Maris Research

How Crypto Transforms Prediction Markets

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Prediction markets are speculative platforms where traders can place bets on the outcome of future events, such as “Will Joe Biden win the 2024 presidential election?”. If their bet was correct traders earn money but if they are wrong they lose the wagered amount.

Users obviously want to make money from these markets, which include PredictIt and Iowa Electronic Market. But the reason the type of prediction market has drawn so much academic interest is that they have a solid track record of making correct predictions, sometimes even predicting the future.

Some believe crypto assets can play a role in improving these markets. Right now the markets are highly regulated in the US, and participating in them costs relatively high fees.

Advocates argue that cryptocurrencies can dodge these issues. That’s because with cryptocurrencies users don’t have to place trust in a central entity. With Ethereum, the idea is the rules embedded in its code can guide certain actions in the project.

To test out this lofty hypothesis, a few prediction markets, including Augur and Omen, are now deployed on Ethereum.


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How do cryptocurrencies improve prediction markets?

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