What is a Prediction Market?
And why use a prediction market?
Prediction markets are open markets where specific outcomes can be predicted. Essentially, they are exchange-traded markets created for the purpose of trading the outcome of events. The market prices can indicate what the crowd thinks the probability of the event is. Unlike traditional methods where individuals cast votes or answer polls, traders who have more insights and knowledge on a particular event will tend to place larger bets. This process eventually leads to an equilibrium of probability, reflecting the collective wisdom of the market participants.
Prediction market have been shown to be a valuable tool for combating fake news and providing more accurate information, but they have historically faced legal hurdles when involving real currency. Despite this, they have consistently demonstrated a higher degree of accuracy compared to expert opinions and polls.