Author Topic: A Call to the Truthcoin Prediction Market  (Read 15580 times)

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Offline AsymmetricInformation

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Re: A Call to the Truthcoin Prediction Market
« Reply #30 on: April 02, 2014, 02:03:18 pm »
Welcome AsymmetricInformation and Bitcoinfan!
Thank you!

AsymmetricInformation, you said somewhere that you didn't believe BitUSD would peg to the dollar back then. What do you think now?
I'm not sure. I happen to be a very skeptical guy, of everything (as James (Bitcoinfan) will tell you). I am impressed with the way the core idea keeps improving, and I think it could easily continue to improve as potential attacks are discovered, as Bitcoin does. BitSharesX is pretty complicated, and I frequently wonder if I even understand it enough to comment. (I'm even skeptical of myself)!

I do know a lot about prediction markets, and I still believe that BitUSD would not represent a prediction market for USD under the established definition, it would instead be something new. A lot of the resistance PMs have to market manipulation is due (in my opinion) to the certainty that traders have that their shares will be worth a certain amount at a certain time ($1 upon the contract maturity). So lately I have been following the market manipulation thread in BitsharesX very closely.

There is some interesting BitSharesX game theory in people's refusal to accept anything other than the market price for their shares. I think this could work really well, but the margin call disrupts this ability-to-refuse. The margin call gets its information endogenously (internally, from the BitPrice) and is a weak point. James and I discussed that BitSharesX could occasionally call out to Truthcoin to find some information about the 'real' market price (say a range of valid prices), and base the margin call (or something else) off of that. The design, though, is already changing to try and block a malicious margin call in other ways (as I was saying).

I think the present forum members have already done a good job voicing their concerns in the relevant threads. If I think of anything new to say I might post there.

Offline Empirical1

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Re: A Call to the Truthcoin Prediction Market
« Reply #31 on: April 08, 2014, 02:30:22 pm »
Thanks for the earlier reply.

I think the thing I'm potentially most excited about is this -

Quote
Prediction Markets (PMs) can do more than predict the future. First, the mere presence of a PM-based forecast can conclusively end debates, prevent lies, encourage and protect whistleblowers, and provide decision makers with honest advice.


At the moment the MSM and politicians have a monopoly on truth or can at least obfuscate it enough to get away with things they shouldn't really be able to.

A robust, widely dispersed, proven TCPM can potentially do a lot of good in the world.


As for the other applications I like that it's decentralised, in that it doesn't need any external feeds, but even though you say..

Quote
In the United States, it is popular to gamble on the NCAA Men's Division I Basketball Championship. The creation of a fully liquid 1x68 market concerning only the champion team (in other words, not a full bracket) only costs about 6 times as much seed capital as authoring a simple 1x2 binary market7 (although decision fees are 67 times greater).
This allows everyone to gamble at once, interactively in an environment where money can be made and lost before, after, and during a game. Likely, no entertainment experience can compare! Moreover, a prediction market has (by definition) actuarially fair odds. There is no ‘house edge’, and with only a 1% trading fee this is possibly the fairest proposition in the history of gambling.

In some of your notes you suggested timelines of a couple of weeks for voting. Would it be fair to say this wouldn't be suitable to horse racing etc. where the events happen very fast, there are many of them and payouts need to be made fairly quickly.

Ie. The TCPM does sacrifice some speed overall and is also not suited (By comparison to tradition onlilne betting) to multiple fast paced, complicated events & betting. For example horse racing.

The benefits are that it is decentralised, no external feeds required and your odds are MUCH better. (The book-maker in sports betting is  usually taking 4-5% at least so 1% does change the game completely.)

Offline Empirical1

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Re: A Call to the Truthcoin Prediction Market
« Reply #32 on: April 08, 2014, 04:08:38 pm »
Another question, (I'm not 100% sure I understand the coin system exactly so apologies if this is wrong) but you say in your whitepaper, that

Quote
a) Any Bitcoin-user can trade on any prediction market without directly interfacing with Truthcoin at all.

Ie. The trading part is done in Bitcoin. So even though I understand your comment

One could design a class of 'owner-only' shares, but this separates ownership from control, introduces agency cost, and otherwise threatens the model. My research into the financial history of this planet indicates to me that separation of ownership from control produces something permanently unworkable. Bitcoin miners control Bitcoin, and are paid in Bitcoin. Bitcoin owners can only destroy their own Bitcoin. Perfectly logical.

It seems that if TCPM became a trillion dollar market, the real benificiary would be Bitcoin holders.
Because Bitcoin would absorb all of that Trillion Dollar TCPM trading volume and the value of Bitcoin would increase as a result  of its' 'fairly' fixed supply.

Therefore if you wanted to bet on the success of TCPM you would buy Bitcoin.

(Because even though the return on a specific TCPM blockchain would be higher by being a voter and owning truthcoin, a voter only has the capacity to vote on X amount of blockchains, so as the TCPM expands they will be selling or losing their stake (via demurrage) in various sub-chains whereas the Bitcoin holder would have a stake in all of them, because all of the trading volume would be denominated in Bitcoin. So IMO the current system does to a certain extent 'separate ownership from control' anyway? )

If that's the case wouldn't it be better to start a separate fixed supply trading coin in which all trading is denominated?

A) That way initial Truthcoin owners/voters could also be given a stake in the 'trading coin' so they're incentivised to expand the network beyond their personal voting capacity because they can still maintain a stake in the future success of the TCPM by holding the fixed supply trading coin in which all TCPM trading is done.   

B) If all TCPM trading is done in a new universal trading coin 'Y' then a small demurrage can also be applied to the trading coin 'Y' that gets paid to Truthcoin holders based on the volume their Truthcoin blockchain contributes to the overall market.  (This way you're actually giving more of the ownership back to the voters, because you couldn't apply this demurrage to Bitcoin, so if you made the trading in Bitcoin it would allow people who are long Bitcoin to get a lot of the value of TCPM without giving anything back to Truthcoin holders.)




 


« Last Edit: April 08, 2014, 04:32:46 pm by Empirical1 »

Offline AsymmetricInformation

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Re: A Call to the Truthcoin Prediction Market
« Reply #33 on: April 09, 2014, 02:26:02 pm »
I think the thing I'm potentially most excited about is this -

Quote
Prediction Markets (PMs) can do more than predict the future. First, the mere presence of a PM-based forecast can conclusively end debates, prevent lies, encourage and protect whistleblowers, and provide decision makers with honest advice.


At the moment the MSM and politicians have a monopoly on truth or can at least obfuscate it enough to get away with things they shouldn't really be able to.

Not just them. http://earthobservatory.nasa.gov/Features/Wegener/


In some of your notes you suggested timelines of a couple of weeks for voting. Would it be fair to say this wouldn't be suitable to horse racing etc. where the events happen very fast, there are many of them and payouts need to be made fairly quickly.

The price will not fix at 1 or 0 until voting occurs, but it will converge toward one of those values as the event info is revealed (ie just as the horse wins). If voting is in two weeks, there may be some time-value-of-money/time-preference/liquidity effect, but shares of the winning horse could still sell for 99.0 or 99.9. Those buying at 99 would be Wall Street / banker types who pick up the shares purely to earn 2 week's worth of above-market interest on their capital.

So fast cashouts shouldn't be a problem.

Another question, (I'm not 100% sure I understand the coin system exactly so apologies if this is wrong) but you say in your whitepaper, that

Quote
a) Any Bitcoin-user can trade on any prediction market without directly interfacing with Truthcoin at all.

Ie. The trading part is done in Bitcoin.

Trading uses the Truthcoin blockchain, but not the 'Truthcoins' themselves. This is probably my fault for relying on the word "directly", I'll put it on my edit list for v1.2.

It seems that if TCPM became a trillion dollar market, the real benificiary would be Bitcoin holders.

Hard to say. Truthcoin owners would be getting 1% of the trading volume. You are probably right, thus is the power of money's network effect.

(Because even though the return on a specific TCPM blockchain would be higher by being a voter and owning truthcoin, a voter only has the capacity to vote on X amount of blockchains, so as the TCPM expands they will be selling or losing their stake (via demurrage) in various sub-chains whereas the Bitcoin holder would have a stake in all of them, because all of the trading volume would be denominated in Bitcoin. So IMO the current system does to a certain extent 'separate ownership from control' anyway? )

Actually, the vision for Branching is that all current owners will own all future branches (they will just sell or fail to use the TRU on branches they are disinterested in). It is actually quite a bit like ProtoShares, where PTS is the first branch. Of course, someone can "plant a new tree" by forking the project completely, which might be ideal for private firms, but for public PMs skeptics would wonder why they should trust you vs. something with an existing reputation. So there is an incentive to buy the earliest tree.

Offline santaclause102

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Re: A Call to the Truthcoin Prediction Market
« Reply #34 on: April 09, 2014, 02:42:22 pm »
AsymmetricInformation, are you aware of the OP_RETURN issues Counterparty has (Mastercoin seems to have the same issue)? The discussion is all over the the Counterparty thread: Here are parts of it: https://bitcointalk.org/index.php?topic=395761.msg5815887#msg5815887

Offline Empirical1

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Re: A Call to the Truthcoin Prediction Market
« Reply #35 on: April 09, 2014, 07:01:04 pm »
Thanks very much for the replies!


In some of your notes you suggested timelines of a couple of weeks for voting. Would it be fair to say this wouldn't be suitable to horse racing etc. where the events happen very fast, there are many of them and payouts need to be made fairly quickly.

The price will not fix at 1 or 0 until voting occurs, but it will converge toward one of those values as the event info is revealed (ie just as the horse wins). If voting is in two weeks, there may be some time-value-of-money/time-preference/liquidity effect, but shares of the winning horse could still sell for 99.0 or 99.9. Those buying at 99 would be Wall Street / banker types who pick up the shares purely to earn 2 week's worth of above-market interest on their capital.

So fast cashouts shouldn't be a problem.

Yes that makes a lot of sense. I can even see third parties advertising they use TCPM on the back-end but bettors might interact with an interface that is market specific and very user friendly with fast cashouts, all for a small fee but which still makes the process a lot cheaper than traditional betting plus with some new interesting options.

Another question, (I'm not 100% sure I understand the coin system exactly so apologies if this is wrong) but you say in your whitepaper, that

Quote
a) Any Bitcoin-user can trade on any prediction market without directly interfacing with Truthcoin at all.

Ie. The trading part is done in Bitcoin.

Trading uses the Truthcoin blockchain, but not the 'Truthcoins' themselves. This is probably my fault for relying on the word "directly", I'll put it on my edit list for v1.2.

It seems that if TCPM became a trillion dollar market, the real benificiary would be Bitcoin holders.

Hard to say. Truthcoin owners would be getting 1% of the trading volume. You are probably right, thus is the power of money's network effect.


Yeah 1% of a $Trillion trading volume would be $10 Billion, which is very lucrative.
However, yeah,  the coin that sucks up that $1 trillion volume, (The one the trading is denominated in) will benefit a lot I think.
I still can't clearly see the reason for not making a new TRU trading coin, (especially because the return on that new coin which would start from a very low market cap would be incredible & I don't think Bitcoin separates the ownership/control problem that much better.) but might just be me. I can be a bit slow on some things.

(Because even though the return on a specific TCPM blockchain would be higher by being a voter and owning truthcoin, a voter only has the capacity to vote on X amount of blockchains, so as the TCPM expands they will be selling or losing their stake (via demurrage) in various sub-chains whereas the Bitcoin holder would have a stake in all of them, because all of the trading volume would be denominated in Bitcoin. So IMO the current system does to a certain extent 'separate ownership from control' anyway? )

Actually, the vision for Branching is that all current owners will own all future branches (they will just sell or fail to use the TRU on branches they are disinterested in). It is actually quite a bit like ProtoShares, where PTS is the first branch. Of course, someone can "plant a new tree" by forking the project completely, which might be ideal for private firms, but for public PMs skeptics would wonder why they should trust you vs. something with an existing reputation. So there is an incentive to buy the earliest tree.

TRU seems a bit different to PTS in that regard as I understand in the moment. In TRU I don't see a lot of new trees but I see a lot of new branches that don't honour the original trunk.

Like say I owned 1% of the first TRU blockchain, then someone created a basketball sub-chain which honoured the base chain,
I would then own 1% of the Basketball sub-chain. But as I'm not particularly interested in voting on Basketball, I would sell my Basketball stake or it would slowly erode away (Through demurrage.)

After a year, the Basketball chain is working well and has gained a great reputation,  however the voting demand is too much so they decide to make some new sub-chains/forks and divide basketball up by the various divisions.

It seems if you wanted to make a sub-chain/fork that works the best and that basketball bettors would trust the most, the basketball division sub-chain would be better off honouring holders of the current Basketball Chain not holders of the original TRU blockchain from which it was originally forked?

Offline AsymmetricInformation

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Re: A Call to the Truthcoin Prediction Market
« Reply #36 on: April 10, 2014, 03:25:09 pm »
AsymmetricInformation, are you aware of the OP_RETURN issues Counterparty has (Mastercoin seems to have the same issue)? The discussion is all over the the Counterparty thread: Here are parts of it: https://bitcointalk.org/index.php?topic=395761.msg5815887#msg5815887

It is completely irrelevant. I wish I knew of a way to make this sound more respectful (I really do), over text/internet which can often make things sound harsh, but the fact that you are even bringing it up indicates to me that you probably don't understand Bitcoin, my proposal, or OP_RETURN really at all. It's like saying "Are you aware of the new laws against writing on dollar bills?" to someone who is trying to start the Chicago Board Options Exchange. I did mention OP_RETURN in the Implementation section of my paper in passing, but only for the sake of completeness in discussion.

Thanks very much for the replies!

My pleasure.

TRU seems a bit different to PTS in that regard as I understand in the moment. In TRU I don't see a lot of new trees but I see a lot of new branches that don't honour the original trunk.

Like say I owned 1% of the first TRU blockchain, then someone created a basketball sub-chain which honoured the base chain,
I would then own 1% of the Basketball sub-chain. But as I'm not particularly interested in voting on Basketball, I would sell my Basketball stake or it would slowly erode away (Through demurrage.)

After a year, the Basketball chain is working well and has gained a great reputation,  however the voting demand is too much so they decide to make some new sub-chains/forks and divide basketball up by the various divisions.

It seems if you wanted to make a sub-chain/fork that works the best and that basketball bettors would trust the most, the basketball division sub-chain would be better off honouring holders of the current Basketball Chain not holders of the original TRU blockchain from which it was originally forked?

I think you've hit on another weak area of writing. I realize now that I was thinking of the 'tree analogy' in time, with ownership equivalent at each fork-point, not a tree of permanent-ownership. So you'd want to own the earliest chain, and you could maintain ownership of it through time (by continuing to vote), and this is the way (not any other way) that you are connected to the trunk (the 'option' to own future branches). I think I need to clarify this a little more in the paper.

The bold part is exactly what I had in mind, in other words, but the tree analogy starts to get confusing after you've abandoned a branch (unlike in a real tree in which you can't do that, and if that branch catches fire or something the whole tree probably dies).

Offline bytemaster

Re: A Call to the Truthcoin Prediction Market
« Reply #37 on: April 12, 2014, 11:20:17 pm »
I had a good chat with the guys behind Truthcoin and have concluded the idea is likely sound from a technical perspective. 

I still have some concerns about whether an anonymous, self-selected, majority is better than a majority of public trusted feeds and a prediction market that uses 2 out of 3 or 3 out of 5 feeds will provide better results.  I am certain that 2 out of 3 trusted feeds is likely cheaper and more efficient. 

May a million DACs blossom!
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Offline CLains

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Re: A Call to the Truthcoin Prediction Market
« Reply #38 on: April 13, 2014, 01:01:47 pm »
Will the market care about whatever the optimal solution is? Look at Bitcoin.

Offline Empirical1

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Re: A Call to the Truthcoin Prediction Market
« Reply #39 on: April 19, 2014, 12:25:27 pm »
I still have some concerns about whether an anonymous, self-selected, majority is better than a majority of public trusted feeds and a prediction market that uses 2 out of 3 or 3 out of 5 feeds will provide better results. I am certain that 2 out of 3 trusted feeds is likely cheaper and more efficient.

May a million DACs blossom!

 +5% I think your solution will be cheaper & more efficient as you said, so in general I prefer that now.

There are some questions you can pose to a TCPM that you wouldn't be able to elsewhere, so it could develop its own niche and build from there.

I also think it could even be useful in Bitshares, occasionally a few loud voices, with multiple overly long posts, (which I've been guilty of too) can almost create a false community consensus on certain topics. Putting some community type questions to our own TCPM occasionally could be useful.

Offline nakaone

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Re: A Call to the Truthcoin Prediction Market
« Reply #40 on: April 23, 2014, 02:37:26 pm »
any updates on this?

I think this one of the most promising ideas in crypto - to get an anonymous prediction market bootstrapped is like bootstrapping trading reality, with all his up- and downsides.


Offline Gentso1

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Re: A Call to the Truthcoin Prediction Market
« Reply #41 on: April 24, 2014, 07:22:56 pm »
I am also curious about what is going on with this project.  Can anyone comment?

Offline Bitcoinfan

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Re: A Call to the Truthcoin Prediction Market
« Reply #42 on: April 26, 2014, 03:02:46 pm »
any updates on this?

I think this one of the most promising ideas in crypto - to get an anonymous prediction market bootstrapped is like bootstrapping trading reality, with all his up- and downsides.


Yes!  Thank you for your interest.  We have not received any commitments of developers or funding just yet.  Dan is waiting for us to send in some proposal documentation before we can proceed with the Bitshares Foundation.  Stay tuned! 
« Last Edit: April 26, 2014, 03:10:40 pm by Bitcoinfan »

Offline AsymmetricInformation

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Re: A Call to the Truthcoin Prediction Market
« Reply #43 on: April 29, 2014, 05:41:37 pm »
any updates on this?
I am also curious about what is going on with this project.  Can anyone comment?

I am still working on the project in my free time, writing and reviewing my code for clarity and performance. Recently, I (finally) perfected Scaled Claims, which allow a PM to take on a final value between 0 and 1, which can be scaled and shifted to represent a price index such as the DJIA or a number of House of Representative seats (the two examples I used in the R code). I have yet to rewrite this in Python or document it. I also still have to write a FAQ and more clearly document the project's requirements.

For details of what I am working on, see the 'Pipeline' section of my GitHub ReadMe, which I update occasionally https://github.com/psztorc/Truthcoin#pipeline

One issue is the economic model. Should this create new currency units (in addition to creating shares)? I had originally planned to use Bitcoin, but this depends on the development of, for example, side chains / tree chains / whatever. I may use Bitcoin's UTXO set purely to gain network effects and testing (distributing the shares [not currency] to the developers [currently just me]).

Many individuals have expressed interest in the project via private message or email, including one developer here. However, no one has volunteered to do what is actually required, and commit a few weeks of undivided development attention. Currently, I am not comfortable hiring anyone, mainly because half-finished code is worthless.

Bitcoinfan indicated to me that Bitshares would be able to provide dedicated developers and/or funding-for-developers in exchange for proportional ownership of the project's shares, but I instead expressed the opinion that Dan would (understandably) be hesitant to fund something which might directly compete with his own project. While meeting with Dan, he indicated that he had not read the whitepaper/code/supporting-documentation, and that he would not be able to directly provide any funding. Nearly all of his questions were about how Truthcoin would compare to his BitsharesX + Feed(s) idea. I interpreted this as confirming my original expectations.

So I am not sure that there is any room for partnership, but Bitcoinfan remains very optimistic so I am leaving it to him to arrange.

Offline toast

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Re: A Call to the Truthcoin Prediction Market
« Reply #44 on: April 29, 2014, 06:05:34 pm »
I really don't think Dan ever meant to show that Bitshares would not want to help you guys because you're the competition. To the contrary I think the whole point here is that *any* value-adding DAC idea can find a win-win arrangement with bitshares.

The usual deal is you honor at least 10% PTS and 10% AGS and in return you get to use bitshares_toolkit and get the support of everyone in the community. This is something you might want to do anyway if you use snapshots for allocation - better than dropping purely on bitcoin's utxo set!

Pretty soon there should be several DAC engineers who might be willing to contribute more focused effort in exchange for more equity in the DAC. I myself am intensely interested in Truthcoin and my grant from Bitshares allows me to work on any DAC that honors the social consensus. It's just a matter of still being at school .p2p taking up more time at the moment. The bitshares landscape will also look much different once XT and then .p2p/Lotto are launched.

In other words, don't turn your back to collaborating just yet! We want you guys!
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