Fw: Fw: Augur: Blockchain-based Internet prediction market.

Razer Rayzer at riseup.net
Sun Sep 27 09:54:27 PDT 2015

On 09/26/2015 11:15 PM, jim bell wrote:
> Copied from correspondence.

Riseup.net doesn't like Fw: Fw: in subject lines...

"Re: ***SPAM*** Fw: Fw: Augur: Blockchain-based Internet prediction market."

> ----- Forwarded Message -----
> *From:* Jim Epstein <jimepstein at gmail.com>
> *To:* jim bell <jdb10987 at yahoo.com>
> *Sent:* Saturday, September 26, 2015 5:23 AM
> *Subject:* Re: Fw: Augur: Blockchain-based Internet prediction market.
> Thanks, jim. I will read your essay and engage with this topic again
> soon, but I'm immersed in another unrelated story that's consuming my
> brain and time. I'll get back to you.
> On Sat, Sep 26, 2015 at 3:47 AM jim bell <jdb10987 at yahoo.com
> <mailto:jdb10987 at yahoo.com>> wrote:
>     I wanted to mention that Prof Juels has responded to my inquiry.  
>        See his work at:    
>      https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=3&cad=rja&uact=8&sqi=2&ved=0CCsQFjACahUKEwi9hY33mZTIAhXRpYgKHeapAhY&url=http%3A%2F%2Fwww.arijuels.com%2Fwp-content%2Fuploads%2F2013%2F09%2Fpublic_gyges.pdf&usg=AFQjCNHOBvCYwJ5Aq0CmHTOY53sGdRs5Sw&sig2=XpktiIWHc5e6slk0VsLOcQ&bvm=bv.103388427,d.cGU  
>      I should point out that the main reason for my inquiry WASN'T to
>     get academic credit, but rather to point out that people who have
>     read my AP essay (and who understand and agree with its goals and
>     likelihood of working) would consider Juels et al objectives to be
>     undesirable and, indeed, dangerous.  Superficially, it sounds good
>     to say that they are trying to prevent "criminal contracts", but
>     for those of us who oppose (for example) laws against
>     currently-illegal drugs, we might very well WANT a "criminal
>     contract" to be operational, like Silk Road or such.  Or my AP
>     (assassination politics) idea.
>     Prof Juels claims that he/they were not aware of my AP essay. 
>     Well, sorry, but I find that a little hard to believe.  It's not
>     that it's hard to believe that an average citizen of America (or
>     the world) hadn't heard of it.THAT would be easy to believe.  
>      Rather, Juels, Shi, and Kosba claim to be working on the concept
>     of trying to stop "criminal contracts", and do you really believe
>     they haven't heard of AP?!?  
>     My understanding is that my AP essay is probably the second
>     most-famous Internet essay in existence, perhaps being Ted
>     Kaczynski's, and it makes far more sense.  Now that Juels, Shi,
>     and Kosba definitely know about AP, I think that they should
>     address its implications BEFORE they purport to fight it. 
>                  Jim Bell
>     *From:* jim bell <jdb10987 at yahoo.com <mailto:jdb10987 at yahoo.com>>
>     *To:* Jim Epstein <jimepstein at gmail.com
>     <mailto:jimepstein at gmail.com>>
>     *Sent:* Wednesday, August 26, 2015 3:39 PM
>     *Subject:* Re: Fw: Augur: Blockchain-based Internet prediction market.
>     You might also want to look at
>      http://www.arijuels.com/wp-content/uploads/2013/09/public_gyges.pdf 
>      , by Juels, Shi, and Kosba.
>                   Jim Bell
>     ------------------------------------------------------------------------
>     *From:* Jim Epstein <jimepstein at gmail.com
>     <mailto:jimepstein at gmail.com>>
>     *To:* jim bell <jdb10987 at yahoo.com <mailto:jdb10987 at yahoo.com>>
>     *Sent:* Wednesday, August 26, 2015 2:35 PM
>     *Subject:* Re: Fw: Augur: Blockchain-based Internet prediction market.
>     I'm not familiar with it, but I'm going to read it. I'm very
>     interested. Thanks for sending this.
>     Jim
>     On Wed, Aug 26, 2015 at 1:14 PM, jim bell <jdb10987 at yahoo.com
>     <mailto:jdb10987 at yahoo.com>> wrote:
>         Dear Mr. Epstein,
>                Are you familiar with my 1995-6 essay, "Assassination
>         Politics".   www://cryptome.org/ap.htm
>         <http://cryptome.org/ap.htm>
>                              Jim Bell
>         ----- Forwarded Message -----
>         *From:* jim bell <jdb10987 at yahoo.com <mailto:jdb10987 at yahoo.com>>
>         *To:* Cpunks List <cypherpunks at cpunks.org
>         <mailto:cypherpunks at cpunks.org>>
>         *Sent:* Tuesday, August 25, 2015 7:31 PM
>         *Subject:* Augur: Blockchain-based Internet prediction market.
>         http://reason.com/blog/2015/08/11/augur-gambling-prediction-ethereum
>         Augur May Become the Greatest Gambling Platform in History. Is
>         There Anything the Government Can Do to Stop It?
>         A blockchain-based prediction market that won’t be controlled
>         or managed by anyone.
>         Jim Epstein   Aug. 11, 2015 12:36 pm
>         An online gambling platform could do to the neighborhood
>         bookie what electric refrigerators did to the ice delivery man.
>         Coming this fall, Augur will allow participants to wager money
>         on any future event of their choosing. Software will set the
>         odds, collect the bets, and disperse the winnings. The price
>         alone should give Nevada sportsbook operators pause; an
>         estimated one percent of every pot will go to keep the system
>         running. The average vig today is about 10 times that.
>         Augur isn't a full-fledged casino. You can't play roulette or
>         poker, and running lotto on the platform would be tricky. But
>         it'll be great for sports betting.
>         Here’s what’s truly novel about Augur: It won’t be controlled
>         by any person or entity, nor will it operate off of any one
>         computer network. All the money in the system will be in
>         Bitcoin, or other types of peer-to-peer cryptocurrency, so no
>         credit card companies or banks need to be involved. If the
>         system runs afoul of regulators—and if it’s successful, it
>         most certainly will—they'll find that there's no company to
>         sue, no computer hardware to pull out of the wall, and no CEO
>         to lockup in a cage
>         .
>         This is new legal territory. If Augur catches on as a tool for
>         betting on everything from basketball games to stock prices,
>         is there anything the government can do to stop it?
>         Augur is a decentralized peer-to-peer marketplace, a new kind
>         of entity made possible by recent breakthroughs in computer
>         science. The purpose of these platforms is to facilitate the
>         exchange of goods and services among perfect strangers on a
>         platform that nobody administers or controls. Augur’s software
>         will run on what’s known as a “blockchain"—a concept
>         introduced in 2008 with the invention of Bitcoin—that's
>         essentially a shared database for executing trades that's
>         powered and maintained by its users.
>         Bitcoin’s blockchain was designed as a banking ledger of
>         sorts—kind of like a distributed Microsoft Excel file—but
>         Augur will utilize a groundbreaking new project
>         called Ethereum that expands on this concept. Ethereum allows
>         Augur's entire system to live on the blockchain. That means
>         the software and processing power that makes Augur function
>         will be distributed among hundreds or thousands of computers.
>         Destroying Augur would involve unplugging the computers of
>         everyone in the world participating in the Ethereum blockchain.
>         If Augur is destined to become the cypherpunks answer to
>         gambling prohibition—the betting man’s version of the online
>         drug market Silk Road if you will—you'd never know it from
>         talking with its developers. They work for a San
>         Francisco-based nonprofit, attend conferences, have legal
>         representation, and talk openly about what they’re up to with
>         reporters. Augur even commissionedone of those cheesy motion
>         graphics promotional videos favored by new tech startups.
>         About half of the roughly $600,000 raised by Augur's
>         development team comes from Joe Costello, the successful tech
>         entrepreneur who was once Steve Jobs' top pick to become the
>         CEO of Apple.
>         Joey Krug, a twenty-year-old Pomona college dropout and
>         Augur's lead developer, never uses the world “gambling" to
>         describe his venture. He and his team of five employees call
>         Augur a “prediction market,” a term that emphasizes the
>         information generated when a bunch of people have a financial
>         incentive to feed their expertise into a sophisticated algorithm.
>         With Augur, as bettors move money in and out of the pot, the
>         odds adjust. This yields publicly available statistics that
>         should carry weight because they're derived from the opinions
>         of a crowd of people with a stake in the results. InTrade, for
>         example, the best-known prediction market until federal
>         regulators forced it to stop serving U.S. customers in 2012,
>         beat the pollsters and pundits by foreseeing the outcome of
>         the 2008 presidential elections in 48 out of 50 states.
>         Augur’s developers hope that their platform will make it
>         possible to do a Google search to look up the likelihood of
>         some future event. This could usher in a better world, with
>         more informed policy decisions and less malinvestment.
>         But Augur also serves the less high-minded—though no less
>         noble—purpose of providing cost savings and convenience to
>         gamblers. Restrictions on gambling serve to protect government
>         revenue at the betting man's expense. State-sanctioned casino
>         operators pay high taxes, and state-run lotteries fleece their
>         customers. But there's no logical or moral case for government
>         restrictions on gambling, since no third party is harmed when
>         consenting adults wager money on the future. Augur actually
>         has the potential to make the world safer by taking away
>         market share in the gambling industry from criminals.
>         And yet sports betting is illegal in most states, and
>         prediction markets are tightly regulated by the Commodity
>         Futures Trading Commission (CTFC). The agency sued
>         Ireland-based InTrade in 2012 to prevent it from accepting
>         bets from U.S. customers. (The company folded shortly after.)
>         In 2013, the CFTC and the Securities and Exchange Commission
>         (SEC) jointly sued the prediction market Banc de Binary for
>         allowing U.S. customers to make bets on commodity prices.
>         The CFTC has approved other prediction markets, such as the
>         New Zealand-based PredictIt, but only after it agreed to abide
>         by the agency's restrictions.
>         Krug says the Augur team is planning to meet with CFTC staff
>         go over how their system works before it’s launched, but says
>         he's not overly concerned. “Our friends in Washington, D.C.
>         say the CFTC will probably just dismiss Augur and say it’s not
>         a big deal,” Krug told me in a phone interview.
>         That doesn’t sound like much of a legal strategy, but how do
>         you have a legal strategy when you're building something
>         unlike anything that's ever existed? Federal anti-gambling
>         laws, such as the 2006 Unlawful Internet Gambling Enforcement
>         Act, target the companies that facilitate online betting—
>         website operators, credit card companies, banks—not individual
>         gamblers.
>         Augur’s biggest legal vulnerability is the community of human
>         “reporters” who are needed to settle bets on the platform,
>         says Cardozo Law School's Aaron Wright, who is writing a book
>         about the legal implications of blockchain technology. Let’s
>         say a group of people wager money on Augur over the outcome of
>         a boxing match. Once the bout is over, human participants (who
>         receive a portion of the trading fees as compensation) must
>         report the outcome to the system before Augur’s software will
>         disperse the money to the winners. "There’s at least an
>         argument that the people doing that reporting are aiding or
>         abetting unlicensed options and could be prosecuted," says Wright.
>         But Augur doesn't collect personal information on any of its
>         users, so identifying these people could be difficult. And
>         Augur is a borderless technology, so U.S. gamblers could
>         simply rely on foreigners to report on the outcomes of their bets.
>         One attorney I spoke with suggested that the team that’s
>         building Augur could be brought up on charges for aiding and
>         abetting a criminal conspiracy. Nate Cardozo, a staff attorney
>         with the Electronic Frontier Foundation, thinks that's
>         far-fetched but says he can't rule it out. Cardozo emphasizes
>         that writing open source software doesn’t necessarily protect
>         the team from prosecution.
>         “We’ve taken the steps that we need to take in order to
>         bracket the individual's risk and the organization’s risk,”
>         says Augur’s attorney, Marco Santori, who declined to comment
>         further on exactly what those steps might entail.
>         Even if Krug and his colleagues were to face criminal
>         prosecution, the technology would live on. After Augur is born
>         into the world, the development team could release a software
>         update that would cripple the system. But in that case,
>         Augur's users could band together to block any changes to the
>         underlying code, or another developer could copy the open
>         source code and simply re-launch the platform. 
>         The big question with Augur—and with blockchain platforms more
>         generally—is whether they can outrun our regulatory state long
>         enough to grow so large and popular that they're truly
>         unstoppable. My money’s on Augur in that race.
>         For more on the promises and pitfalls of decentralized
>         peer-to-peer marketplaces, read my recentReason magazine
>         feature story on the topic.

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