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Prediction Markets: Tales from the Election

vitalik.ca

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Re: Prediction Markets: Tales from the Election

#11

Post by pdonis »

ErikAugust wrote: post #3

"The best way to predict the future is to create it." I always thought the the problem with prediction markets is you have the incentive to make the prediction come true. And that gets ugly fast. But hell, I guess that's what all this is at the end of the day.

> the problem with prediction markets is you have the incentive to make the prediction come true

If players in the market have ways outside the market to significantly affect the outcome that the market is betting on, then it isn't a prediction market. The whole point of a prediction market is that there is no such feedback mechanism.

For example, the article discusses prediction market bets on Trump winning the election. The underlying assumption of such markets is that no player has more than one vote in the actual election, out of some 150 million or so votes, so each individual player's ability to affect the outcome is negligible.

Re: Prediction Markets: Tales from the Election

#12

Post by solveit »

ahelwer wrote: post #6
ErikAugust wrote: post #3

"The best way to predict the future is to create it." I always thought the the problem with prediction markets is you have the incentive to make the prediction come true. And that gets ugly fast. But hell, I guess that's what all this is at the end of the day.

Yep, it clearly leads into assassination markets - for example, opening a large bet that person X will die on a specific date.

Yes, just like you can short Tesla and assassinate Musk.

This is ridiculous, regulate prediction markets like any other financial market (in particular, your identity should be traceable) and then all your clever plan does is get your funds frozen pending a very thorough investigation.

Re: Prediction Markets: Tales from the Election

#13

Post by ouid »

ahelwer wrote: post #6
ErikAugust wrote: post #3

"The best way to predict the future is to create it." I always thought the the problem with prediction markets is you have the incentive to make the prediction come true. And that gets ugly fast. But hell, I guess that's what all this is at the end of the day.

Yep, it clearly leads into assassination markets - for example, opening a large bet that person X will die on a specific date.

Isn't that just life insurance?

Re: Prediction Markets: Tales from the Election

#14

Post by solveit »

hatsunearu wrote: post #2

I considered myself pretty in-the-know and knew about Predictit, all kinds of crypto, and therefore I thought I was up-to-date on the crypto news but I did not even know that there was a crypto clone of Predictit. >blockchain-based markets are highly niche Not sure if he means if the whole of blockchain is highly niche or blockchain-based prediction markets are highly niche, but if it's the latter, I definitely agree…

Check out Polymarket, much smoother UX than Augur (at the cost of being more centralized, as I'm sure you guessed).

Re: Prediction Markets: Tales from the Election

#15

Post by Supermancho »

What I read was a story of making money from some niche prediction market sites (that I would never touch). There is also quite a bit of handwaving, eg "I saw more and more arguments from Very Smart People whom I respected arguing that the markets were in fact being irrational and I should participate and bet against them if I can. Eventually, I was convinced." and showing some math from trivial arbitrary scenarios the author poses (nothing to do with the story). This then dovetails into how ETH is a good bet because, they know some calculus? This is crypto-promotion, plain and simple.

Re: Prediction Markets: Tales from the Election

#17

Post by mbg721 »

ouid wrote: post #13
ahelwer wrote: post #6

Earlier quoted context omitted.

Yep, it clearly leads into assassination markets - for example, opening a large bet that person X will die on a specific date.

Isn't that just life insurance?

It sounds like term life for an unusually specific term. But you do typically have to have an insurable interest in order to buy insurance on someone's life.

Re: Prediction Markets: Tales from the Election

#18

Post by solveit »

IAmEveryone wrote: post #5

I've always had the impression that the cryptocurrency community was trending rightwards. So it's good to see some quantifiable evidence of it. Which leaves the question: why? Technology as a whole is centre-left, so there's something else going on. One common theme seems to a loss of trust in any institutions, and democracy itself: "the FED is just a private bank" isn't far away from "the mainstream media is lying",…

Crypto understandably leans libertarian, which is increasingly becoming orthogonal to the right-left axis of American politics.

Re: Prediction Markets: Tales from the Election

#19

Post by tptacek »

monkeydust wrote: post #4

>Blockchains are often criticized for being speculative toys and not doing anything meaningful except for self->referential games (tokens, with yield farming, whose returns are powered by... the launch of other tokens). There >are certainly exceptions that the critics fail to recognize; I personally have benefited from ENS and even from >using ETH for payments on several occasions where all credit card options failed…

It is in the same way drug bazaars are: states have been hesitant to regulate blockchain applications, so they're a form of regulatory arbitrage. Without regulation, nothing prevents conventional predication markets from removing limits.

Re: Prediction Markets: Tales from the Election

#20

Post by ahnick »

bigpumpkin wrote: post #7

One thing he didn't talk about was capital gains tax. If I wanted to bet on the election, I would first have to realize my short term capital gains.

He avoids capital gains in the article by using a MakerDAO CDP. This is a loan that is collateralized by his Ethereum holdings. (IIRC 1.5 ETH to the amount of DAI you want)
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