Prediction markets and blockchain identity verification: Gnosis Olympia and uPort

Blockchain identity verification enthusiasts now have an opportunity to experience the process using uPort and Gnosis Olympia, a prediction market platform that uses cryptocurrency. Users can currently test the platform using play tokens. To better understand the user interface, I gave uPort and Olympia a try.

Prediction Markets on Blockchains

Prediction markets are nothing new. Participants have been buying and selling futures contracts on events and election outcomes at least since the 1800s. Predictit, run by non-profit Victoria University, allows users to buy shares in outcomes for presidential elections and other international political events. Correct predictions receive profits less a 10 percent fee; incorrect predictions receive nothing. Prediction markets have been reliable indicators of real-life outcomes, though trust is wavering due the unexpected outcomes of events like Brexit.

Olympia will offer prediction markets solely on the blockchain, with trades verified through smart contract transactions. Trades are made with OLY tokens.

uPort is a self-sovereign identity system built on the Ethereum blockchain—it allows users to manage their own identities instead of having them managed by a corporate or government entity. It also improves the user experience for Ethereum apps with a visual interface.

uPort uses Ethereum’s smart contract function to create a public registry that refers to data stored off the blockchain (the app requires significant data usage that isn’t suitable for the blockchain). The smart contract function also makes public key recovery possible. For example, if the user lost or changed phones, they would be able to change the key on their new device—very important when it comes to identity management.

Olympia is uPort’s first integration available for the public to try. It’s still in the testing phases, so expect a few changes.

Getting Started With uPort’s Identity Function

To use Olympia, users must have the uPort mobile app, available on iOS and Android. Creating an identity on uPort takes a few minutes and requires the user’s location, phone number, and fingerprint. Data is secured on the Ethereum blockchain with the fingerprint. As anyone with experience sending or receiving cryptocurrencies has experienced, manually finding and entering keys to conduct a transaction is cumbersome. uPort improves that experience through its user interface. Smart contracts work in the background to verify information and conduct the transaction. All the user needs to do is use the QR code and fingerprint function on their phone.

A public profile with name, images, and description is created with the uPort identity. Unlike many blockchain transactions, this user interface makes interaction more personal (like a Twitter profile). In the future users will be able to control what information in viewable on their public profile.

The Olympia Process

Once set up, users must go to the Gnosis Olympia website and sign in with their uPort account, which requires scanning a QR code with the mobile app. The app will then ask for verification before finalizing the connection.
uPort Interface Example

New users receive 200 OLY tokens, which are topped up every two days, to test out the system with. Each prediction tournament is easily viewable on the main page, and shows a short description and trading information, including a countdown for when the tournament will close.

Olympia Blockchain Preditction Example

Olympia features two types of contracts for tournaments: event contracts and market contracts. Event contracts can either be for scalar events (a number within a defined range, such as number of participants in an event) or categorical events (a list of outcomes, such as sports teams participating in a world cup event). Market contracts are always associated to an event and are funded with collateral tokens (the currency in which the event is traded). A bot called a Market Maker sets the pricing for outcomes based on the current state of the market.

It wasn’t immediately obvious where to enter the amount of tokens to buy for a tournament, but once the amount is entered more information calculates to show the potential outcome of a bet if it’s successful. Once the “buy tokens” button is clicked, a QR code appears that must be scanned through uPort (there’s a small icon at the top left of the app to open the QR code reader). There are two separate transactions. The first scan sets the allowance (how much the smart contract can spend) and then the user must close that one and open a second scan for the actual token offer. A user unfamiliar with blockchain smart contracts could be confused with this two-scan process as it looks like the user is being charged twice; however, a helpful Gnosis team member named Mikhail assured us that Gnosis will be revisiting the user experience to clarify the distinction. On the positive side, the whole process only takes about 30 seconds and besides opening the QR reader and scanning their fingerprint to verify the transaction, the user doesn’t need to provide any further information.

Olympia QR Code

Now the contract is signed and the user waits until the tournament closes, after which they will find out if their prediction was successful or not. The smart contract function will automatically settle bets and distribute tokens as specified in the contract. Users also have the option of buying and selling tokens during the tournament if they want to bet on both outcomes or change their mind entirely based on external information. For example, if the prediction is that a platform will grow to 10,000 users by a specific date and a participant can clearly see the platform’s very close to that number already, they can trade some of their tokens from one outcome to the other. As with any betting system, incorrect predictions win nothing.

Olympia Outcome ExampleThe visual experience of interacting with uPort to sign smart contracts was overall positive. Quick and seamless, it can provide a way to build trust with new users who are unfamiliar with transactions on the blockchain. There are no receipts stored on uPort to view previous transactions, though users can view their previous trades on the bottom half of the dashboard screen on Olympia.

The experience is helpful in understanding what it will be like to verify a digital identity and transactions attached to it on the blockchain. It’s not as quick as tapping your credit card on an Interac machine, but it’s much quicker and more convenient than creating new accounts on several (unsecure) platforms, uploading a front and back scan of an identity card, and managing passwords on each of them.

About the Author

Rikki Ayers is a writer with ITFO Communications, focused on cryptocurrency and blockchain as well as how technology impacts financial services and public service industries. She has a decade of communications, digital marketing, and writing experience and a BA in Professional Communications from Royal Roads University.

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