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Decentralized Prediction Market Without Arbiters

  • Iddo BentovEmail author
  • Alex Mizrahi
  • Meni Rosenfeld
Conference paper
Part of the Lecture Notes in Computer Science book series (LNCS, volume 10323)

Abstract

We consider a prediction market in which all aspects are controlled by market forces, in particular the correct outcomes of events are decided by the market itself rather than by trusted arbiters. This kind of a decentralized prediction market can sustain betting on events whose outcome may remain unresolved for a long or even unlimited time period, and can facilitate trades among participants who are spread across diverse geographical locations, may wish to remain anonymous and/or avoid burdensome identification procedures, and are distrustful of each other. We describe how a cryptocurrency such as Bitcoin can be enhanced to accommodate a truly decentralized prediction market, by employing an innovative variant of the Colored Coins concept. We examine the game-theoretic properties of our design, and offer extensions that enable other financial instruments as well as real-time exchange.

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Copyright information

© International Financial Cryptography Association 2017

Authors and Affiliations

  1. 1.Cornell UniversityIthacaUSA
  2. 2.chromawallet.comStockholmSweden
  3. 3.Israeli Bitcoin AssociationTel AvivIsrael

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