Assassination Markets for Jeff Bezos, Betty White, and Donald Trump Are On the Blockchain
Assassination markets are old as the concept of cypherpunk itself. Now blockchain-based betting platform Augur has become a home for them.
Jul 25 2018, 8:46pm
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Earlier this month, the non-profit Forecast Foundation launched its Augur protocol on the Ethereum network in a bid to create the first blockchain-based betting platform. Now, Augur is hosting several wagers where users bet on when a public figure will die, with a pot of digital money going to whoever makes the correct guess. This type of betting is referred to as an “assassination market” because it arguably incentivizes someone to guarantee a win by offing the person themselves.
On the Augur marketplace, Motherboard found open bets on the deaths of a number of public figures, including Betty White, Donald Trump, Jeff Bezos and Warren Buffett. Other events were also bet on as well, such as whether SpaceX will complete a crewed flight beyond Earth orbit this year. Most of these betting pools had few or no bets on the books at the time of writing, but some betting pools, including one predicting Donald Trump’s death this year, had dozens of trades.
These prediction pools are called assassination markets because they arguably incentivize bettors to make their predictions come true by taking matters into their own hands. Cryptoanarchist Jim Bell introduced the concept in a paper called “Assassination Politics” in the mid-1990s. Bell imagined that the anonymity afforded by modern encryption techniques and the advent of digital money would allow for political assassinations to be incentivized and carried out anonymously.
Cryptocurrencies like Bitcoin and Ethereum have arguably created a perfect environment for Bell’s assassination politics to take shape.
In practice, an assassination market works like this: Consider someone who creates a market for the prediction that “the governor will die in 2018.” If the governor is in good health, it wouldn’t be very rational to bet on their death this year. Yet if someone wanted to make a lot of money, they’d place a large bet on a 100 percent chance that the governor will die and then go and kill the governor. This way, they’d reap the rewards of the betting pool, which was mostly weighted against them.
Augur wasn’t created as a protocol for assassination markets, but rather prediction markets in general. Prediction markets are based on the idea that the aggregate opinion of the crowd is more accurate than the opinion of a single individual because it involves a greater pool of information. In short, prediction markets theoretically give investors a better idea of how much an asset is worth because it aggregates a large amount of distributed information about that asset. For the participants in these markets, it’s basically just gambling on world events.
When Motherboard reached out to the foundation on Twitter about the rise of assassination markets on the platform, we were directed to Augur’s FAQ. This document states that the Forecast Foundation doesn’t “have the ability to monitor, control, censor, or modify any actions performed on the Augur protocol.”
Augur is a self-policing platform. Users can buy Augur’s in-house cryptocurrency, called REP, which makes them a “reporter”. When a bet is closed, REP token holders report on the outcome of the event being wagered on to determine who gets payouts, and are penalized for misreporting the outcome of an event. This incentivized reporting scheme allows the protocol to make payouts to the winning bettors without a centralized authority. Reporters can also mark a bet “invalid,” ensuring nobody gets a payout. In theory, this is how users of the Augur platforms could de-incentivize assassination markets.
To make a bet, users download the free Augur app and link it to their Ethereum wallet. They can then create prediction markets for some event or use ether— the native token on the Ethereum blockchain—to make bets in other markets.
For now, Augur only has a few dozen transactions on its marketplace, so it’s unlikely the service will be able to incentivize anyone to murder a public figure anytime soon.