What Is Augur (REP)?
Augur is an Ethereum-based decentralized prediction market that leverages the wisdom of the crowds to create a search engine for the future that runs on its own token, REP. Augur allows users to create their markets for specific questions they may have and to profit from the trading buys while allowing users to buy positive or negative shares regarding the outcome of a future event.
Augur was founded in 2014 by Jack Peterson and Joey Krug to develop a decentralized oracle and prediction market platform on the blockchain that could be deployed by anyone as open-source software. The alpha version of Augur was released on the Ethereum testnet on June 16, 2015. The first beta version was released in March of 2016.
Augur aims to create the most accurate prediction markets using the “wisdom of the crowd”—the idea that, when many people weigh in on certain outcomes, they’re more likely to create an accurate prediction.
It runs on Ethereum, the decentralized ledger system that enables money to move quickly and cheaply and is second only to Bitcoin among blockchains whose coins have the highest asset value.
The Augur Project was funded by a public crowdsale during the fall of 2015, in which it sold 11 million reputation tokens (REP) to more than 4,000 participants. Software development of the Augur platform has been done through the not-for-profit Forecast Foundation OU. The Forecast Foundation OU retained 440,000 REP (as well as the crowdsale proceeds) to help fund development of the platform.
Augur owes its intellectual legacy to, and stands on the shoulders of, Arrow and Debreu’s Existence of an Equilibrium for a Competitive Economy, Friedrich Hayek's The Use of Knowledge in Society, James Surowiecki's book The Wisdom of Crowds, Robin Hanson's concept of “Idea Futures”, Paul Sztorc's “Truthcoin”, Vitalik Buterin's "Schellingcoin" concept, and the work of Stanford University computer scientist Joseph Bonneau.
The project includes Intrade founder Ron Bernstein, George Mason University economics professor Robin Hanson (author of OvercomingBias.com), and Ethereum founder Vitalik Buterin among its advisers.
Augur’s purpose is to allow humanity to use its platform to democratize and decentralize finance worldwide. It does this by providing anyone, anytime, anywhere with the ability to create and speculate on derivatives at very low cost. Prediction markets have also been proven to provide better future forecasts, more direct hedging and speculationmechanisms, and finally to better fulfill the vision set out by Hayek and Arrow & Debreu on how changing derivative prices communicates market information to reach equilibrium.
Since it is run on the decentralized Ethereum blockchain, Augur cuts out middlemen, virtually eliminates counterparty risks, and brings trading and market costs down to the economic minimum needed to operate the software platform securely.
Augur’s creators argue that one problem with traditional prediction markets or betting platforms is that they’re centralized, so they can easily be shut down. Another issue is that they rely on one party to report how an event turned out, a setup that’s susceptible to mistakes or manipulation. Since Augur is a decentralized system, thousands of people can report on the outcome, making it more accurate. And those who predict the correct outcome get rewarded with Augur’s REP tokens.
Reputation (REP) tokens are the cryptographic token behind the Augur platform. The use of REP tokens on the platform helps secure Augur by having REP holders arbitrate (or judge) the outcome of prediction markets created on the Augur platform. However, the vast majority of Augur participants will never need to hold, see, or even use REP to place trades on any given Augur market. Instead, REP tokens are only needed by market makers (when they create a new market on the platform) and by reporters when they report on the outcome of markets created on the Augur platform. By owning REP, and participating in the accurate reporting on the outcomes of events, token holders are entitled to a portion of the market fees generated by the platform.
How does it work?
The value of each share adds up to one dollar, so if a negative share is worth 50 cents and if a positive share is worth 50 cents, there is a 50/50 probability of said event becoming true or false according to the platform. If that event is proven to take place, the positive shareholders will receive a full dollar for each share bought. The current market price of a share is an estimate of the probability of an event occurring.
Users don’t have to hold on to a share until the event takes place, as shares can be freely traded in the Augur exchange until the event takes place.
Let's say we're betting on a sports tournament. A user can buy shares for the underdog to win the championship at a cheap price, 10 cents for example. As the tournament progresses, this underdog surprises everyone by winning some games. The price of that share will certainly rise given the success of the team, meaning that we can now sell the share for a higher price, let's say 60 cents, making a 50c profit for each share sold.
After the event takes place, thousands of users will then report the outcome using the Augur token (REP), meaning that the result of the event is not reported by a central authority, but by a large group of individuals that participate in the Augur system.
Other than providing a source of income for market creators, and entertainment for speculators, Augur provides another useful feature by leveraging the wisdom of the crowd concept ( if you ask the same question to a large number of people, their average answer will always be far more accurate then the answer provided by a specialist), meaning that Augur can be used as the search engine for the future.
This concept isn't new, however, as prediction markets have been around for a while, however, Augur is the first decentralized one, meaning that users do not have to trust a central authority to report on the outcome of events, as this creates a single point of failure and leaves the market open to mistakes or outright manipulation. With Augur, thousands of REP token holders will verify this outcome, making manipulation or error virtually impossible.
Anyone can create a market for a future event, regardless of the event itself, by providing the initial funding and liquidity for shares. Market creators receive a monetary incentive from the fees generated by the market, as users buy and sell shares for that event.
Beginner's Guide to Augur (REP)
Where and How to Buy Augur (REP)?
Augur (REP) Wallet
Where to Buy Augur (REP) with Credit Card?
Where to Buy Augur (REP) with PayPal?
How to Buy Augur (REP) with Wire Transfer?
Where to Sell and Trade Augur (REP)?
How Much Are the Transaction Fees of Augur (REP)?
Augur (REP) Markets
Value of Augur (REP)
Is It Profitable to Invest in Augur (REP)?
Where to Spend or Use Augur (REP)?
Can Augur (REP) Grow to Become a Major Payment Network?
If Augur (REP) will ever grow to become a major payment network will ultimately depend on how well Augur (REP) competes with other, already established payment methods—cash, checks, debit and credit cards, PayPal, and others. Augur (REP) solves the problem of making payments in a trustless environment, but it is not obvious that this is a problem that needs solving, at least in advanced economies. And solving that problem creates others. One is scalability; the process of picking random validators takes time, is expensive, and consumes tremendous amounts of energy.
Another current issue is the volatility in the value of Augur (REP) which makes it less useful as a currency. This volatility is an inherent feature by design. Since there is no central bank that adjusts the supply of Augur (REP) to accommodate changes in demand, Augur (REP)'s value can swing sharply with demand. In a world where all things were priced in Augur (REP), this would likely translate into massive swings in inflation and economic activity. In contrast, providing an "elastic" currency to promote financial and price stability is a goal shared by the Federal Reserve System, the European Central Bank, the Bank of Japan, and many other central banks.
The trust-proofing provided by Augur (REP) also comes at the expense of another key feature of a payment method: convenience. If we lived in a world without trust, Augur (REP) might dominate existing payment methods. But in this world, where people do tend to trust financial institutions to handle payments and central banks to maintain the value of money it seems unlikely that Augur (REP) could ever be as convenient as existing payment means.
That said, Augur (REP) and other cryptocurrencies are trying to improve scalability and convenience so perhaps in the future one of these cryptocurrencies could realistically compete with current payment methods. A payment method designed to function where trust in institutions is completely absent can maybe never be as convenient as one where trust is required, but also already exists.
As of now Augur (REP) has not attained the relative stability of value to make it useful as money for everyday transactions. The current set of government-issued fiat currencies - such as the dollar, yen and the euro - provide efficient media of exchange, stores of value and units of account.
In addition local legal tender money tends to be a natural monopoly with only extreme hyperinflation leading people to seek out a monetary alternative.
How Does Augur (REP) Work?
Does Augur (REP) Use Blockchain Technology?
Mining Augur (REP)
What Are the Advantages of Augur (REP)?
What Are the Risks of Augur (REP)?
What Happens if Augur (REP) Gets Lost?
Augur (REP) Regulation
Summary of various regulatory actions and statements regarding cryptocurrencies
Is Augur (REP) Legal?
Augur (REP) and Taxes
Augur (REP) is not a fiat currency with legal tender status in any jurisdiction, but often tax liability accrues regardless of the medium used. There is a wide variety of legislation in many different jurisdictions which could cause income, sales, payroll, capital gains, or some other form of tax liability to arise with Augur (REP).
Does Augur (REP) Have a Consumer Protection?
Illegal Activities with Augur (REP)
Augur (REP) has a value, and valuable things have always been attractive both for legal and illegal purposes. Any form of currency has illegal users, Augur (REP) is no different in this regard. Cash, credit cards and current banking systems widely surpass Augur (REP) in terms of their use to finance crime. Augur (REP) can bring significant innovation in payment systems and the benefits of such innovation are often considered to be far beyond their potential drawbacks.
Augur (REP) are completely impossible to counterfeit. Users are in full control of their payments and cannot receive unapproved charges such as with credit card fraud. Augur (REP) allows money to be secured against theft and loss using very strong and useful mechanisms such as backups, encryption, and multiple signatures.
Some concerns have been raised that Augur (REP) could be more attractive to criminals because it can be used to make private and irreversible payments. However, these features already exist with cash and wire transfer, which are widely used and well-established.
But criminals, who typically use cash for the anonymity and security it provides, may be moving to cryptocurrencies. The US Drug Enforcement Administration reports a sharp decline in bulk cash smuggling in 2016, which is the traditional payment method for drug shipments and suggests that payments may have shifted toward cryptocurrencies. Cryptocurrencies are more convenient than cash for many illegal activities that now take place online.
More broadly, cryptocurrencies are ideal for circumventing legal or regulatory authorities, because they aren’t governed by any. Some rogue states are reportedly responsible for state-sponsored hacks to steal cryptocurrencies, which help bypass economic sanctions that are enforced through the cooperation of financial institutions and countries.
Is Augur (REP) Secure?
Is Augur (REP) Anonymous?
Has Augur (REP) Ever Been Hacked?
How Can I Restore Augur (REP)?
Why Do People Trust Augur (REP)?
It has long been known that currencies that are intrinsically worthless, mere pieces of paper, are recognized as valuable because payments with money are so much easier than the alternative, barter. The problem with barter, when everyone trades goods and services directly, is the dreaded "double coincidence of wants." If you want to buy toys for your child and you are a chicken farmer, and the toyshop is not interested in trading toys for chickens, you have to keeping searching until you find a toyshop where they accept chickens as payment.
Money, even intrinsically worthless paper money, cuts the "double coincidence" problem in half. You just need to find someone willing to pay you some of that paper for your chickens, then use that paper to pay for the toys. As long as there is trust that someone will accept the paper, you will be willing to accept it in exchange for your chickens. It is trust that the "worthless" piece of paper is actually worth something to other people that makes it an acceptable medium of exchange. It is the same with Augur (REP), if there is no trust in it, there is no value. As a result, the value of Augur (REP) fluctuates with news that vendors or firms accept or decline the Augur (REP) as a mode of payment. Trust is implicit for practically any means of payment.
The U.S. dollar is not backed by gold (or silver) and is therefore a fiat currency, which is inconvertible paper money made legal tender by a government decree.
The obvious question is, "Without gold, what does guarantee the value of our money?" The answer is: nothing at all. The only reason a dollar, a Yen, or a Euro has any value is because we have a stable system in which people are known to accept these pieces of paper in return for something valuable. Or, as Nobel Prize-winning economist Milton Friedman puts it, "the pieces of green paper have value because everybody thinks they have value." The value is the confidence people have in what the currency represents.
A fiat currency is legal tender whose value is backed by the government that issued it. The U.S. dollar is fiat money, as are the euro and many other major world currencies.
This approach differs from money whose value is underpinned by some physical good such as gold or silver, called commodity money. The United States, for example, used a gold standard for most of the late 19th and early 20th century. The U.S. dollar - as well as many public and private debts - could be converted into gold until the mid-1930s, and the U.S. dollar was tied to the value of gold until the early 1970s, when President Nixon completely severed the relationship between the U.S. dollar and gold.
A fiat currency's value is underpinned by the strength of the government that issues it, not its worth in gold or silver. Currency is a tool of trade. People tend to hoard gold and silver when things are uncertain, and that's harmful when it limits currency flows on a large scale. Removing the relationship between a currency and commodity doesn't create "worthless money."
Augur (REP) entails both a new technology, Blockchain, and a new currency. The new shape and form of the Augur (REP) market in the future will likely depend on what economic value Augur (REP) is perceived to add.
Trusting the maths of Augur (REP) makes sense. Most of the computer code behind it is publicly available, meaning it has been checked over by lots of programmers. The algorithm that limits the supply of coins also verifies transactions.
People trust Augur (REP) because it is run by the people who use it, not a government. It is not regulated by world authorities or banks. Augur (REP) provides you with a way to have more control over your money. Money is only spent when you want it to be. There are no interest rates or fees with peer to peer Augur (REP) transactions. For people who have a difficult time trusting banks, this is an optimal alternative.
With Augur (REP), you can also make secure transactions all over the world. Augur (REP) is secure. Once a transaction goes through, it cannot be undone or removed. It is immediately recorded on the block chain.
History of Augur (REP)
Who Created Augur (REP)?
Augur (REP) Videos and Tutorials
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