Re: This new Ethereum-based “assassination market” platform could cause Napster-size legal headaches MIT Technology Review Article

[Steven Schear]

"Augur’s creators claim they don’t have control over what its users choose
to do with the protocol—or the ability to shut it down. This creates a
problem that is “endemic” to blockchain technology, says Wright, who
recently co-wrote a book on the subject: “If you do not have a very
concrete intermediary—i.e., a company or group of people that are running
the marketplace—how do you apply laws and prevent that activity from
occurring?”

This is, as they say in marketing, not a problem but a feature.

On Thu, Aug 2, 2018, 3:55 PM jim bell <jdb10987 at yahoo.com> wrote:

>
> https://www.technologyreview.com/s/611757/this-new-ethereum-based-assassination-market-platform-could-cause-napster-size-legal/\
> ×
>
>
> Connectivity
>
> This new Ethereum-based “assassination market” platform could cause
> Napster-size legal headaches
> Augur lets people bet on events and pays whoever gets it right—so of
> course they’re wagering on the deaths of Donald Trump and Jeff Bezos.
>
>     * by Mike Orcutt
>     * August 2, 2018
>
> Augur, a new blockchain-based prediction market platform, is getting a lot
> of media attention because people are using it to predict the deaths of
> celebrities. But despite fears that the rise of “assassination markets”
> could inspire real killings, the more urgent problem Augur presents is
> something else entirely.
>
>     1.
> This piece first appeared in our twice-weekly newsletter Chain Letter,
> which covers the world of blockchain and cryptocurrencies. Sign up
> here—it’s free!
>
> Really, people saw these sorts of “death pools” coming decades ago, and
> blockchains, with their decentralized networks and (potentially) anonymous
> transactions, serve as an ideal platform. Augur’s open-source software
> relies on blockchain-based computer programs called smart contracts to let
> users set up their own prediction markets that automatically pool
> cryptocurrency bets and distribute winnings without the need for
> participants to identify themselves. Perfect for ginning up interest in
> offing someone by guaranteeing a payday to whoever does the deed, at least
> in theory. Predictably, the protocol, which launched July 10, has already
> led to markets for forecasting the demise of Donald Trump, Jeff Bezos,
> Warren Buffett, Betty White, and others. But these markets have seen very
> few transactions, and the amounts wagered have been tiny, making it
> unlikely they’d inspire someone to engage in foul play.
>
> Nevertheless, Augur may already be facilitating illegal activity that
> could prove far more troublesome.
>
> In the US, prediction markets are generally not permitted. Federal and
> state laws prohibit online gambling, and “in many ways the line between
> prediction markets and gambling is not that clear,” says Aaron Wright, a
> professor at the Cardozo School of Law in New York City. Further,
> some Augur contracts allow users to bet on the future value of something,
> such as Ether cryptocurrency. That sounds a lot like a type of investment
> called a binary option, which is unlawful to list without approval from the
> Commodity Futures Trading Commission. In 2012, the CFTC sued Intrade, an
> Ireland-based prediction market, accusing it of permitting US users to
> trade binary options, and eventually a judge blocked Intrade from offering
> the contracts in the US.
>
> Sure enough, Augur already has the CFTC’s attention. But even if the
> agency decides that Augur is breaking the law, how will it enforce that
> decision? Augur’s creators claim they don’t have control over what its
> users choose to do with the protocol—or the ability to shut it down. This
> creates a problem that is “endemic” to blockchain technology, says Wright,
> who recently co-wrote a book on the subject: “If you do not have a very
> concrete intermediary—i.e., a company or group of people that are running
> the marketplace—how do you apply laws and prevent that activity from
> occurring?”
>
> When Napster, Limewire, and other peer-to-peer file-sharing networks
> started slinging music, movies, and other files around the internet two
> decades ago, they created similar law enforcement headaches. But in each
> case there was an entity that could be sued for copyright infringement.
> Software like Augur, which is open-source, freely downloadable, and run on
> a blockchain, presents genuinely new challenges, says Wright.
>
> That doesn’t mean laws can’t be applied—just that they’ll need to be
> applied in different ways. For instance, if officials were to rule that
> Augur was facilitating illicit activity, they might try to go after the
> people who developed the software, much as malware developers have been
> held liable for their creations, says Wright. That would be likely to set
> up a fight over First Amendment protections. Prosecutors could also try to
> target the users who keep the protocol running. Called “reporters,” they
> use Augur’s tradable crypto-token, REP, to report outcomes and are rewarded
> with more tokens if their reports are consistent with the larger consensus.
> There are potentially other avenues, as well, says Wright: “Just because
> there is no center doesn’t mean there aren’t indirect ways to attack
> lawless activity.”
> Keep up with the latest in blockchain at EmTech MIT.
>
> Discover where tech, business, and culture converge.
>
> September 11-14, 2018
> MIT Media Lab
>
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