Internet

Markets in Assassination? Everybody Panic!

A long-awaited prediction market comes online. Cue the freakout.

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Sharaf Maksumov/Dreamstime.com

It's been a few years since the last media scare about prediction markets. So we were overdue for this week's handwringing about Augur, digital currencies, and assassinations.

Augur, which has been under development since 2015 and launched this month, is a set of smart contracts built on the Ethereum blockchain. It's intentionally decentralized, meaning that anyone can use it to propose wagers, anyone can bet on the outcome, and human judges known as reporters have a financial incentive honestly to decide whether the event happened or not. No central authority exists to reject unacceptable, or illegal, wagers.

This week's media scare arose after a single person used the Augur protocol to bet on whether President Donald Trump would survive 2018, and that person apparently placed the bet on a lark after a Twitter discussion.

Cue the frightened headlines: The Independent reported: "Donald Trump assassination market appears on blockchain platform Augur." Newsweek: "Welcome to Augur, the cryptocurrency death market where you can bet on a Donald Trump assassination." Mashable may have been the most worried, declaring Augur "terrifying."

In reality, Internet assassination markets have existed for years. A Forbes article from 2013 described a self-proclaimed "Assassination Market" that attempted to crowdfund murder with bitcoins. Bounties were established on NSA Director Keith Alexander, President Obama, and Fed Chairman Ben Bernanke (Bernanke's bounty, the highest, would be just over $1 million at today's bitcoin prices).

Five years later, those officials are still alive.

Human beings can be creative creatures when choosing to do evil, and one day prediction markets may well be used for actual foul play. This is especially true when one person stands to gain a lot from harming another: Murders have been committed to gain life insurance payouts. Worse, prediction markets could reward not only assassins, but criminals involved in mass shootings or terrorist attacks as well.

At least these public markets do one thing that underground payments-for-assassination do not: they let the target know that he or she is a target. If you knew that there was a large bet that would pay off only if you died in the next 24 hours, you might want to take the appropriate precautions, including a vigorous exercise of your Second Amendment rights. Hope your state doesn't require a waiting period! (There may be a market in bots that, for a fee, will scour new Augur contracts for your name.)

This is probably why the CIA, which presumably never would favor the assassination of a U.S. politician, seems to like prediction markets. A 2006 analysis published by the agency concludes that "the record of prediction markets is impressive." It adds that "prediction markets can contribute to more accurate estimates of long-term trends and threats and better cost-benefit assessments of ongoing or proposed policies." And of course it was the Defense Advanced Research Project Agency that proposed a prediction market based on events such as regime change in the Middle East.

George Mason University economist Robin Hanson, whose work partially inspired DARPA, uses the history of short selling to suggest that the danger of foul play in prediction markets is exaggerated. He writes:

Some people suspected that the September 11, 2001, terrorist attacks on the New York World Trade Center were funded in part by trades of airline stock options. Similarly, some feared that the 1982 Tylenol poisonings were done to profit from short sales on the Tylenol stock. Airline stock prices did fall on September 11, as did the Tylenol stock with the 1982 poisonings. And a study has found that Israeli stock and currency prices respond to Israeli suicide bombings. Thus, it is not crazy to think that terrorists might use financial markets to profit from their acts. Nevertheless, we know of no examples of anyone using financial markets to profit from such sabotage.

The idea of arranging assassinations online through pseudonymous identifiers and paying in digital cash is not exactly new. It's been discussed for nearly a quarter-century.

In September 1994, retired Intel engineer and polymath Tim May published The Cyphernomicon, a manifesto that said: "In my highly personal opinion, many people, including most Congressrodents, have committed crimes that earn them the death penalty; I will not be sorry to see anonymous assassination markets used to deal with them."

May included assassination markets in his list of what truly anonymous digital cash could accomplish. Such markets, he suggested, were merely one consequence of what the wrecking ball of cryptographic technology would do to the nation-state. Others included illegal markets in gambling, bribes, payoffs, insider trading, contract crimes, fencing, organ selling, and military and trade secrets. On the cypherpunks mailing list, May outlined an experimental scheme called BlackNet to demonstrate anonymous information markets.

A few years later, Jim Bell, an MIT-educated anarchist, stepped in where May left off. Bell published a 23-page essay with the provocative title "Assassination Politics." Bell's sketch of how this system would work argued that an "organization could quite legally operate, assisted by encryption, international data networking, and untraceable digital cash, in a way that would (indirectly) hasten the death of named people, for instance hated government employees and officeholders."

The Forecast Foundation, the nonprofit group leading Augur's development, has taken some steps to prevent their project from morphing into Assassination Politics or BlackNet. For instance, it added code to allow participants to reject transactions as unethical and therefore "invalid."

But different people–the ones acting as reporters–may reach different conclusions about what transactions are unethical or invalid. The creators of Augur call this disagreement a potential fork. If there is a dispute, there are built-in ways to try to resolve it; if it cannot be resolved, the market will be forked over a 60-day period. A March 2018 white paper calls forks a "nuclear option" that "are expected to be exceedingly rare events." If a disagreement over bets on the longevity of politicians ever arises, a Coindesk report suggests there's a "possibility that Augur could fork into two platforms, one–call it Augur Dark–that tolerates assassination markets, and one that doesn't."

There are other ways the foundation could try to curb potential illegal wagers, including altering the codebase to inject additional safeguards. But participants in the Augur marketplace would be free to ignore the alterations. An intentionally–even radically–decentralized system is difficult to tame again once it's released into the wild.

The foundation has tried to distance itself from unlawful uses of Augur, stressing on its website that it "has no power to censor, restrict, or curate markets, orders, trades, positions or resolutions on the Augur protocol contracts." Earlier this week, it formally relinquished its ability to shut down the network. Now the fate of Augur, and of its associated prediction markets, now in the hands of its users.

NEXT: Trump Praises Dallas Cowboys' Owner, Who Probably Wishes POTUS Would Shut Up

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  1. the CIA, which presumably never would favor the assassination of a U.S. politician

    You’re funny.

    -jcr

  2. May included assassination markets in a list of what truly anonymous digital cash could accomplish.

    May included assassination markets in his list of what truly anonymous digital cash could accomplish.

    You can say that again!

    Seriously, are “assassination markets” really more terrible than, say, murder mysteries or “Saw” movies?

  3. I remember first reading about assassination markets disguised as prediction markets: “I predict that so-and-so will live past Jan 24 noon, and will pay $10K if I am wrong.” Just made me laugh, and then all those idiots trying to ban the very idea, that was even funnier.

  4. central authority exists to reject unacceptable, or illegal, wagers.

    If there’s no central authority then no wagers are illegal. And all of them are.

  5. Just another example of the disconnect between science/tech and ethics

    1. Note to foreign readers: by ethics, most U.S. sockpuppets mean altruism.

  6. Doug Stanhope’s Death Pool has been around forever as well. It’s a bit different as it’s just gambling on who will die in any way, but I thought it was worth mentioning.

    1. I don’t know what that Death Pool is, but as soon as you start gambling on who will die and how, you create incentives for assassination.

      1. It’s like Fantasy Football, except with people dying. You have rosters of people, and if they die you get points. The points are based on factors such as age and the such.

        1. Wait – so this isn’t just my poker group???

      2. Or maybe you have invented life insurance?

        1. Life insurance companies lose money when you die. They have the opposite incentive.

          1. Still a bet.
            You are betting you are going to die soon, the insurance company is betting you die later.
            And you are giving them odds.

          2. They don’t lose money when you die. Premiums are put into an investment pool – that’s how they make money, not directly from premiums themselves. Unless you die unexpectedly early then worst case scenario they have to pay out a small percentage of the profits they made off your premiums back to you.

            If they genuinely lost money with each insured death they’d go out of business real quick unless they jacked premiums up past that payout – and then no one would buy life insurance.

            1. They make more money if you live a long time, and less if their customers die too soon. And they have no incentive either way with those that aren’t customers. Unless the insurance salesman is making you an offer you can’t refuse…

              “Studies show that a 50 year old man who buys Corleone life insurance will on the average live 25 years more than the dirty rat what turned us down.”

  7. “and human judges known as reporters have a financial incentive honestly to decide whether the event happened or not”

    So I can see reasonable disagreement among ‘reporters’ concerning for example, Keith Richard’s death.

    1. How DO you decide when someone becomes a zombie?

    2. Richard’s ‘supposed’ death will be fought over like that Indian yogi’s. ‘E’s not dead. E’s just been sleeping it off for a really long time this time around.’

    3. That Keith Richards is still kicking at 75 only shows the relative harmlessness of products lobbyists have paid politicians to ban, including LSD, all plant leaf products, and even plant sap products. This follows the pattern of nuclear energy, which is WAY safer per gigawatt-hour than anything else capable of lighting a city. Nuclear power plants therefore draw the boiling wrath of the most violent and ignorant among the illiterati. Ayn Rand was right about looters–especially mystical looters–valuing death.

  8. You can be certain that there have been assassination markets by which rich and powerful people can eliminate those who get in their way or who they don’t like for as long as there has been money. And a large percentage of murders are premeditated, so obviously there is a demand. I think it’s naive to be surprised when technology drives down the price of murder for hire just like it drives down the price of any other service. Nevertheless, violence and murders have been going down, so I wouldn’t lose too much sleep over it.

  9. The problem with assassination as policy is that it is in effect a demand for politicians who care about their own lives even less than the current batch of nihilistic looters. One example suffices. Character assassination–the current policy–has resulted in packing the political State with imbeciles and poltroons with no character to assassinate.

  10. The Don was elected by a huge margin by partisans who want to keep electricity and transmission lines safe and legal. Those same folks are capable of electing someone else who values access to energy. Less obvious is the replacement cost of hereditary Saracen enforcers of Sharia law. Arab execution of gays (where rich pashas marry up gals by the dozen) and Republican-style singling out of women for coercion (no women drivers) might make fertile ground for a market in change-by-initiation-of-force. After all, both kleptocracy parties in These States are committed to change-by-initiation-of-force, only with the emphasis on votes. Votes are less in monarchies.

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