I am very intrigued in the potential of various 2.0 applications built on top of the blockchain technology. Does anyone have any thoughts on decentralized prediction markets? So far, all developing implementations of decentralized prediction markets appear to still be in their infancy. Some existing platforms like Nxt, Counterparty, BitsharesX already have this concept through the issuance of user-defined assets -- however these do not seem to have taken off. To me, they appear to be more useful as a method of crowdfunding/investing, rather than for prediction markets. The TruthCoin project is attempting to design a system where prediction markets are resolved through a weighted voting system, rather than by the individual asset issuer. However this project too, is still in relatively early development.
What are the chances that we could see a successful decentralized prediction market emerge out of cryptocurrency technology? I would imagine that a vibrant prediction market would have tremendous value in all sorts of areas, although the first things that come to mind are political prediction markets (an unstoppable, unregulated Intrade) and sportsbetting. The key problem appears to be how to resolve a market. You either have to trust the asset issuer, or you need some other built-in method in the protocol which could be vulnerable to malicious attacks producing an incorrect outcome.
Between this, and all the other new blockchain applications I have been researching, have convinced me to acquire my first bitcoins last week. I look at all the different things this technology could be used for, and am astounded that the market cap for the entire crypto-currency world right now is less than 6 billion dollars. I would not be surprised if cryptocurrency turns out to be worth 20x that much or more.
Getting back to just the one topic though... Do you think reliable decentralized prediction markets will develop and grow fast enough such that the demand for them (especially by the 2016 election) could increase demand for bitcoins and other cryptocurrencies?
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