What Are Prediction Markets?

Explanation of the concept of prediction markets and description of their working process, overview of their advantages and disadvantages, the way of cooperation between prediction markets and blockchain, the list of examples of prediction markets powered by blockchain.

Prediction markets have been in existence for decades, but with blockchain-related inventions leveraging the concept, a new level of excitement about prediction markets has been reached. Today the potential impact of prediction markets could go far beyond betting.

A prediction market is a collection of people speculating on the outcomes of events. A prediction market is an exchange where people trade contracts for future events. These events may include sales of a company, stock price fluctuations, elections, weather changes, or any other event where the result can be objectively verified. The main purposes of prediction markets are to aggregate public opinion and to estimate the probability of an event.

How do prediction markets work?

Prediction markets award users for correct predictions.

Let’s say, there is an election. A prediction market issues to types of contracts: A-contracts for Candidate A’s victory, and B-contracts for Candidate B’s. When the elections are over, the prediction market will pay users $1 for each winning contract they hold, while losing contracts will be worth nothing. Most users think that Candidate A will win, so they buy as many A-contracts as they can. The demand for A-contracts increases, and so does their price. If an A-contract trades at 78 cents, then we can say that Candidate A will win with the approximate probability of 78%. Respectively, a B-contract costs 22 cents, and Candidate B’s chances are 22%. You buy 10 A-contracts for $7.8, and if Candidate A does in fact win, you are paid $10 for your 10 contracts. Thus, you made a profit of $2.2.

What do they have to do with blockchain?

Prediction markets operate by the Wisdom of the crowd principle. This idea suggests that a group of people are right more often than any individual within that group. The group can give more correct answers than any of the group members. This is why prediction markets are a powerful prognosis tool.

Prediction markets have been around for decades. However, they all had one crucial flaw — the outcome of an event had to be verified by a person. The human factor implied that there could be mistakes, lies, manipulation, and corruption.

Blockchain revolutionized prediction markets such that they no longer need to rely on people to confirm events. Now prediction markets use oracles that automatically record real-world data onto blockchains for safe untamperable storage. Blockchains allow prediction markets operate in a completely decentralized unbiased way.

What are their flaws?

One problem with prediction markets that is still relevant is how they should be treated. Some governments see them option markets, others recognized them as betting markets. This creates a lot of confusion when it comes to regulation.

Prediction markets also pose a threat of controversial incentives, such as assassinations and terroristic attacks. For example, a market can predict a death of a political figure and, thus, creating an incentive for murder.

What are some examples?

Augur is an automated prediction market built on the Ethereum network. The platform has no fees and does not manage trading operations. Its developers cannot modify smart contracts or spend funds held in contracts. Behind Augur is a non-profit organization called The Forecast Foundation.

Gnosis is a prediction platform that aims to serve financial, insurance and information markets. They also want to aggregate data produced by artificial intelligence to provide highly accurate results.

Another example is Stox, a decentralized platform that aims to bring prediction markets to mainstream audiences.

Related news

Japan Plans To Build A “SWIFT-LIKE” Blockchain Payment Network

According to an insider familiar with the matter on Thursday, the Japanese government is leading innovation to build a payment network for cryptocurrencies similar to SWIFT used by banks. This news comes in an effort of the Japanese government to fight financial crimes and money laundering. According to the report,  these are issues resulting from either the adoption and/or use of the blockchain and cryptocurrencies in the region. As the innovation is yet to be made public. The insider source, whose identity is not certain for security reasons, clarified that the innovation is in active development. The new crypto payment system would allow for a much easier mode of settlements, transaction speed, and cost-effectiveness. According to the source, the Japanese government aims to corporate with other countries in achieving this accomplishment. The developments would be monitored by the Intergovernmental Financial Task Force (FATF). The development, according to the report was proposed by the Japanese Ministry of Finance and approved by the FATF in June of this year and plans of implementation have since then begun. Japan is known to have widely adopted the blockchain technology and made many innovations from its building blocks. The country leads a pack including other countries which have active blockchain and cryptocurrency regulatory practices and allows for active developments in the blockchain and crypto space. Although recently, Japan was one of the countries which disapproved of the much controversial Facebook cryptocurrency, Libra. The Bank of Japan (BoJ) too recently went against the idea of central banks developing national cryptocurrencies. The nation has been investing heavily in developing itself using the blockchain as a means of substantial economic growth and developments. At the moment, no regulatory measures have been taken by the country’s Financial Service Agency (FSA) and how this new crypto payment network would be regulated. The post Japan Plans To Build A “SWIFT-LIKE” Blockchain Payment Network appeared first on Coingape.
CoinGape

OWN | BlockchainBrad | Blockchain based Next Gen. Digital Investment Platform | Stock Exchange News!

Blockchain Brad speaks with OWN CEO Sascha Ragtschaa about the Next Gen. Investment for the Digital Generation: the OWN Investment platform! Own are owning the investment space and soon they will have their OWN Stock Exchange! Their technology enables businesses, especially SMEs, to create digital ‘tokens’, which investors can then purchase. Companies can digitise previously unbreakable assets, which can then be traded through the OWN platform. Because these assets are digital, investors can choose to purchase a fraction of a token to fit their budget, which makes investing really affordable. ●▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬● Links: Website: https://weown.com/about-us Twitter: https://t.me/OwnMarket Medium: https://medium.com/ownmarket Telegram: https://t.me/OwnMarket ●▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬● ►Join The BCB Tele https://t.me/BlockchainBradCommunity ► Follow on twitter: https://twitter.com/Brad_Laurie ► Join BlockVera on twitter: @BlockVera ► Check out BlockVera on youtube: https://www.youtube.com/watch?v=Af4pD... ●▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬● Every company or investor that registers for the OWN platform is given a unique login, which takes you to a dashboard, where you can create or invest in offers. You will also gain access to all of OWN's management and engagement tools, to channel all communications and activities through a single, online portal. OWN's digital platform is built on a bespoke blockchain, which ensures that all transactions are secure, quick and reliable. It also enables them to be highly scalable, so that quality of service is never compromised as more people start using us to fundraise. By building our own blockchain, the OWN team know it can function exactly as intended: to enable speedy, secure transaction processing, and scalability as OWN's user base grows. ●▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬● PAYMENT/DONATION DISCLOSURE: This interview was entirely, 100% free in every way, not tokens, no under the table deals. I have done several free videos with OWN because I believe in them. I believe that sponsored content is not a problem if disclosed openly to the community. This is not Financial Advice. Please #DYOR ●▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬● INVESTMENT DISCLOSURE: I have invested in CHX. This is not Financial Advice, but I really believe in this project. #DYOR always. ●▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬● #digitalinvestment #OWN #CHX #BlockchainBrad #OWNplatform #OWNinvestment #OWNit #OWNyourfuture
Blockchain Brad

Hot news

By continuing to browse, you agree to the use of cookies. Read Privacy Policy to know more or withdraw your consent.