Just like the bitcoin network does something much greater than the sum of its parts, so the decentralised prediction markets platform developed by Augur aims to give us a glimpse into the future.

Prediction markets harness the wisdom of the crowd to make stunningly accurate predictions. They have a colourful history, particularly in the US where people have traditionally used them to bet on the outcomes of presidential elections.

Entirely decentralised, globalised and honest by design – the Augur Project is taking prediction to the next level. Its potential scope is vast: "Two minds are typically better than one - and a thousand, or a million, or a billion minds are even better," states Augur.

In recent decades predictive marketplaces trading in what amounts to futures contracts have come under regulatory scrutiny. But interestingly, waivers have also been granted in some cases as authorities acknowledge the social good these markets can provide; their uncanny ability to make society more aware of itself.

Peronet Despeignes, SpecialOps, Augur, told IBTimes: "The whole point of creating prediction markets is to elicit information, intelligence, insight in to what is going on out there.

"Most of us are confined to the world we live in - where you live and what you do kind of restricts what you know. A prediction market - I kind of like to describe it as the Borg. But not a malevolent Borg ... a good Borg.

"The Borg had complete awareness of everything that any member of the Borg was aware of, and I think there is something to be said for how human kind could advance a little bit if we found a way to share our awareness and knowledge much more quickly and easily and honestly."

Augur, which begins a crowd sale of its reputation token (REP) on August 17, is one of the most keenly anticipated decentralised apps on the Ethereum network. Some 11 million REP will be issued, with 80% (8.8m) earmarked for the public, 16% (1.76m) for the developer team and advisors and 4% (440,000) for the Forecast Foundation.

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Tony Sakich, director of marketing at Augur said: "The reason we chose the crowd sale is because it really is the only way we could distribute these tokens, which need to be in existence to make the system work."

"It's a complicated issue there, but that is something we have tried to hammer home."

Despeignes added: "People value what they pay for generally, whether it's with money or with other things and we need to be very sure that the referees who are selected, basically by purchasing reputation tokens, are revealed by their decisions to demonstrate that they value this platform and they value its integrity. So the crowdsale is a way of determining who really values the platform."

As far as simple metaphors go Augur can be understood as a cross between prediction market Intrade and BitTorrent. The Alpha has been out for a few weeks now and users are already starting to interact with the concept in surprising ways, having been given the opportunity to decide what prediction markets they are interested in seeing speculation about.

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Regarding the Alpha stage Despeignes said certain aspects of the code are somewhat complex: "You only get closer to perfection through trial and error and you don't know what you don't know until it's actually tested by larger audiences. That's kind of the nature of the beast.

"We are not going to sugar coat the fact that these are new technologies and we are dealing with new paradigms that have never been brought into reality before.

"We are working through that; Ethereum is certainly working through that and have made huge progress over the past year and that progress is going to continue."

Part of the Augur crowd sale will fund an extensive and expensive security audit of the entire system with third parties and reputable hacker security audit companies.

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"We want to make this so you don't have to be a huge bitcoiner to be able to use what we are doing. It does take a while to get there because it takes development. When we are in Alpha we don't want to mess with people's real money so it's all play money at this stage and it will be that way until we are 100% sure that the market is ready," said Despeignes.

The goal the company has set, is to get this up and running and enabled and live before the presidential season in the US really gets underway.

"I think the current dates are for us to be in Beta somewhere in the fall, maybe later fall, and to be fully live winter, end of 2015, early 2016," he said.

Augur runs on code and decentralised consensus like bitcoin, so it eliminates middlemen and counterparty risk. No human has access to money flows and the custodial holding of funds during any transitional period is taken care of by code on a blockchain.

This decentralisation extends to the referees who report the outcome of events, as opposed to a single person or company. This large group of holders of reputation make decisions. But this is not simply calculated through an average of votes; a sophisticated set of algorithms is involved, which one of Augur's lead programmers Dr Jack Peterson elegantly describes as a "lie-detector".

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It views packages of decisions every month or two months, and determines how people have voted across multiple decisions, to reveal which voters regularly stick out like a sore thumb from the consensus. It then reduces their voting clout by reducing their reputation.

"There are built in incentives for people to behave properly here. I think that's one of the other intriguing things about the platform; it's a very carefully crafted set of incentives. This is more than just computer science. It's game theory: economic incentives in general, game theory in particular,"

The basic breakdown of revenues is 50% for the person who creates the market, and 50% distributed to the reporters, and this latter is proportioned according to the amount of reputation each voter has.

The 50% that goes to a market creator incentivises them to create markets that will generate activity and liquidity. A market creator has an incentive first of all craft questions that people will have confidence are questions that can be answered definitely with a "yes" or "no".

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The split of the revenue means market creators are also given the incentive to offer initial liquidity to get people interested in participating in the markets.

Augur was originally expected to be on bitcoin but a later a strategic decision was made to build on Ethereum until bitcoin sidechain capability was ready.

"I think the general point is that Ethereum is the best available immediate option to build a complete solution now but the intention has always been to have the platform be bitcoin ready as soon as bitcoin is ready via sidechains.

"Ultimately the goal is for the platform to be cryptocurrency agnostic. Note that the Ethereum platform will allow for the creation of currencies and currency proxies beyond ether," said Despeignes.

In the past some controversy became attached to prediction markets as people fielded unethical questions, such as asking about the likelihood of a terrorist attack. As well as yes or no, Auger has a third option which is when a market has been uncertain or unethical.

If something could be deemed unethical reporters should consider this carefully because even if they are not personally offended, their reputation could be damaged if others are offended and they didn't flag it.

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The Commodities and Futures Trade Commission has stumbled into a regulatory lacuna with blockchain technologies and the vigorous activity happening with decentralised exchanges of all kinds for stocks and bonds and also predictions.

Despeignes said: "Our platform is so different from what the CFTC have envisioned that they face some serious jurisdictional and definition questions - there is basically no middle men.

"This is an opensource and project and is basically available to anyone and everyone who has questions about it and what we are doing and the code is there.

"It is certainly one of our hopes that prediction markets can do a lot of good in the world. I see the world as flying blind on a lot of different fronts - economic fronts, financial fronts, on geopolitical fronts."

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Augur said individual exchanges will decide when and whether they will make reputation tokens available for exchange. Using ether tokens as an indicator, it would seem exchanges are likely to jump on pretty quickly because everyone is generally excited about Ethereum.

In terms of the number of users the network could eventually encompass, Despeignes said at the moment there is no clear idea of that.

Sakich added: "We are optimistic but we don't know so we don't want to count our chickens - maybe someone should set up a prediction market."