This blockchain-based prediction market just keeps creating weird new scenarios. Last time we checked in on Augur, the Ethereum-based platform had just launched and was already making waves with its markets that let users wager on real world events, such as when certain celebrities and prominent figures would die. We explained why the whole idea of a prediction market that no one owns or controls is bound to create novel challenges for law enforcement. Now Augur, which has a small but growing user base, is again making waves. This time it's because of a "gimmick" market that got huge.
The source of controversy is an Augur market that asks: Which party will control the House after the 2018 US Midterm Election?" Around 90% of the more than $1.2 million that users have wagered on this market has been bet on the Democrats, which of course gained control of the House after the election. Here's the problem, though: All the question asked was who would control the house after the election, and it never specified a date other than the market's expiration date, which was December 10. The Democrats don't officially take over until January. A dispute is brewing, with the two sides disagreeing over whether the correct answer should thus be the Republicans. It's not yet clear which side has the majority.
Augur token holders called reporters are responsible for reporting real-world outcomes. But now the platform's built-in mechanism by which reporters can dispute outcomes may be put to its biggest test yet. In a Reddit post, the anonymous creator of the market in question said they would report that the correct answer to the original question is the Republicans, and apologized "for any confusion or financial loss my gimmick house market may have caused." Stay tuned.
Pump the brakes on Ethereum futures. Six months ago, Ethereum fans breathed a sigh of relief when William Hinman, an official from the US Securities and Exchange Commission, seemed to indicate that his agency would not classify Ether as a security. His words also led many observers to believe that regulators might therefore see Ethereum as a commodity, which would allow exchanges to list Ethereum futures contracts like they already do for Bitcoin.
But, as we've been reminded time and again, there are many cooks in the kitchen when it comes to regulating crypto-assets in the US. And apparently the agency that would be in charge of overseeing said Ethereum futures, the Commodity Futures Trading Commission, has just now realized that it has a lot more to learn about the network. The CFTC has said it is seeking public feedback on a number of questions about Ethereum. Among them: What was the impetus for developing Ether and the Ethereum Network, especially relative to Bitcoin? Does the Ethereum network face scalability challenges? How is the governance of the Ethereum network similar to and different from the governance of the Bitcoin network?
In all, the CFTC asked 25 questions, ranging from scalability to governance to smart contract security. It seems safe to say that Ether's status in the eyes of regulators is unsettled.
Speaking of Ethereum's future: A little over a month ago, I traveled to Prague to experience Devcon, Ethereum's "family reunion." I was struck by the idealism, optimism about blockchain technology, and determination to change the world that was so evident among the attendees. But I also saw at first hand that the technology challenges the community faces are no joke, and that to solve them it's going to need to figure out how to govern itself—and fast. I hope you enjoy the story I wrote about what I took away from the conference.
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Loose Change
Fill your pockets with these newsy tidbits.
- Popular US cryptocurrency exchange Kraken is trying to raise funds from "select investors" at a $4 billion valuation. (CoinDesk)
- The number of cryptocurrency users doubled during the first three quarters of 2018, despite the market's downturn. (Bloomberg)
- Basis, a stablecoin that called itself an "algorithmic central bank," is shutting down and giving most of the $133 million it raised back to investors. (The Block)
+Stablecoins will help cryptocurrencies achieve world domination—if they actually work. (TR)
