Augur is a Decentralized Prediction Market Platform. Augur open-source platform is built on top of the Ethereum blockchain for any and all predictive markets, intended to revolutionize forecasting, decision making, and the manner in which information is collected and aggregated.
White Paper: http://www.augur.link/augur.pdf
Prediction markets allow their users to buy and sell shares in the outcome of an event. The current market price of a share is an estimate of the probability of an event occurring.
Historically, prediction markets have fallen short due to dated jurisdictional regulation, lack of volume due to limited payment options, a paltry number of markets, and sometimes even paying out the wrong people!
The root of these problems stems from centralization — an issue solved by blockchain technology. Augur's prediction markets try to eliminate the inherited risk of counterparty and centralized servers, creating a global market by employing cryptocurrencies including bitcoin, ether, and stable cryptocurrencies. All funds are stored in smart contracts, and no one can steal the money.
Augur's interface is currently in English, but there are plans to make it available in other common languages, starting with Chinese and Spanish.
So, what is Reputation (REP)?
REP is the first decentralized oracle solution ever implemented. It allows its holders to report on the outcome of events in Augur’s prediction markets, and rewards them for honesty, and regular reporting, with half of all trading fees on the platform.
One of the most important features of decentralized and blockchain-based technologies is that there exists no single point of failure in a system. There is no server that can be shut down, no head that can be chopped off. It is an uncensorable oracle. An oracle is any mechanism that provides answers, such as a third-party API for sports games or news, or Siri on iPhones, when she decides to be useful.
Those who had purchased REP will be required, every eight weeks, to participate in a reporting period, and during that period, spend what should take no more than an hour, to report on a random selection of prediction markets that have expired in the past eight week period. This allows Augur’s prediction markets to be closed and resolved in a fully distributed manner.
During the crowdsale of REP 4,550 accounts were created to report on events, raising above $5 million. This great number of people, together with the randomization of markets being reported on, ensures that events are reported as honestly as possible (hence the name “Truthcoin”). Additionally, a simple cryptographic commit and reveal prevents people from credibly revealing their reports before consensus, although we'll have to come up with a different solution once zero knowledge proofs become easy to compute.
For a more detailed information on reputation you can read this blog