In the following article, I will explain how it is possible to achieve a perfect corruption using anonymous predictions markets.
This concept is not new and has been already described by Timothy C May in The Cyphernomicon and Robin Hanson in Futarchy - Vote Values, But Bet Beliefs
For the illustration, I am going to demonstrate how anonymous predictions markets can significantly disrupt any parliamentary democracy system. Of course, this mechanism can be used to any authoritative, hierarchical organization where only a few people have the power.
Truly anonymous cryptocurrency – any cryptocurrency with fungibility feature (e.g., Monero, Zcash, Zcoin, etc.)
Anonymous prediction market – any market that accepts truly anonymous cryptocurrency and is accessible through onion / i2p address (using Tor/I2P) (see also fully decentralized prediction markets Augur and Gnosis that cannot be regulated or shut down by governments).
Before anonymous prediction-markets (current) society
The governments have a monopoly for legislation and regulations. This monopoly is often exploited by corporations leading to the corporatism. This effect can be seen in all countries worldwide.
At this time only particular groups of lobbyists/corporations can corrupt politicians (including members of parliament). It is caused by the fact this lobby requires a lot of the mutual trust. Therefore the corruption is strictly limited to government-friendly financial/lobbyist groups.
Post anonymous prediction-markets (futarchy) society
Anonymous prediction-markets introduce something that was not possible in the past and thanks to truly anonymous cryptocurrencies and prediction markets, is technically feasible now – the creation of fully anonymous economic incentive.
Thanks to this property, the prediction markets allow democratization of corporatism. Anyone can make an anonymous incentive to corrupt the politicians. Technically this can be achieved by prediction markets.
Disrupting the parliament democracy election
Voters in the democratic election use multiple polling places where they cast their ballots. Thanks to the anonymous prediction markets, it is possible to make an anonymous economic incentive to manipulate elections inspectors or poll workers to "make the right winner" (e.g., party X) at the given polling place.
If you want to increase the likelihood for your party X to win in the given polling place, make a bet, e.g., 1000 XMR (what is almost $100 000) that the party X will not win. If it is not likely that the given party wins in a normal way, you make a strong economic incentive for election inspectors or poll workers to manipulate their polling and make the opposite bet that the party X will win. In this situation, they can gain the reward in an entirely anonymous way. It is impossible to prove the election inspectors or poll workers took the bribe.
The same "betting" technique can be used in all polling places in the country. Depending on the fact how it is likely that the party X will win in the given place, considering as well the fact how easily corrupted election inspectors or poll workers can be in the particular area, it is possible to set up the suitable „bets“ on the anonymous prediction markets, e.g.
1000 XMR (approx. $100 000) that the party X will not win in the village A
5000 XMR (approx. $500 000) that the party X will not win in the small town B
20000 XMR (approx. $2 000 000) that the party X will not win in the city C
In addition to these bets at the regional level, you can make „huge“ bets on the country level, e.g.
1000000 XMR (approx. $100 000 000) that the party X will not win in the country S
Huge bets can create a significant incentive for many people to collaborate, to make an opposite bet, gain the reward a divide it to each participant.
Corrupting the politician /member of parliament
In addition to prediction markets that can manipulate regional or national elections, the anonymous economic incentive can also be utilized to corrupt any politician/member of parliament. In the situation when the voting is public, and it is known how each member of parliament votes, it is possible to make a bet, e.g., 1000 XMR (approx. $100 000) that the given member of politician will vote / will not vote for the proposal P. It creates the anonymous economic incentive for the politician to make the opposite bet and gain the reward.
Besides anonymous bets for the vote of each member of parliament, it is possible to make a bet for votes of the majority of parliament members (e.g., for the given party) or all members of the parliament. Thanks to this, it is possible to create the strong incentive for many people to cooperate and subsequently to divide their win.
For the first time in the history, it is feasible to achieve an anonymous economic incentive leading to fully anonymous corruption & bribes with the impossibility to identify those who corrupt as well as those who accept bribes.
The perfect corruption allows democratization of corporatism – everyone can create an anonymous economic incentive and be both bribe provider and receiver.
People perceiving the corruption as something horrible may be concerned about this „democratization process.“ It is necessary to realize that thanks to the prediction markets significantly more people can be involved in this process with their real „skin in the game“ reflecting their actual beliefs, probably leading to futarchy.