  We are talking about lots and lots of transactions, leading to lots and lots of new people discovering BitShares growing suite of transparently incorruptible services.

I expect that this whole area will undergo tremendous growth and innovation in the coming year.
We may have to provide tools to allow people who need them to comply with their local regulations.
BitShares is a global company and must grow to meet the regulatory and privacy needs of its users.
There are no pat answers to how it should work.
We'll start out simple and innovate it into a huge business.

Nice thing about a SuperDAC is that each area of innovation cross-feeds strength to other areas.
We wouldn't get that if we kept each business model on a separate block chain.

:)
« Last Edit: February 07, 2015, 12:49:01 AM by Stan »
Anything said on these forums does not constitute an intent to create a legal obligation or contract of any kind.   These are merely my opinions which I reserve the right to change at any time.

Offline Stan

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Re: Prediction Market
« Reply #11 on: February 07, 2015, 01:14:25 AM »
@Stan thanks.

But the prediction market could be applied to anything, as long as there is interest right?

1. What party will win the elections?
2. Who will win AS Roma or Man United?
3. Will graffenwalder be asking stupid questions tomorow?

The way we envision it, any account can pay a fee, create what amounts to a special form of user issued asset which embeds a posed question about a predicted future state and a list of other accounts to act as judges to document the answer when it becomes known in the future.  They then earn a share of the transaction fees from trading that asset.  These fees reward them for the service of posing an interesting question and calling the world's attention to it.

It is up to the "asker" of the question to draw attention to the opportunity to participate in adding global knowledge about the answer to the question by attracting people who have insights to share them in the marketplace.

So you can imaging lots of small businesses using the BitShares public ledger and marketplace to distill this knowledge into a usable form.

Judges can be independent individuals or small businesses who develop reputations for publishing reliable "fact feeds". 

Each of these independent individuals is doing a very simple task.  One defines the question.  Another documents the answer. The blockchain does not need to be explicitly in the business of doing anything but trading user issued assets that represent whatever people want them to represent. 

The emergent property of these three independent activities is the ability to answer questions for which the answer would never otherwise be available because the information is too diffuse and unprofitable to assemble otherwise. 

emergent property
noun
any unique property that "emerges" when component objects are joined together in constraining relations to "construct" a higher-level aggregate object, a novel property that unpredictably comes from a combination of two or more simpler constituents

We are simply building a toolkit of useful accounting functions that produce interesting emergent properties when people provide services that are legal for them to offer wherever they live and global synergy mixes them together in innovative ways.
« Last Edit: February 07, 2015, 01:25:30 AM by Stan »
Anything said on these forums does not constitute an intent to create a legal obligation or contract of any kind.   These are merely my opinions which I reserve the right to change at any time.

Offline Akado

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Re: Prediction Market
« Reply #12 on: April 29, 2015, 12:21:01 AM »
What does everyone think of the prediction market feature BM discussed in today's Mumble?  Forget gambling, this looks like the post 1.0 feature that could really drive BitAsset usage.

just would like to know if this still stands, even if later down the road.
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Offline starspirit

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Re: Prediction Market
« Reply #13 on: April 29, 2015, 12:32:34 AM »
I think this type of discussion is good, to consider what future services, structures and markets might look like and how they might operate.

I also think that their success will depend on the existence of a widely accepted stable currency for exchange and settlement. I remember participating in a site called betsofbitcoin, which had similar prediction markets settled in BTC. It was really a great site, and plenty of fun, and anybody could earn fees for creating markets. In the end though, I feel its growth was inhibited by the volatility of BTC itself, and it didn't help when the owner finally lost interest and ran with the remaining BTC in the system.

Yes, prediction markets can be huge. But it needs all the right user ingredients. And we are still building those. [Still worth the discussion though].

 

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