DRA

CryptoScam #5 - Augur (w/ Paul Sztorc)

February 10, 2017Original source

On February 10, 2017, Tone Vays hosted Paul for a discussion of Augur, decentralized prediction markets, Truthcoin and Bitcoin Hivemind, with context on eCash, sidechains, oracle incentives, and Bitcoin-native market design.

Highlights

Key Takeaways

From eCash To Hivemind

Paul traces the idea for decentralized prediction markets to a mix of influences: Robin Hanson’s writing, the shutdown of Intrade after the 2012 election cycle, Bitcoin’s resilience, and earlier digital-money systems such as Liberty Reserve and eCash. That background led him to design Truthcoin in 2013 and publish the white paper in early 2014. The project later became Bitcoin Hivemind, with a focus on making prediction markets durable, censorship-resistant, and directly usable by Bitcoin holders through sidechain infrastructure.

Why Sidechains Fit The Design

The discussion distinguishes a Bitcoin-sidechain approach from token-sale-driven application platforms. Paul explains that Hivemind can let users trade prediction market contracts with Bitcoin, while a separate internal voting token exists for workers who resolve markets rather than for ordinary users who simply want exposure to outcomes. This structure keeps the user experience centered on Bitcoin and gives the oracle layer its own incentive mechanism. It also points toward the later Drivechain direction: sidechains can host specialized applications while preserving Bitcoin as the monetary base.

Oracle Incentives And Market Resolution

A major theme is how prediction markets decide outcomes after trading ends. Paul explains why some questions need human or semi-human aggregation rather than a single media source or simple web lookup, especially when wording, timing, and edge cases matter. The oracle mechanism is framed as a way to reward accurate resolution while making bribery expensive and unattractive. The conversation also connects this to censorship resistance: decentralized market resolution reduces reliance on a visible party that regulators or other pressure points can target.