The team behind Gnosis (GNO) bets they can make money from prediction markets.
A prediction market is a pool where people bet on the outcome of events. The theory behind prediction markets is that betters are more honest.
A person who despises President Donald J. Trump (R-Trump) could refuse to admit she thinks Trump will win reelection next year, for instance. However, that person could bet on Trump’s reelection because she thinks she will make money from that event.
Thus, a prediction market is a data collection mechanism they design to ascertain popular opinions. For example, you could use a stock prediction market to determine investor sentiment about equities.
How Gnosis could cash in on Prediction Markets
Gnosis’s plan is to build prediction market platforms that allow anyone to utilize customized forecasting applications.
In addition, the Gnosis team plans a new class of blockchain assets they call conditional tokens. I think the conditional tokens could be Ethereum Request for Content (ERC20) tokens that contain smart contracts linked to “conditional prediction markets.”
The Gnosis website mentions “prediction market contracts” and describes as “experimental smart contract.” A smart contract is a digital robot or decentralized app (DApp) that performs a task.
The smart contract in a stablecoin, for instance, makes a fiat currency payment from a bank account. Hence, the Gnosis prediction market contract could payout if a prediction is correct. A contract on a Trump victory in 2020; for instance, will payout if the Donald wins the election.
Altcoins for Gambling
Hence, Gnosis is planning a new class of altcoins that you could use for wagering or investment. A bookie could issue Super Coins based on the outcome of the Super Bowl, for example.
Sports betting is big business. In fact, Statista estimated the total global gambling market gross at $450 billion March 2019. In addition, Statista estimated the size of the online gambling market at $48.5 billion in March 2019. Plus Statista estimated the amount of money bet on one website; bet365, at $52.13 billion in 2015.
Importantly, the U.S. Supreme Court struck down a federal ban on sports betting in the United States on 14 May 2018, Business Insider reports. That means sport betting is legal in the United States, unless state law specifically bans wagering on sporting events.
Online Sports Bets could soon be Legal in America
By August 2019, 11 US states, including New York, had legalized sports betting because of the Supreme Court’s action. Furthermore, Business Insider claims 24 state legislatures are considering legislation to legalize sports betting.
Thus, a huge market for gaming altcoins could soon open in the United States. However, gaming cryptocurrency could violate an old federal law called The Wire Act of 1961. The Wire Act bans electric transmission of sports bets. The Trump administration claims The Wire Act bans online gambling but New Hampshire is appealing the administration’s ruling to the U.S. Supreme Court.
If the Supremes overturn The Wire Act, it could be legal to take online sports bets across state lines. Hence, overturning the Wire Act could open up a huge market for Gnosis’s conditional tokens. That market is purely theoretical because nobody knows how the Supremes could rule on The Wire Act.
However, there are many countries where online sports bets are legal including the United Kingdom. Thus, markets for conditional tokens already exist. I think one popular product could be a conditional stablecoin.
Stablecoins like Tether (USDT) contain a smart contract that orders a bank account to release payment in fiat currency. Hence, a conditional stablecoin could release payment in dollars or pounds if your bet is successful.
How Accurate are Prediction Markets?
I do not think prediction markets are as accurate as some people think because prejudices and limits in knowledge affect betters’ actions.
For example, Hillary R. Clinton (D-New York) was the fifth most popular bet to win U.S. Democratic presidential primary at the PredictIt prediction market on 30 September 2019. Yet Clinton is not running in the primary. In fact, Clinton publicly announced she is not running for President in 2020 in March 2019, The New York Times reports.
I think people bet on Clinton because they are unfamiliar with most of the Democratic primary candidates. For example, betters outside the United States are probably unfamiliar with PredictIt frontrunner U.S. Elizabeth Warren (D-Massachusetts). However, most literate people on Earth know who Hillary Clinton is.
Most Americans are unfamiliar with most of the primary candidates. So foreigners are probably more confused about the primary. However, the confused still bet on the PredictIt primary market which skews the results.
Hence, prediction markets could disappoint those expecting prediction markets to create accurate forecasts. Thus, I think there will be a major prediction market failure such as an inaccurate election forecast that could sink Gnosis’s value at some point.
Gnosis Could Have a Lot of Value
Gnosis (GNO) could have a lot of potential value because its builders are planning several interesting blockchain mechanisms that could make money.
Sight, for example, is a noncustodial and regulated prediction market that Gnosis will base in Gibraltar. Gibraltar is a British Overseas Territory in Spain that writes its own laws governing finance. Hence, Gibraltar is a popular location for overseas banking, cryptocurrency ventures, and gambling.
You could bet on the outcomes of multiple events and gain insight about behavior from Sight. However, no date for Sight’s for launch is available. Instead, Gnosis is collecting emails for volunteers for a beta test of sight. No date for the beta test is available.
Gnosis Apollo is a collection packages that could form a “build your own prediction market kit.” Anybody could build her own Prediction Market Interface or Prediction Market Tournament on the Gnosis Prediction Market Framework if Apollo works as advertised.
Can Gnosis Make Money from Dutch Auctions?
The DutchX is a fully decentralized trading protocol that Gnosis Limited designed to allow anybody to trade any ERC20 Token pair. They will base all DutchX trades on the “Dutch Auction” principle.
To clarify, a Dutch Auction reverses the traditional auction formula. In a Dutch Auction, the auctioneer starts the bids with the high price and lowers the price until she finds a buyer. Most Dutch Auctions have a reserve price; a low price at which bidding ends, to ensure the seller makes some money.
Ideally, Dutch Auctions, could be faster and more efficient than traditional bidding mechanisms. There are same famous Dutch Auctions including the Federal Reserve Bank of New York’s sales of U.S. Treasury Bonds.
I suspect Gnosis hopes to use DutchX to create sales platforms for bonds, cryptocurrency, fiat currencies, stablecoins smart contracts, equities, and conditional tokens. I think this market could be huge because they could theoretically build conditional tokens for stocks, and other equities.
Gnosis invests in developers with GECO
The Gnosis Ecosystem Fund or GECO is a venture capital funding mechanism and incubator for blockchain projects and developers. Teams can apply for grants of up to $100,000 that GECO will pay in Gnosis (GNO) tokens.
Gnosis developers will mentor GECO grant recipients. Additionally, GECO grant recipients can work at the Full Node coworking space in Berlin and present their projects at the DappConn developer conference.
Therefore, Gnosis could have access to a pipeline of future projects that could boost the GNO token’s value. In addition, Gnosis could add new blockchain apps developed by GECO recipients to its tokens first.
Is Gnosis a Good Cryptocurrency?
Presently, Mr. Market gives Gnosis (GNO) some value. Specifically, CoinMarketCap gave GNO a Coin Price of $14.60, a Market Capitlization of $16.129 million, and a 24-Hour Market Volume of $7,375 on 2 October 2019.
CoinMarketCap estimates Gnosis was the 163rdt ranked cryptocurrency on 2 October 2019. CoinMarketCap estimates there was a Circulating Supply of 1.05 million GNO and a Total Supply of 10 million GNO on October 2, 2019.
Notably, Gnosis is taking part in Bancor’s Liquidity Network. That means you can use Bancor to convert GNO into Ethereum (ETH), EOS (EOS), and ERC20 tokens that participate in the liquidity network.
Bancor gave Gnosis (GNO) a Coin Price of $14.59, a 24-Hour Market Volume of $413 and a Liquidity Depth of $34,936 on 2 October 2019. The Liquidity Depth is the buying power of the GNO tokens in the Bancor Liquidity Network.
I think Gnosis (GNO) is an interesting cryptocurrency with a lot of potential. However, Gnosis’s value will be purely theoretical until Gnosis Limited gets its projects like DutchX, Gnosis Apollo, and Sight up and running. Until then I advise speculators to stay away from Gnosis (GNO).