Yeah, I do have a problem with BTSX too. For me, mostly because of how it fails to provide an adequate solution to the naked short. You can be forced to provide a certain amount of collateral, but when there is no upper or lower bound on the possible price, no amount of collateral is enough to prevent a short squeeze that is large enough to break the system and crash the value of BTSX. BTSX can't be used to track things that could be highly volatile, which is also why it appears to be somewhat difficult/expensive to create a BTSX asset. I would argue with a prediction market though, there is no need to have any mechanism to control volatility (like their delegation system), because there is always a fixed range on the possible values of an asset. Both the 'long' and 'short' sides have a finite, opposite, risk. They are opposite sides of the same coin. Any attempted manipulation towards the wrong answer would be unsustainable for the reasons described previously. The actual value of the CashCoin, of course, would certainly come into play -- but I'm not sure I'm convinced yet that a malicious attack on a market could cause a crash of the value of the coin so long as the attack is guaranteed to be doomed to failure because of the market mechanics.
BTSX is not built for prediction markets. Nxt has a different approach, but from what I can tell, Nxt assets are not conducive to prediction markets either because they require the asset owner to issue shares as opposed to the shares being created by the market participants and whose properties and txn fee behavior is determined by the definition of the market. See NXT asset id: 10185950182542481875 (DemPOTUS16) and 1115687958997024723 (RepPOTUS16):
"Issuer will seek to maintain inverse parity between the two assets. Issuer will seek to distribute the assets at prices comparable to external prediction markets. Issuer commits to buy back all shares of the "correct" asset upon resolution at 100 NXT and will reserve sufficient funds to do so."
Dafuq? Why should the issuer be responsible for issuing prices comparable to external markets, maintaining inverse parity, and buying back the correct asset? That could all happen automatically in a decentralized manner. No wonder this asset never went anywhere.
I can certainly say, ever since the demise of Intrade, at least in the US there has been a very strong demand for another comparable option that isn't a sportsbook with house odds. It would not surprise me if there would immediately be a significant amount of interest especially in the political markets, if there were a system such as TruthCoin that is built specifically to be a prediction market and also happens to be immediately available to all bitcoin users. Even if CashCoin were to have $0 market cap, because current bitcoin users are getting their initial CashCoins for free. It would be an entrepreneurial chance to gain more CashCoins which have the potential to appreciate significantly in value, while having nothing to lose.
You may still disagree (perhaps for good reasons I am not seeing yet), but I am interested to listen to your continued thoughts whether here or on your blog ---