Blockchain-Based Betting Could Cause Some Big Problems in FinTech

Being a technological frontier, FinTech development already has its fair share of headaches and problems to work through. But a new blockchain-based betting platform that lets people wager on the deaths of celebrities could cause some colossal issues never seen before.

Betting on Unfortunate Events

Augur is a blockchain platform that lets people bet on practically any type of event. It didn’t take long for the Internet to pervert this. Often, gambles revolve around the deaths of famous people like Seattle tech titan Jeff Bezos or President Donald Trump.

It’s no surprise that this has gained the media’s attention. Of course, there’s the idea that this sort of betting could encourage real killings. But, fortunately, these so-called “death markets” haven’t garnered many transactions; the wagered amounts have been negligible so far.

Still, Augur does present some other very real dilemmas.

The Bigger Problem in the Background

While the headlines focus on predictions of celebrity demises, Augur may be facilitating other illicit activities. In the United States, prediction markets are not permitted. And federal and state laws also prohibit online gambling. Aaron Wright is a professor at the New York City-based Cardozo School of Law. He says, “In many ways, the line between prediction markets and gambling is not that clear.”

But even if this line is blurred, there’s another issue. Because Augur lets users bet on the future value of an event or item in the form of cryptocurrency, this type of investment could be considered a binary option. Binary options are unlawful to list without consent from the Commodity Futures Trading Commission (CFTC). The CFTC has taken a heavy hand of justice to previous violators. But Augur poses a different scenario.

Catch Me If You Can

So, let’s say the CFTC claims Augur is breaking the law. The creators of the platform claim they don’t control what its users choose to do with it. And they even say they can’t shut it down. This lack of a concrete intermediary is a unique factor of blockchain, and one that manifests itself as either an advantage or a problem, depending on the situation. Basically, without someone to point the finger at, how do you enforce the law?

This situation is similar to what peer-to-peer networks like Napster and Limewire encountered. But in those cases, there was always an entity to trace the blame back to and sue for copyright infringement. With Augur being blockchain-based, open-source, and free to download, this isn’t exactly an easy task.

As is the case with any vexing problem, new challenges necessitate new solutions. In this particular scenario, there are a few options. Officials may pursue the developers of Augur. Or maybe they’ll try to place accountability on the users running the platform to make bets.

But for now, the future (and solution) is unclear. What do you think should be done about Augur? Do you think it should be shut down? Or maybe you believe it’s none of the government’s business. Let us know in the comments!