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.