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we are about to begin our prediction
Market I will uh hand it over to our
moderator um so if everyone could quiet
down while we begin prediction markets
thank you all for coming uh I have a a
general question that I started asking
during the tea bre and that is what do
you see the INF funnel and the out
funnel into prediction market so what
kind of processes that could themselves
be related to ethereum could lead to
prediction markets be very liquid and
very effective and if we manage to
create liquid and effective prediction
markets what kind of ethereum uh
processes could benefit from that so if
we could start from Martin please yeah
so um as I as I mentioned in in the
presentation earlier on gnosis our our
goal is first to set it up uh to make it
really really easy to set up a
prediction Market um so let's say you
are interested in one specific topic
let's just have an example um decisions
on Supreme Court decisions or any kind
of special interest or what's going on
in the next um season of Heth of cards
whatever um then it should be really
easy uh as easy as setting up a
WordPress block to set up a prediction
market and um one addition additional
mechanism that um might make make it uh
easier to get started is that you can
use first um tokens for those markets
and um
they can have a value or they they can
be additionally traded in eer um but it
it's for sure it's easier to to get it
started uh if you have some kind of play
money that only evolves over time into
something that becomes valuable because
those who have a lot of tokens kind of
um uh certificate that they are experts
in in this field Jack um well I think
one thing that uh could help sort of
onboard people is like really meaningful
social media media integration so um one
integration that I've thought would be
pretty cool is like um if you could sort
of challenge people on Twitter like the
I guess uh Twitter has like a change tip
integration now I think they do and um
you know you can imagine you know
someone is always is on Twitter saying
something that's just like blatantly
wrong and I mean okay so you could you
could rage at that person it's not going
to change anything um but you could
challenge them to put their money where
their mouth is which is sort of the the
um catchphrase for prediction markets
and say you know you have a button you
can click on that says You Know Jack has
thrown down the gauntlet challenges you
to place a you know five Bitcoin bet
that what you're saying is right you
know vaccines actually cause autism and
see if they take see if they take you up
on it I think the sort of conflict um
sort of spectacle resp that I really
like like the idea Twitter integration
uh one one thing that I I think might be
problematic you just brought up the
example um um
that um cause autism um the problem is
do you get those people to rely on a
specific Oracle what what would be the
Oracle it if it would be the Wikipedia
article then um well they can just
directly I I guess they would not agree
to it the problem with that example is
that vaccines cause autism isn't a
prediction so much as a question so then
you have to formulate exactly you know
what would a testable prediction off of
that be yeah know that's a fair point
and I mean I think that I the trick if
you if you were sort of the the
Challenger would be finding you know an
existing prediction Market or even
creating one that matched the challenge
that you wanted to place so one one sort
of example that might be sort of better
more effective is let's say you had two
people one of whom thinks that
technological unemployment is going to
be a very serious problem and the other
one who says well you know no humans
aren't like coures we're we're not going
to be replaced we're infinitely creative
and we'll just keep on finding better
jobs and so you actually could make you
know between those two people actually
could make a testable prediction
something like you know labor force
participation rates will continue being
above half wages will continue going up
for about 20 years even making
conditional on you know technological
progress and so forth what's great about
this process is that it actually really
drives the conversation forwards and in
a productive Direction when you can take
a a conversation from you know this is
what I think and this this is what you
think to what would it take to know who
was right um and that's something that
really pushes an argument in a positive
direction so you know I I think that
kind of integrating this thing these
things into communities um it's very
positive for onboarding it's positive
for those communities um and it's also
potentially I mean depending how you
design your settlement system it's also
potentially something where you've got
these people who have already identified
with their reputations so potentially
you can use that to settle the outcome
um based on those real world reputations
if you if you build a system around that
okay but I was wondering if I could push
you in a slightly more ambitious
Direction so so if you work for a
sufficiently large organization you have
heard the expression key performance
indicator okay now suppose this
organization was run on a blockchain and
they have their key performance
indicator and those are published as
predictions on a prediction market so if
the company steers left and the price of
the contract tanks that's an indication
that perhaps should be starting steering
right instead so do you see that as a
potential uh addition to the toolkit of
the governance of a company really
actually I think you know in the
ethereum community it seems as though
lots of people are very excited about
this idea of making their own ethereum
startups be daos and you know if you
want to create a blockchain based
organization then you definitely need to
have some kind of blockchainbased
governance so you know having people
vote as one approach um it also has
weaknesses so for example one very
simple one that I think people might be
overlooking a bit is if you have the
simple approach where you know people
vote people become automatically become
shareholders and shareholders vote on
where the money goes then you know
here's one thing that I could do let's
say you know SW walk.it does their
little crowd fund does their little
crowdfund and they get $80,000 $80,000
on the last in the last hour I dunk in
$100,000 I get 55% and and I I make a
motion to sends $180,000 back to myself
and I have 55% of the vote and so I win
so this is basically the reason why in
the real world we have things like
minority shareholder protections so
basically the point of this is that
governance mechanisms especially those
for a system that's kind of intended to
really sort of stand the stand the test
of time and even without sort of relying
on manual human inter intervention you
know potentially ever it's figuring out
sort of effective governance mechanisms
is a very a very hard and interesting
problem and I could easily see
projection markets playing a part in
that okay anyone else on this I think uh
one really nice example to to showcast
uh this governance thing could be and
I'm looking forward to to do it uh to to
play a chess game to um the key
performance indicator as you mentioned
it would be will um will we win the game
on the one hand the prediction market
and then you could uh you could for
every move have different markets and
and see what's the likelihood to win the
game under the condition of this move
and on the other side you have a very
strong player and it would be really
nice showcase if the prediction Market
could beat a very strong
player I think that the um you know I
mean one of the examples that that's
thrown around for you know prediction
markets as governance is just like you
know will the share price go up or down
if this person is elected uh CEO and by
by making it a market you know you
attach a financial incentive to it and
um I think it becomes more meaningful
than just say a
vote okay and so now let's explore the
other end of the prediction now suppose
you do have in place liquid well
functioning efficient prediction markets
how do you teach people to extract who
are not necessarily directly involved in
the events that are predicted to to
extract a signal out of it that can use
for their activities and possibly within
the blockchain
itself well I think that if it if it's
really well functioning um and if you've
really got reliable information then
actually world will spread that quite I
mean and it's it's quite well known how
well prediction markets have been
performing for example outperforming
pundits um in predicting you know who's
going to win elections um so I think
that once it's a it's clearly a valid
source of information it's going to be
no problem um getting people to actually
use that information the difficult
problem is making it actually a valid
source information that isn't going to
be gained isn't going to going to be
messed with I mean I think there
definitely is such a thing as you know
markets sort of Market maturity and and
liquidity actually jumping onto a market
because you know we see right now we
already have a bunch of prediction
markets on group on group gnosis Happ
trading this week and I'm pleased to
announce that I earned about 25 ether
insider trading this
week
so for those who work here on Monday the
story is basically there was a market
maret on whether or not I'm going to
wear a hat again this week um so the uh
other Market there was on whether or not
the price of ether would be higher on
Saturday than it was on Monday and you
know if markets were efficient at all we
would probably see the probability of
pretty efficiently kind of track you
know jump down quite a quite a bit when
the when the price goes down go up when
the price goes up and so forth so you
know the you could EAS it's kind of easy
to just as an economist to kind of think
that you know if basically you know if
you set the incentives they will come
but at the same time it does kind of
take time for that to happen and you
know th those kinds of activities it's
important not to forget that those
activities happening actually involves
you know real humans doing real things
and actually sort of writing the the
Bots or you know doing things or doing
whatever things themselves and all of
that kind of INF real infrastructural
work happening so I'm actually going to
latch onto the last comment so uh we
seem to be in an unusual crowd here
where most people seem to have a
positive opinion of prediction markets
but that's by far uh not the norm and a
lot of people who strongly resist to
this idea are actually concerned about
the possibility of somebody with Deep
Pockets um moving a prediction Market in
a certain direction for the purpose of
taking advantage of it later so how
would you guys uh uh Comfort allay the
fears of such a person we start with
Martin
I would say that's that's difficult
because uh to some degree I also have
those concerns and I would well need to
um really paint a bigger picture of a of
of the new um economy where where
hopefully um well more people get uh
directly shareholders of things they do
and and then therefore make better
better decisions and and therefore
uh money cannot influence them so easy
um but um yeah it it's it's really a
bigger bigger bigger answer jump over
here Ed what do you think well it's
going to happen um people are going to
spend money to to move markets and
change information they and and you see
this a lot right now um particularly in
political markets because political
betting example in the UK where it's all
entirely legal but it's still an
extremely small Market with not a lot of
liquidity um compared to for example
Sports and so for example um a few years
back there was a um a leadership
election between uh Nick CLE and uh
Chris hun and somebody was putting a lot
of money on Chris hun in a way that
seemed to be you know aimed at moving
the price um the solution to it or or
the um you know the mitigation is that
hopefully if you've got enough liquidity
and enough people who know what's going
on they're going to pile a load of money
on the opposite side and they're going
to make a big profit you know um so so
in in that sense I think from the point
of view of people who actually um run
and promote these um prediction markets
it's something they'd like to see happen
because all of their honest users are
actually going to make money when people
try to to manipulate the markets yeah me
what I would say is just that um you
know what prediction markets do assuming
that they're they're liquid and well
functioning assumptions you said earlier
uh is you know they they make it so that
if you're manipulating the market you'll
lose money you should lose money um
and you know that now that doesn't
necessarily help you in you know this
hypothetical situation where you have
someone with an unlimited amount of
money and nothing to lose and they're
just you know kind of out to burn the
world um but I I think that's you know
that that's a quote unquote
vulnerability that you know most systems
have that okay so let me dig a little
bit deeper into that so imagine a
situation where the prediction is about
an act of sabotage where an individ
idual could actually uh by themselves or
with help actually carry out the act of
sabotage and cause the event to actually
take place so uh what what do you guys
think a responsible prediction Market
should do to deal with that kind of case
you could start with Edmund again yes so
um I I mean as a data fee provider we've
always kind of agonized about whether we
should be providing um signed data about
people's deaths um which obviously has a
lot of potential for abuse you know
people bring out the assassination
contract when you when you talk about
prediction markets at the same time it
has all kinds of really useful
interesting use cases like um you know
making wheels execute quickly for
example or you know uh governance
governance procedures um so we we still
haven't quite made up our minds what to
do ultimately about that um but I I
think you know it's going to happen
somebody's going to do it Mar yeah
obviously also thought about is um sign
messages of U people's deaths and B
basically in the world of ethereum every
time you are publishing a signed message
you're pulling a tri a trigger of a
machine where you don't know what's
what's happening in this machine so you
you could trigger anything with this
signed message and um especially when it
comes to um the death of people um it it
might be or it it might uh be a solution
to say um you as an individual would
have the right to make an oracle
wrongly report about your your death for
example to kind kind of unload the gun
in in this uh so Jack um I gu my my my
my my thought about that is that um you
know why not take advantage of the the
same mechanism that you know sort of
powers prediction markets in general the
idea of the wisdom uh of the crowd and
you know say that you know well what
does it mean for a market to be saying
like unethical um and well it's really
you know whether or not people think
it's unethical and uh so you could sort
of Leverage the moral compass of your
users and say like well they can vote on
whether or not it's this is an ethical
uh whether or not this is an ethical
question um link yeah I mean I think as
you know as
I understands you know the the way augur
does that is basically that when you
when people actually vote on whether or
not an event occurred they can vote Yes
they can vote no or they can vote you
know ambiguous or unethical and the
theory is that you know if some question
actually is an ethical in some way or if
it's just sort of too plain ambiguous
what like if you just throw gibberish
into the question field then they'll
answer that and even the person who
created the question might even be
penalized some amount so it's like the
thing is that all of you know these
blockchain based systems they all kind
of exist in this sort of cryptosphere
and there's always going to be some kind
of link between that in the real world
and it's kind of clear that that link is
inevitably going to be a collusion
Vector I guess both for good and for
evil okay a going in a slightly
different direction now so uh imagine
that you had the ability to make the
life of the predictor as easy as
possible so imagine the equivalent of an
IDE for predictors where where you enter
the market and you have a series of
dashboards that you can look at that can
assist you with your prediction and here
there is an interesting link uh because
a lot of uh governments at various
levels National Regional and even City
uh are now publishing very large amounts
of data sets that describe what's
happening in the region or the country
at various level so economic statistics
demographics transportation and so on so
if you had 12 months to work on such a
system so H how would you set it up if
we could start from Edmund again um so
so so the question is that we how would
we set up giving you access to all this
information so that you can make a
prediction yeah or which kind of data
sets would you if if this was your
dashboard what would you want to see or
for what kind of predictions right well
well it's it's going to really you know
enti entirely depend on the um um on on
the the subject that thing you're trying
to predict but um uh the one of the
things you you want to know is what
everybody else on the market is doing
that that's something that um that you
normally uh do know um yeah apart from
that it's going to be very context
defend on I think um I think one sort of
importantance and con sort of
convenience thing to have is just a very
simple field that lets you just ask and
make a prediction yourself just like
fill in a text box make a prediction
click yes and then you know maybe put in
maybe put in some Market maker subsidy
and then just see people start voting on
that
um I mean this is May this is maybe a
somewhat optimistic answer but uh you
ask for sort of the best case scenario I
so I would say you know if you had like
a really good you know sort of AI
machine learning uh text mining
algorithm that could suggest answers to
you um and you could always uh verify
them yourself afterwards um I I I think
that the knowing how other people are
are deciding is that that that's a would
also be a very strong indicator
um but I you know that relies on getting
something like that to work uh we we are
we are sort of researching something
like that uh at at augur but um it
remains to be seen whether that will pan
out
Martin Martin if you have anything to
add okay so then I'm trying to coax a
prediction out of you so um what kind so
how many uh question types do you so
today you know the the the most
frequently cited examples of prediction
Market are about political events so
elections or uh Hollywood movies gross
totals or
um issues that have to do with popular
culture in general right and so those
are fairly predictable in their times uh
how many different time types of
predictions do you expect to see say in
the next five years time so a 10-fold
increase a 100 fold increase and one
millionfold increase and what would
drive that growth if if possible so can
we start from Jack sure
um I mean I so I don't have a good sense
of like the you know the the number of
categories that people will be making
predictions on um I think that the you
know my sense is that and maybe this is
a pessimistic prediction but I I I feel
like the the you know the few basic
things that people want to predict uh
won't be that different than they are
now I think I think politics Will
decline I think that's sort of a you
know for some reason that has become
prediction markets a uh you know the the
sort of go-to topic um I think that um
one thing that PE one thing that might
be uh somewhat new so you mentioned like
Hollywood stock exchange uh will be
people um sort of betting on things like
who will win American Idol um I think a
lot of people would find that to be very
diverting uh and you know aside from
that sort of the The Usual Suspects you
know you can imagine like um you know uh
Financial betting I mean it's sort of
like a you know if you think of like
well options are kind of like betting um
you know maybe Sports things like that
not you know I'm not too sure on how on
exactly how long the road map until this
will be but one area that I'm interested
in is actually rather than sort of
starting from the top and sort of
thinking big of you know is making
predictions on whether policy a or
policy B will will be more likely to
increase GDP by 5 trillion years or
anything of that scale why not use them
for things that are extremely
microscopic so one simple example of
prediction Market is you can imagine one
being used to say create a voting system
for a decentralized Reddit so the basic
problem here is that in General on
Reddit you have two types of moderation
one type is community moderation up
votes and down votes it's nice it's sort
of democratic and decentralized and
people like that but the problem is it's
slow and people don't like the fact that
if someone posts a spammy Content it
comment it still stays on for like at
least a couple of hours before it gets
kicked off the page the second kind is
centralized moderation which people
don't like because it's you know the big
big bad guy with an Iron Fist and for
everything so one sort of alternative
proposal is imagine every single Reddit
comment being a prediction market and
people could you know up vote and down
vote they could up vote and down vote
themselves they could potentially you
know have a machine learning bought do
the up voting and down voting you know
potentially any strategy goes but well
the thing that they will be predicting
is you know it could imagine some sort
of pool of moderate of community
moderators and this could be sort of
very you know very large fairly easy to
join and you know people would sort of
be moderating random Subs sets of of
comments and this would be a prediction
Market on how they would vote so it's
sort of kind of like I think Robin
Hansen came up with what he called
predict cracy which is like using
prediction markets on voting so this
would be kind of similar so the benefit
here is that you know people could make
sort of down votes and potentially push
content down very quickly but you know
by doing that they're putting their
money where their mouth is and if
they're abusing the system then
theoretically someone else could sort of
bet against them and steal their money
so you know that's just one very you
know very simple sort of you know
completely out there example of how
prediction markets could be applied on
like Sub sub dollar
scales so again let me build on that so
I find it uh interesting and remarkable
how still web oriented much of the
discussion is but suppose you want to
know um how many new stores a large
company like Walmart will open in the
United States next year uh you really
want to have the people who are driving
by the construction sites of the Walmart
site to tell you if the construction is
proceeding on schedule so what kind of
mechanism do you think could be put into
place to have those very microl local
observations feed into a macro process
like how well Walmart is going to do
next year make this sort of haakan ideal
of markets as sort of decentralized
information aggregators actually really
work well um I think I mean the problem
seems to be a user interface Problem by
and large so you know the solutions are
going to be sort of things that you know
economists might not find to sexy but
which app app developers perfectly well
understand like you know making sort of
nice and easy to use apps that people
can sort of you know see a bunch of
prediction markets potentially even you
know sort of use machine learning to
sort of suggest which ones you should
look at and just make it very easy for
people to bet on
them one thing that that's important in
my mind is that you can have very very
different views on the same data so um
so one reason to to place a prediction
on a prediction Market could be hedging
against the risk and basically buying an
insurance um but that would obviously be
a completely different uh user interface
and and look and feel uh but still it
could it could access or it could um be
on the same market and then could be on
the other side or on another side a
market that's more spec speculative on
on on those um and I think those yeah
different um use cases might also help
um to yeah to to get the ecosystem right
for a prediction Market because in the
end it's a it's a zero sum game so in
the end if someone wins money and and
those who contribute the information
they they should win money then someone
else on average needs to lose money and
that could be someone who for example
wants to hatch against the risk right so
that's like the famous nor trade uh uh
theor that says that if somebody's
taking that side of the bat who am I to
think that I know more than they do okay
so again how sometimes they might so how
how do you break that uh uh that problem
well I was just going to say like
wholeheartedly agree with the the I mean
really what both of you guys have said
just that the the user interface is is
very important and and especially with
your point that you know really you
there there is not necessarily a one
siiz fits-all solution for for user
interfaces in general but for prediction
Market specifically like you can imagine
that um I mean you can break it down
sort of as granularly as you as you want
but the you know it seems like well
you'd have like the sort of uh Traders
would want one kind of interface they
want really all the details all the data
presented to them you if you want maybe
people who are it seems like people who
are betting on say sports would would
expect a different interface right they
they they'd expect like odds instead of
probabilities um and well and maybe the
most important one is just sort of a
newbie interface one that doesn't
require you to sift through mountains of
data or understand how odds work or
really anything like that you know so
just an app where you can click like on
you know where you drive by the Walmart
and is this going well yes or no that
sort of thing okay so uh different
question so imagine a situation not too
far I don't think where a very Advanced
artificial intelligence gets access to
one of these markets and systematically
uh ends up uh uh outbidding everyone so
what would happen to a market in those
in those
circumstances that's it sounds like you
know at the very start people would lose
and then in the second phase people
would kind of realize that the AI is
probably is smarter than them and so
there's no point in disagreeing with any
of the probabilities and then of course
the third phase would be that the AI
realizes that aside from this crazy
ethereum thing there's this thing called
Wall Street where the AI can make
millions of times more
money and so the the the AI would vacate
the market and move to better things and
leave the humans uh pick up the scraps
that would be nice but in the meantime
you'd have like perfectly efficient
prediction markets that always told you
the right
answer a good thing oh I'm up okay so
thank you all for uh being on the panel
and I HED everybody else had fun thank
you absolutely
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