Prediction markets - the new "snake oil" or what?

[CIYAM]

They are voted in.. Top 101 become delegates and get paid for it... Mostly developers right now. Part of the delegates job is to host full node in signing mode and publish price feeds. In effect its alot more decenteralized than mining pools.

But it is not truly decentralised at all - so it is really not safe against a conspiracy - is it?

My main issue is that it is a "trust system" which is exactly the opposite of what the blockchain invention is all about.

[Come-from-Beyond]

I think you are confusing the very point of the consensus mechanism with something that apparently depends upon Oracles (read the last post).

No. Let me paraphrase.

It's the same what stops people from doing a revolution. If the majority collude then they can change the state of things, but if they don't know how many of others support the movement they have to follow the rules or be penalized.

[sidhujag]

They are voted in.. Top 101 become delegates and get paid for it... Mostly developers right now. Part of the delegates job is to host full node in signing mode and publish price feeds. In effect its alot more decenteralized than mining pools.

But it is not truly decentralised at all - so it is really not safe against a conspiracy - is it?

Right.. But 51% participation in a conspiracy is highly unlikely... As it is easy to unvote these guys and have another standy delegate take their place if someone with morals finds out... Worsed case you dont need a hard fork like with bitcoin

[CIYAM]

It's the same what stops people from doing a revolution. If the majority collude then they can change the state of things, but if they don't know how many of others support the movement they have to follow the rules or be penalized.

When there are huge amounts to be gained then I am pretty sure you'll get the collusion required to gain that (this concept is not using the PoW approach so it isn't like that at all).

[CIYAM]

Right.. But 51% participation in a conspiracy is highly unlikely... As it is easy to unvote these guys and have another standy delegate take their place if someone with morals finds out... Worsed case you dont need a hard fork like with bitcoin

It only takes one such event to destroy all confidence in the platform (and social manipulation is always going to win over algorithm manipulation).

[sidhujag]

They are voted in.. Top 101 become delegates and get paid for it... Mostly developers right now. Part of the delegates job is to host full node in signing mode and publish price feeds. In effect its alot more decenteralized than mining pools.

But it is not truly decentralised at all - so it is really not safe against a conspiracy - is it?

My main issue is that it is a "trust system" which is exactly the opposite of what the blockchain invention is all about.

Placing trades are dont trsutlessly its just for feeding price which depends on a central price mechanism anyway.. How else do you know price?

As a side effect you can work to earn by marketing yourself as a delegate and get paid while incentisizing the delegate through bitshares compensation. I highly encourage you and CfB to participate im sure you will get voted in easily with your skill level.. I will create your delegate and host it until you are voted in.

[Come-from-Beyond]

When there are huge amounts to be gained then I am pretty sure you'll get the collusion required to gain that (this concept is not using the PoW approach so it isn't like that at all).

Yes. The same is applied to Bitcoin, if you can earn by double-spending more than you need to spend to trigger a chain reorg then it's a no-brainer to attack Bitcoin.

[Come-from-Beyond]

Thank you, Eric. Your advertisement was exactly what we needed in this thread.

[sidhujag]

Right.. But 51% participation in a conspiracy is highly unlikely... As it is easy to unvote these guys and have another standy delegate take their place if someone with morals finds out... Worsed case you dont need a hard fork like with bitcoin

It only takes one such event to destroy all confidence in the platform (and social manipulation is always going to win over algorithm manipulation).

Right you talk about a black swan event which is unrealistic but possible... Read
http://bytemaster.bitshares.org/article/2015/01/27/BitAssets-and-Black-Swan-Events/

[Bit_Happy]

"The idea behind prediction markets for companies is that the accumulation of informed opinion will be more accurate than the best guesses of ex­ec­utives. They have been billed as a way to tap communities of employees, consumers and experts to generate in­sights into issues affecting businesses and their operations, from product delivery schedules to marketing and quarterly sales."
http://www.ft.com/intl/cms/s/0/f03fc956-9586-11e2-a151-00144feabdc0.html#axzz3T3p3Pekm

Prediction markets (in general) can tap the "wisdom of crowds" and are not always the new snake oil.

[sidhujag]

"The idea behind prediction markets for companies is that the accumulation of informed opinion will be more accurate than the best guesses of ex­ec­utives. They have been billed as a way to tap communities of employees, consumers and experts to generate in­sights into issues affecting businesses and their operations, from product delivery schedules to marketing and quarterly sales."
http://www.ft.com/intl/cms/s/0/f03fc956-9586-11e2-a151-00144feabdc0.html#axzz3T3p3Pekm

Prediction markets (in general) can tap the "wisdom of crowds" and are not always the new snake oil.

Pms are great... But i think hes focused on bitassets from bitshares

[CIYAM]

I do *get* the idea of the "wisdom of the crowd" but I think that the way this is being *used* currently looks just like pirateat40's "investment scheme" looked like (which took a hold of quite likely 50% of this forum members that were "wanting to get rich quick").

[sidhujag]

I do *get* the idea of the "wisdom of the crowd" but I think that the way this is being *used* currently looks just like pirateat40's "investment scheme" looked like (which took a hold of quite likely 50% of this forum members that were "wanting to get rich quick").

Again not sure where you get the idea of it being USED as an investment scheme... BitAssets are not based on PMs... if PMs were put into the bitshares toolkit they would be for different purposes, like insurance etc

If you read the links I posted to you, you would have answered all of yours questions.

[AtheistAKASaneBrain]

If you want to predict something about a stock... hire some hackers and spys.. works better than trying to predict a graph.

[sidhujag]

If you want to predict something about a stock... hire some hackers and spys.. works better than trying to predict a graph.

haha so true...

[Cryptowatch.com]

PS: We could talk about prediction markets in general though.

Lets do that - I challenge that the very idea is basically nothing better than a ponzi scheme.

With zero regulation there is no reason for any party to "honestly" do anything (it is just a new way to relieve stupid people of their money).

Without me pointing to a particular case here, there's plentiful of examples where in regulated markets customers have been conned, schemes have sometimes been long in the making and are quite elaborate and big. If there would be more fraud with less regulation, I don't know.

I do think however that a businessman or company with integrity is able to conduct business with integrity no matter how they are regulated. So I disagree that with zero regulation there's no reason for any party to "honestly" do anything. Some businesses pride themselves with integrity and doing things in an ethical way. It seems however most companies don't as money is the driving factor, and then corners are cut.

We live very much in a trust based society. When you go to a restaurant and get a glass of water, you trust the waitress not to give you water you will die from. You trust the repository of your favourite linux distro not to contain any malware. Of course there are consequences in the real world to doing wrong things, if the waitress gave you poison in the water, she would probably be prosecuted for murderer. As such you could say society is "regulated". As for the linux distro, the malware would be a confidence blow among its users, so they have an incentive not to do anything like that.

The same exists with businesses in the crypto world. If you are concerned about running a business and having customers, and having integrity, then you run it honestly. If you're a crook, then you run it as a crook. Of course, it might be easier to get away with a fraud scheme online than in the real world. The face and identity of the fraudsters might not even be knows. But for the very sceptical observer, he should not be robbed, as there usually are signs something is up, well in advance before it goes titts up. Very obvious examples are MtGox and Pirateat42 in the bitcoin world. Lots of scams would be avoided if people were much more careful. However, it works like that most people are greedy, so then the fool and his money is easily parted.

[CIYAM]

I had come to the conclusion that pirateat40 was a scam a good couple of months before its actual collapse and as soon as I saw the huge difference in prices on Mt. Gox compared to other exchanges I knew it was time to remove any BTC from there (there was a window of about a month with that).

Honesty and decentralisation (especially if you want any degree of anonymity) just don't mix IMO.

[sidhujag]

There is a tradeoff.. good or bad i guess well see:

"Legal Compliance
Any company that takes deposits from customers and facilitates transfers among customers is heavily regulated in most countries.
These regulations include license requirements, bonds, insurance, Know Your Customer (KYC) laws, and anti-money-laundering (AML) compliance among others. The BitShares block chain provides gateways with all of the tools necessary to comply with these regulations.

If you are already in this business then you are maintaining a database tracking user deposits and your database is probably logging every single transaction and balance change. Your database knows exactly who is owed what at any point in time. You also have the power to seize or freeze user balances at the demand of law enforcement. BitShares provides you with all of these features as well including:

Ability to white-list public keys that may control a balance of your asset.
Ability to freeze all funds and stop all trading of your assets.
Ability to transfer any balance of your asset from any user to any other user.
In other words, if you are operating a legally compliant crypto currency exchange, then you can easily expand your business to becoming a BitShares gateway."

[brekyrself]

They are voted in.. Top 101 become delegates and get paid for it... Mostly developers right now. Part of the delegates job is to host full node in signing mode and publish price feeds. In effect its alot more decenteralized than mining pools.

But it is not truly decentralised at all - so it is really not safe against a conspiracy - is it?

My main issue is that it is a "trust system" which is exactly the opposite of what the blockchain invention is all about.

CIYAM

Decentralization to one person is different to another.  Also, we need to think about decentralization at what cost and ultimately decide what is decentralized enough.


Check out some of these quick blog posts around this topic:

http://bytemaster.bitshares.org/article/2015/01/20/The-Minimal-Requirement-for-Decentalization/
http://bytemaster.bitshares.org/article/2015/01/12/Decentralization-Scalability-and-Fault-Tolerance-of-Bitcoin/
http://bytemaster.bitshares.org/bitshares/2015/01/04/Delegated-Proof-of-Stake-vs-Proof-of-Work/
http://bytemaster.bitshares.org/article/2015/01/07/The-Most-Decentralized-Proof-of-Stake-System/
http://bytemaster.bitshares.org/article/2015/01/08/Nothing-at-Stake-Nothing-to-Fear/
http://bytemaster.bitshares.org/article/2015/01/07/The-Worlds-First-Decentalized-Exchange/

[CIYAM]

Now that we have the Bitshares fanboys attention I think it is time to lock this topic.

(beware of anyone trying to change the definition of "decentralised")