My notes on the Augur Whitepaper by Dr. Jack Peterson & Joseph Krug.
A prediction market is a place where individuals can wager on the outcomes of future events. Those who fore- cast the outcome correctly win money, and if they fore- cast incorrectly, they lose money.
Our goal here is to provide a blueprint of a decentral- ized prediction market using Bitcoin’s input/output-style transactions. Many theoretical details of this project, such as its game-theoretic underpinning, are touched on lightly or not at all. This work builds on (and is intended to be read as a companion to) the theoretical foundation established in [the Truthcoin white paper].
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Built as an extension of Bitcoin core
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Adds betting and consensus mechanisms
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Intended to be a sidechain of Bitcoin
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Replaces “VoteCoins” from Truthcoin with “Reputation”
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Every transaction input and output field has a “units” field that can be “Bitcoin” (transferred through the pegged sidechain mechanism), “Reputation” or another currency used to hedge against long-term volatility