Gnosis announced a decentralized platform for prediction markets, built on Ethereum, which allows anyone to create a prediction market for any event. According to the company, the platform could power a more efficient information society.
Prediction markets are speculative markets created for the purpose of making predictions. The current market price for a prediction ‒ for example the election of a particular candidate ‒ can be interpreted as an aggregate, crowdsourced estimate of the probability of the prediction.
“Gnosis is part of a new wave of decentralized platforms, key to which is permissionless innovation,” said Martin Köppelmann, co-founder of Gnosis. “Having an open platform with verifiable behavior introduces an incredible opportunity to bring a wide range of applications onto Gnosis, many of which we never anticipated. Gnosis lowers the barrier to entry for new applications spanning industries and interests.”
Robin Hanson, a leading prediction market researcher who wrote seminal papers on “Idea Futures,” was all over the news in 2003, when the Policy Analysis Market (PAM), a prediction market proposed by the United States’ Defense Advanced Research Projects Agency (DARPA) and inspired by Hanson’s ideas, was canceled after a wave of accusations of incentivizing terrorism, which resulted in the resignation of John Poindexter, head of the DARPA unit responsible for developing the project.
Evidence suggests that financial incentives make prediction markets more effective than other forecasting strategies. For example, the Iowa Electronic Markets has often predicted the results of political elections more accurately than polls or expert opinions.
The Foresight Exchange, the granddaddy of active prediction markets, is a public, play-money market allowing individuals to sign up for free and predict the future. The Foresight Exchange website and user interface show their age, with a retro look that gives the impression you need a monster IQ and several PhDs to make predictions. Not the way to go in today’s one-second attention economy, and if nobody uses a prediction market its potential accuracy is lost. To realize the full potential of prediction markets, it’s important to make them fast and easy to use for everyone.
Other prediction markets introduced later, especially for sports betting, had a simpler user interface, but Gnosis’ Twitter bot “Gnosis Bot,” developed by Gnosis to showcase the capabilities of their prediction market platform, is simplicity itself: it allows users to participate in a prediction market with a tweet. It works like this:
The bot asks a new question every 3 hours. For example, at the time of writing the last question is: “Will Bitcoin Hardfork before June?” and anyone can bet with a tweet using the syntax:
“Lower x ETH” to bet x ETH on NO Outcome.
“Higher x ETH” to bet x ETH on YES Outcome.
The bot replies with a current crowdsourced outcome probabilities and a QR code that can be scanned with the uPort app to place the bet. When the outcome is known, winners can collect via uPort. To bet with Gnosis Bot, it’s necessary to sign up for uPort alpha and configure the app.
“UI and UX are key to the adoption of decentralized technology,” Koppelmann told Crypto Insider. “With the Twitter bot integration, we are making the use of blockchain literally as easy as responding to a Tweet and scanning a QR code.”
“Our Twitter Bot integration can bring some cold hard numbers to Twitter discussions,” continued Koppelmann. “You can make stronger statements about an issue if you are ready to put some money where your mouth is.”
Gnosis Bot is but one of the prediction market application that, according to the company, can be built on the Gnosis platform. It’s worth noting that Robin Hanson himself, a founding father of prediction markets, sits on the Gnosis advisory board. Other Gnosis advisors are Etrereum co-founders Vitalik Buterin and Joe Lubin.
Gnosis, which has been recently incorporated in Gibraltar and is the first company to spin out of the Ethereum incubator Consensys, started by Lubin, has recently launched a tokan auction with an innovative “Dutch Auction” mechanism devised by Buterin.
Picture from Wikimedia Commons.