The blockchain platform that relies on public wisdom...is it legal?
What is Augur.net?
Augur, a blockchain-based prediction marketplace platform, which is getting media attention because people are using it to predict celebrity deaths. But despite fears that the rise of "death markets" could inspire actual murders, the more pressing problem, Augur presents something else entirely. People saw these kinds of "kill groups" coming decades ago, and blockchains serve as an ideal platform with their decentralized networks and (potentially) anonymous transactions. Augur's open-source software relies on blockchain-based software called smart contracts to allow users to set up their prediction markets that automatically pool cryptocurrency bets and distribute winnings without the need for participants to identify themselves. Perfect for drumming up interest in offering someone guaranteed payday to anyone who does, at least in theory.
However, Augur may already be facilitating illegal activity that could be much more problematic. In the United States, prediction markets are generally not allowed. Federal and state laws prohibit online gambling, and "in many ways, the line between prediction markets and gambling is not so clear," says Aaron Wright, a professor at New York City's Cardozo School of Law. In addition, some Augur contracts allow users to bet on the future value of something, such as the cryptocurrency Ether. That reminicenses a type of investment called a binary option, which is illegal to list without approval from the Commodity Futures Trading Commission. In 2012, the CFTC sued Intrade, a prediction marketplace based in Ireland, accusing it of allowing U.S. users to trade binary options. Eventually, a judge stopped Intrade from offering the contracts in the United States.
Indeed, the CFCT has previously included Augur in mechanisims-to-review list. But still imagining Augur was considered illegal by the CFTC, how can said decision be enforced? How could the system punish those with membership in Augur, and wipe the platform completely off the internet? Augur's creators claim they have no control over what users choose to do with the protocol or the decision of desabling the platform. This creates an issue that is typical only to the blockchain industry, says Wright, who recently co-wrote a book on the subject: "If you don't have a particular intermediary, i.e., a company or group of people running the marketplace: how do you enforce the laws and prevent that activity from happening?"
When Napster, Limewire, and other networks began posting music, movies, and other files on the Internet two decades ago, they created similar headaches for law enforcement. But in each case, there was an entity that could be sued for copyright infringement. Software like Augur, which is open source, free to download, and runs on a blockchain, presents new challenges, Wright says.
That doesn't mean the laws can't be enforced, just that they will need to be implemented in different ways. For example, suppose officials rule that Augur facilitates illegal activity. In that case, they could try to prosecute the people who developed the software, just as malware developers have been held accountable for their creations, Wright says. That's likely to generate a fight over First Amendment protections. Prosecutors could also try to target users who keep the protocol running. Called "reporters," they use Augur's tradable cryptographic token, REP, to report results and are rewarded with more tokens if their reports are consistent with the broader consensus. There are potentially other avenues as well; Wright says: "Just because there isn't a hub doesn't mean there aren't indirect ways to target illegal activity."
So, could it be assumed that Augur is legal?
Only people who use Augur to gamble in legal jurisdictions requiring gambling licenses should have gambling licenses. In areas where only market makers must have licenses, the government rules and corresponding threats would be different. It's similar to buying and selling bitcoins in that sense; in New York, they would lock you up for selling bitcoins without a license, but governments don't care or have less strict rules in other jurisdictions. There are already purchases from jurisdictions with centralized prediction markets. For example, in the U.S., there are reportedly illegal betting markets being set up and run on who will be the next president, but it is not illegal to bet on these markets in the U.K., so people bet on these markets hosted in the U.K., where the same rules do not apply. You could argue about this ethics, and I will say otherwise, but if the argument is about legality, that is what the law allows.
As for the Augur foundation, they won't be needed for Augur to function once Augur is up and running. If they get locked up, Augur will continue. However, that's unlikely because, taking a look at their own precedent, they won't run illegal markets or, for that matter, notable markets other than bug bounties and such. They are essentially a research and development team and not an Augur trader.
Ok, that's all on the strictly legal side of things. But, of course, it should be noted that people should not so willfully dismiss the grey and black market uses of Augur. For example, if a farmer in the U.S. wants to hedge the future prices of the onions they grow, it's illegal to trade a futures market. If some brave anonymous individual decides to market a criminal onion price insurance system in August, I don't think that's a net loss to society. It means farmers can grow more onions with the confidence that if prices go down, they won't disappear, which means onion buyers will be able to insure against rising prices.
Insurance is not gambling, but it's still betting on uncertain future events. The big difference is how you use the platform. Are you using it to reduce your volatility and hedge against losses? Then you're hedging your bets. It is expected that this will be the important use case for Augur: hedging in the long run. Unfortunately, many entrenched players in the hedging industry want it to be illegal for you but not for themselves. So at the end of the day, the legality of Augur will rely on how relevant its positive impact on the overall population is in the future.
Should I buy Augur or not?
Augur is an excellent option for investment; it is undeniable the practical course it has had this year and the stable position in the world ranking of cryptos. So, is it worth betting on this cryptocurrency? If we are aware of the expert opinion and daily analysis, it could be said that this coin has a future. Will the value of Augur increase? Short-term prediction is information that many investors and traders want to know. It should be remembered that the price of any cryptocurrency can be at the top of the mountain and go down in a matter of seconds. To have a little more stability in our investment, it is essential to analyze recent movements, observe how volatile crypto has behaved.
Hope is the last thing to be lost, and emphasizing the optimistic opinions, Augur will likely increase more than 100%. It is highly advisable to know where we invest our capital; for this reason, we should not anticipate the facts. As general advice, it is essential to be aware of the news daily and to understand, above all, the volatility of cryptocurrencies. Reading the information will allow us to see how Augur and the market as a whole is unfolding. These scoops will help us choose whether crypto is worth buying or not.