Prediction markets are specialized betting platforms with a wide range of uses, from insuring crops against bad weather to predicting event outcomes based on crowd wisdom. They are also commonly used for hedging investments, shorting the market, creating futures markets, and forecasting election results. Given the success of blockchain projects in fintech, prediction markets could become very successful and complement the existing fintech ecosystem.
How do prediction markets work?
- A participant creates a “market” by defining an event with multiple possible outcomes. For example, “Will Donald Trump be impeached before his term ends?”
- Participants place bets by answering “yes” or “no,” specifying their probability estimate and the amount of money at stake.
- Bets are matched when opposing bets are made. For instance, if someone bets $1 with a 70% chance of “yes,” the bet will be held until another participant bets at least $1 with a 30% chance of “no.”
- Before the market closes, participants can buy or sell their bets at adjusted prices based on market expectations.
- When the event concludes, such as Trump finishing his term or being impeached, the winning bets are paid out.
After testing various blockchain-based prediction markets for over two weeks, I found that many platforms still have significant usability challenges and limitations. Additionally, slow blockchain transaction times and low liquidity make these platforms impractical for real-world use, such as shorting the market.
Table of contents:
- Betting currency: The coin used for placing bets.
- Dispute and Market creator coins: Coins used to resolve disputes and create new events. These coins may differ across platforms.
- Participation rewards: Rewards earned for specific actions.
- Dispute mechanism: Indicates if the platform has a process for resolving disputes over results.
- User reputation measurement: Tracks the accuracy of participants’ predictions.
- Market creation: Specifies if all users can create new betting markets.
- Probability vs. result: Indicates if participants can set the probability of an event or only bet on the outcome.
- Sell bets before market closes: Shows if users can sell their positions before the event ends.
- Multiple options bets: Indicates if the platform allows betting on more than two outcomes.
- Application status: Current state of the software.
- Application type: Whether the platform requires installation or is web-based.
- Blockchain network: The blockchain on which the platform is built.
- Coin holders: Number of users holding coins on the platform.
- Foundation date and Initial investment: Year of creation and the initial capital raised.
- Where does it work? Regions where betting is allowed on the platform.
Company,"| href=""https://www.augur.net/"">Augur"," | href=""https://www.stox.com/"">Stox"," | href=""https://www.bodhi.network/"">Bodhi"," | href=""http://amoveobook.com/"">Amoveo"," | href=""https://gnosis.pm/"">Gnosis",,,,,,,,,,,,,,,,, |
| | |||
|---|---|---|---|---|---|---|---|---|---|
| Betting | Currency,ETH,STX,QTUM,mVEO,OLY | ||||||||
| Dispute and Market creator Currencies,REP,none,BOT,none,GNO | |||||||||
| Participation | rewards,"market | creator | gets | a | fee | ||||
| he | sets | between | 0 | and | 50% | ,none,result | settlers | split | 1% |
| of | loosing | bets",none,"to | be | decided | |||||
| by | market | creators" | |||||||
| Does | it | have | a | dispute | mechanism?,yes,no,yes,no,yes | ||||
| Does it have a user reputation measurement?,no,yes,no,no,yes | |||||||||
| Can | anybody | create | a | market?,yes,yes,yes,yes,no | |||||
| Does | the | better | choose | probability | or | result?,probability,result,result,probability,result | |||
| Can bets be sold before the market closes?,yes,no,no,yes,yes | |||||||||
| Does | it | have | multiple | options | bets?,yes,yes,yes,no,yes | ||||
| Application | status,live,live,live,live,beta | (test | network) | ||||||
| Application | type,webpage,webpage,"desktop | ,webpage,webpage Blockchain network ,Ethereum,Ethereum,Qtum,Amoveo,Ethereum Coin holders,5196,17687,33102,2680,10088 Foundation date,2014,2015,2017,2018,2015 Initial Investment,5.3 Millons,43.5 Millons,33.3 Millons,0 U$ (open source),12.5 Millons Where does it work?,Worldwide,Worldwide,everywhere | but | US, | |||||
| China, | and | Singapore | ,Worldwide,Worldwide |
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Disclaimer: CoinFabrik does not provide financial advice. This material has been prepared for educational purposes only, and is not intended to provide, and should not be relied on for, financial advice. Consult your own financial advisors before engaging in any investment.
