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Blockchain and prediction markets: An analysis of three organizations implementing prediction markets using blockchain technology, and the future of blockchain prediction market
KTH, School of Electrical Engineering and Computer Science (EECS).
KTH, School of Electrical Engineering and Computer Science (EECS).
KTH, School of Electrical Engineering and Computer Science (EECS).
2018 (English)Independent thesis Basic level (degree of Bachelor), 10 credits / 15 HE creditsStudent thesis
Abstract [en]

Since the rise of Bitcoin in 2008, many have speculated about the scope of blockchain technology applications. Prediction markets, i.e. markets in which uncertain outcomes of future events are tradeable, is such an application; blockchain technology may offer several technological attributes that may facilitate prediction market implementations. This study describes and compares the platforms of three organizations that build blockchain prediction market platforms: Augur, Gnosis and Stox. By this, we provide a pertinent overview of current blockchain prediction market applications. Additionally, we conduct interviews with three Swedish blockchain experts clarifying blockchain technology strengths and weaknesses in relation to prediction markets. We identify five factors that are essential for prediction markets to aggregate and reflect information accurately: many actors participating, no actors being prevented from participating, a trustworthy setting function, freedom to create new contracts, and transparency. We conclude that blockchain technology has attributes that facilitate future prediction market implementations in accordance with these requirements. However, blockchain scalability issues pose a key challenge.

Abstract [sv]

Sedan Bitcoins introduktion 2008 har många spekulerat kring omfattningen av blockkedjeteknologins tillämpningsområden. Prediktionsmarknader (eng. prediction markets), d.v.s. marknader i vilka det går att spekulera i osäkra resultat av framtida händelser, är ett sådant tillämpningsområde; blockkedjeteknologi kan tillhandahålla aspekter som främjar implementationer av prediktionsmarknader. Denna artikel beskriver och jämför plattformarna som tillhandahålls av tre organisationer som använder sig av blockkedjeteknologi for att bygga prediktions­marknadsplattformar: Augur, Gnosis och Stox. Genom detta tillhandahåller vi en helhetssyn över nuvarande prediktionsmarknadsplattformar som bygger på blockkedjeteknologi. Dessutom genomför vi intervjuer med tre svenska blockkedjeteknologiexperter, detta för att klargöra blockkedjeteknologis styrkor och svagheter i förhållande till prediktionsmarknader. Vi identifierar fem faktorer som är essentiella för prediktionsmarknaders förmåga att framgångsrikt aggregera och reflektera information: att många aktorer deltar, att inga aktorer är förhindrade från att delta, en tillförlitlig funktion för avgörande av utfall, frihet att skapa nya kontrakt, samt transparens. Vi drar slutsatsen att blockkedjeteknologi, med avseende på dessa faktorer, har egenskaper som förenklar implementationen av prediktionsmarknader. Å andra sidan utgör blockkedjors skalbarhetsproblem en signifikant utmaning. 

Place, publisher, year, edition, pages
2018. , p. 16
Series
TRITA-EECS-EX ; 2018:428
Keywords [en]
Blockchain, Smart Contracts, Prediction Markets
National Category
Computer and Information Sciences
Identifiers
URN: urn:nbn:se:kth:diva-249988OAI: oai:DiVA.org:kth-249988DiVA, id: diva2:1306764
Supervisors
Examiners
Available from: 2019-05-13 Created: 2019-04-24 Last updated: 2019-05-13Bibliographically approved

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