The Regulative Problem of Crypto Prediction Market
The process of using cryptocurrencies for online betting and gambling is not just about having access to yet another means of payments and withdrawals. Instead, it is a technology that provided the gambling domain with completely new tools to offer to their users.
Features of bitcoin, like those of other cryptocurrencies, allow for a versatility that regular fiat currencies just do not offer. Among these are also new and novels ways of gambling. In this category, the idea of a prediction market is quickly gathering both attention and notoriety.
The basic idea of prediction gambling platforms like Augur is to offer its users to bet on almost anything in the world, from political events to natural disasters. Using the blockchain, the users can create an event and then build a market around its predictions. The users can then make trades using the event shares. All of this is built on the ethereum’s ETH tokens and is by no means the only platform offering this service.
The bets are paid when the same particular market is resolved after the real-world outcome is known. While the concept might sound like the dream come true for any bookie, it also drags behind it a range of possible problems and issues. Most of these are directly connected to the regulation process for any gambling or betting venture, both brick-and-mortar and the online ones.
The Crypto Betting Allure
The domain of crypto gambling and online betting is in a constant state of growth. The same process takes place as people around the globe become more familiar with cryptocurrencies. In 2013, over half of all bitcoin transactions were related to gambling. In the last four years, it is estimated that BTC tokens valued at over $26 billion have been used directly on betting platforms. During 2018, the industry saw more money changing hands because of the World Cup and betting that took place around it. Some users went to the established platforms while others wanted to wager on their particular predictions.
This allowed for copycat or even scam platforms for event prediction to crop up, especially those that target the Chinese market. Here, a range of arrests connected to these ventures has been made, showing the potential of the local gamblers, even though both gambling and trading crypto are illegal in the country. On top of this, there is a range of other dubious gambling apps (or apps) built on ethereum network, like the PoWH3D. All of this shows a clear need for more regulation in the domain of the crypto prediction market.
Numerous Regulatory Barriers
Attaining any level of regulation is easier said than done. The legislation in different countries perceives crypto gambling differently. In China, like it was already stated, no form of gambling, including prediction alternatives are allowed. In the United Kingdom, on the other hand, UKGC (UK Gambling Commission) classifies P2P betting protocols like Augur as a betting intermediary. Yet, this regulation was set up in 2013, which makes it likely obsolete and not conclusive enough to be effective. Other countries have their own particular demands and most hold cryptocurrencies in a gray legislative space. Specific gambling procedures in the crypto space are even more fringe legal phenomena.
But, none of this will impact the future growth of the prediction market. In many ways, it is a process of infusing of the formal gambling into the bets among friends and many other ventures that are as old as time. Only now, there is the technology of blockchain that can facilitate this among complete strangers. It is easy to see the same process gaining in popularity not just for sporting events, but also politics, entertainment and almost anything else where people can predict events and wager on the outcome.