This guy (economist at Yale) is currently working on an interesting project.
https://bitcointalk.org/index.php?topic=475054
Naturally I introduced this project to him, though he’s interested in pursuing a much more information-centric approach. Also some good discussion about feed operators, etc.
Please refrain from spamming that thread with “BUY XCP NOW!!!” messages. It just makes everyone look bad.
Yes, I did see the post on Reddit. Sounds like a good fit for the counterparty betting platform (prediction market).
A problem with thinking about Bitcoin, and all the more for “Bitcoin 2.0”, is that there are simply too many possibilities for what could be done with them. It’s too vast a flood of possibility for anyone to reason through, so it gets lumped into a vague box of "mindbending futuristic stuff."
One solution is to consider a single aspect of a single function when it is fully formed, say the implications of frictionless betting systems, complete with a robust ecosystem of oracles. Easy, cheap, reliable, fair, frictionless, ubiquitous betting enables ubiquitous insurance. Everything that would benefit from being insured, could be insured provided reliable oracles were available. Business risks, especially in the third world, could be mitigated against like never before.
Imagine a farmer in Kenya for whom one bad season could mean his family starves. For him, hedging risk is a matter of life and death; yet he’s one of the last people on the planet you’d expect to have crop insurance. Ubiquitous insurance changes the very character of the industry. When everyone can get reliable insurance without credentials, without middlemen, with tiny spreads, with a phone app, in seconds, insurance will be used for a whole lot more things. On the train to the airport but will miss your connecting flight if the train is more than 15 minutes late? Odds: 0.1%, total personal loss estimate: $2000. Pull out your phone, open Counterparty app, create a bet, select from a set of suggested oracles, enter bet amount. Instant hedge!
If Bitcoin expands the division of labor to encompass everything any human being can do for another - any win-win trade two people can make based on their differing priorities and abilities - the Counterparty’s betting platform expands that to risk hedging. Any event with low probability but horrible results for you can be hedged by someone for whom the results are not so horrible. For instance, you might buy rain insurance for your outdoor wedding even though the chance of rain is only 5%. The counterparty(ies) to the trade win by getting a positive expected return on their investment, and so do you, simply because you care a lot if it rains in your town on that day and they don’t. To make this work, weather.com and other sites would simply have to release PGP-signed weather data in a feed. The contract might specify several oracles, or 2 out of 3, to prevent gaming. (The redeeming party could either submit the relevant signed feed data in order to collect, or perhaps it could be done automatically.)
But, as mentioned in the Bitcointalk thread, that’s only one half of it. As we saw with Intrade’s incredible accuracy at predicting the outcomes of elections, frictionless betting also brings the full promise of the Internet alive as a collective consciousness. How good would weather forecasting get if the importance of getting it right were baked into the movements of value in the economy? Far from being some kind of den of vice as its name seems to hint, ubiquitous betting that can’t be shut down or censored or disrupted represents for the first time actual correct pricing of knowledge in society in the most direct way.
The price on the universal betting platform would fairly soon become the most reliable coalescence of society’s knowledge and predictive capacity on a given event. Only the most confident would have the conviction to bet large amounts, and those that were irrationally confident would soon lose their money while the best predictors would grow rich and have more and more capital to invest, signalling ever more faithfully the best known probability of the outcome to society.
This is just a small sampling of just one aspect of one of the many things Counterparty or other decentralized betting platform can do. Just imagining a world where everything is reliably, instantly, and very cheaply insurable/hedgable is enough to set the mind racing for hours or days at the possibilities. The sum total of all these innovations is surely to us here now incalculable.
Very interesting stuff! Maybe my questions are more related to a PM than Truthcoin directly so I won’t pollute the Bitcointalk thread.
How does a PM resolve disambiguiity? For example “The ILO describes 4 different methods to calculate the unemployment rate” http://en.wikipedia.org/wiki/Unemployment. How about if the answer to the question is culturally ambiguous? http://en.wikipedia.org/wiki/Linguistic_relativity_and_the_color_naming_debate
Would it be a fair assumption that the value of the PM must be higher than instruments that are built off the knowledge within the market? ie if the payoffs on bets outside of the PM was worth more (leveraged) than the payouts within the network, then the in built economic incentives in the PM would be insufficient to offset the off market value of manipulating the outcome.
Re: ambiguity
Specific oracles would be designated in each contract. There could be provisions for what happens if oracles disagree. For cultural differences, you’d just want to be careful of what culture the oracles are in. Counterparty is neutral and deterministic, but the other side of the equation, the oracles, are not.
[quote author=Zangelbert Bingledack link=topic=125.msg1057#msg1057 date=1393822530]
Re: ambiguity
Specific oracles would be designated in each contract. There could be provisions for what happens if oracles disagree. For cultural differences, you’d just want to be careful of what culture the oracles are in. Counterparty is neutral and deterministic, but the other side of the equation, the oracles, are not.
[/quote]
Also each oracle’s voting record would be in public so those who bet would be able to remove some uncertainty by referencing his past decisions.
(Interestingly noone seems to have a problem with the phony nature of “official” stats).
https://github.com/psztorc/Truthcoin/blob/master/docs/1_Purpose.pdf
guys if this is in any way possible to implement under current given technological circumstances it should be done AS SOON AS POSSIBLE.
there are probably only a few things which academia wants so hard and politicans forbid so strictly.
blockchain + prediction markets is the killer app for the whole sector.