Quote from: gwern on April 30, 2014, 06:14:45 PM

That seems like a severe oversimplification, akin to describing the stock market as nothing but 'buying based on how you think others will buy'. Yes, there's elements of a Keynesian beauty contest, but the fundamentals still exist: dividends are paid out or not, companies go bankrupt or not, and any traders who are totally unmoored from reality will discover that the hard way.

The easiest way to predict the resolution the majority will choose is to simply look at what the reality is. *Was* Obama elected? *Did* Putin invade Russia? etc. The truth is the Schelling point for all voters; how do conspirators know which way to vote on what contracts? Their communication will be unreliable and harder than the truthful voters, who merely have to look at a data source to decide; combined with the incentive for each of them to defect and screw over their co-conspirators, this produces a fundamental bias towards the majority voting for the true outcome, which produces a fundamental that voters must acknowledge or lose money, which anchors the prediction markets & prevents them from spinning off into navel-gazing.

Just like Bitcoin: if you can trust the majority of hash power (vote power), you're fine. If you can't, you're not.

BUT this is not the issue I am talking about here.
The Truthcoin layer is utterly unnecessary for the PM! The prediction market (PM) exists in its own layer, following its own rules and inputs The TRC layer is added below it only to take 50% of the trading fee. TRC does not provide backing or input feed to the PM layer.(or any other usefulness to the PM layer that I can think of) It exists to serve its own existence and follows its own rules for shares redistribution -rules that decide who will get more of the next round commissions from the PMs trades
Let me put in different way being right or wrong how the others will vote determines how much you will get from the next trading fees on the PM. I still do not get what utility of truthcoin entitles it (its holders) to those fees in the first place.