January 26, 2018
There are many tools available nowadays that can support our curiosity when it comes to gaining insight into past, present and future events. However, important differences lie in the perspectives for sifting through the huge amount of information available through various sources. While we can develop a diverse background and experience, allowing us to easily understand and interpret information more clearly. Unfortunately this is not usually the case as biases and incomplete knowledge proliferates. Hence, a decentralised forecasting platform, one of the most powerful applications of blockchain development, has stepped in to introduce a new way for us to share opinions about future events with the use of blockchain technology and incentives for correct predictions.
So, what are differences between decentralized forecasting and existing models? Normally, when seeking answers, we are rely on the views of experts in their given fields to provide us the most appropriate conclusions or decisions. Moreover, such opinions can sometimes be tainted or manipulated towards a desirable conclusion. This is especially problematic when economists or advisors are not the ones who suffer the consequences of their opinions. So, how can we overcome this gap in information in order to be better informed without suffering at the hands of greed or manipulation?
Predicting is something that we do everyday. For example, we predict the price of Bitcoin, the outcome of presidential elections, the weather patterns in the near and long future. Just have a close look at history and you will see that people have always found ways to forecast the outcomes of events or divert outcomes towards more suitable ends. Donald N. McCloskey, a Professor of Economics, History, English and Communications at University of Illinois (Chicago), expressed the same thoughts in her book “The Art of Forecasting: From Ancient to Modern Times”1. This book shows various ways that people have attempted to predict future events throughout history, and draws a parallel distinction between the ancient predictive approaches to those of modern times – presented by economists and forecasters.
The current forecasting model is for a small group of people to make predictions. Let’s take the weather for example. In the UK Met Office2, a small handful of people are responsible for making the informed guesses weather patterns. Other nations rely on a different small groups, teaching working a very isolated nature and with little common communication of consensus.
What’s more? Just have a look at the outcomes of elections. The election results are predicted based on polls made just before the election takes place, often at different intervals before the election to gain an idea of voter consensus. In many cases the election is polled by a particular newspaper or institution. Moreover, the poll does not get millions of inputs but just a small proportion of the total population of the country. Do you remember what the poll told about Hillary and Trump in the last U.S presidential election? The day before the election poll data was showing us that Hillary was ahead in the battleground states, proving that the current prediction models do not always work.
So, in order to overcome such boundaries and reliance on centralized figures who we entrust with our futures, we need to look elsewhere where people are liable for their past, present and future points of view. This concept has been possible thanks to blockchain development. By incorporating blockchain development to decentralise prediction markets just like the way the blockchain has decentralised financial transactions, a more accurate prediction market could develop. As a result, there could be radical changes to how people place bets, purchase and sell stocks, and make decisions about the potential for certain events related to everything from elections to weather patterns.
Augur3, a decentralized forecasting platform built on the Ethereum blockchain provides a good example. It allows users to predict future events and be rewarded for predicting them correctly. In other words, the platform is created based on the concept that when you ask a crowd to forecast the outcome of an event, the result is usually far more accurate than the opinion of even an expert in that field.
Following on with the weather forecast, instead of the weather being predicted by the small group of people in an unconnected model in each country, people can use a blockchain database to store and manage all the inputs to extrapolate more meaningful information. Moreover, those who make the most accurate forecasts, consistently, can be rewarded with tokens in the blockchain that thus give them more influence in the modelling phase.
Moreover, imagine that if there was an app on mobile devices in which people could collect and input their poll data recorded on the fully transparent blockchain. As a result, fraudulent interactions could be prevented and millions of voices contributing to one piece of data could be extrapolated.
In essence, blockchain development’s role involves the enormous amount of reliable data that it can collect, with and without rewarding tokens. The great amount of information can lead to immensely more accurate and powerful predictions. Instead of one group of people, who may have particular biases in making predictions, we will have the prediction model containing million, and even billions of participants. As a result, reliability will be much better.
Infinity Blockchain Labs is a visionary R&D company engaged in intermediary and RegTech services employing blockchain technology. We focus on forming alliances with established businesses and regulatory institutions across various industries, as well as providing collaborative incubation for early stage blockchain projects.
IBL aspires to empower Vietnam to become a global leader in blockchain development and therefore are committed to sharing information to nurture a passionate, educated blockchain community. One of the ways we maintain our role as ecosystem pioneer is by helping create educated blockchain enthusiasts. We are committed to sharing information and resources to help Vietnam become a blockchain hub through conferences, courses, contests, alliances, workshops, speaking engagements and incubations. Information regarding topics like hard forks helps people become more familiar with key blockchain concepts and thus able to adopt the technology.
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