In the rapidly-expanding world of cryptocurrencies, new entries into the field are facing increasing pressure to set themselves apart from their competitors. Augur, a cryptocurrency-based betting platform, seems to have done just that. In 2017, the platform's coin increased in value by 2,000% as a result of a dramatic, if somewhat understated, increase in investor interest.

What is Augur?

Augur is a decentralized prediction market platform that allows users to place bets on the outcome of future events. It was founded in 2014 by Pantera Capital co-CIO Joey Krug and biophysicist Jack Peterson.

According to Forbes, the platform "aims to create the most accurate prediction markets using the 'wisdom of the crowd.'" The more individuals who weigh in on a particular event which has yet to happen, the more likely the group will come up with an accurate prediction for the outcome of that event. Augur runs on ethereum, the decentralized ledger system, and is currently in a public testing phase.

Augur is not the only prediction market betting system available to investors at this point, but it does stand out for its fee structure. According to Krug, "on Betfair you're paying 10%+ fees, on Augur it'll likely be 1% or less."

Decentralization is Key

The creators of Augur believe that decentralization is key to the success of a prediction market or betting platform. Traditionally, these systems are centralized, meaning they can be shut down easily and rely on a single party to report how events turned out. This means the system is susceptible to both errors and deliberate manipulation. In Augur's case, the platform is decentralized, so it requires that thousands of people confirm an outcome in order to better ensure accuracy. (See also: Bot Activity Plays Major Role in Cryptocurrency Price Swings.)

Individuals who successfully predict the correct outcome are rewarded with Augur's REP (Reputation) tokens. It is these tokens which spiked in value over the past year. At the start of 2017, the market cap of REP tokens was $43 million. As of December 2017, it was nearly $1 billion, marking a 2,000% increase in just a year's time.

Augur has seen outspoken support from many of the most important names in the cryptocurrency space. Coinbase CEO Brian Armstrong described it as an "awesome project with huge potential," while ethereum co-founder Vitalik Buterin said it was "Uber for knowledge."

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