Ethereum (CRYPTO: ETH) creator Vitalik Buterin said on Sunday that prediction markets are “healthier” to participate in than regular financial markets.
Buterin Builds A Case For Prediction Markets
During a conversation on Farcaster, a decentralized social media platform, Buterin stated that prediction markets are bounded between 0 and 1, reducing risks such as pump-and-dump and speculative bubbles.
He also contrasted prediction markets with social media, where people can make “sensational” claims.
“In social media, lots of people talk about ‘This war will definitely happen’ and scare people, and there’s no real accountability: you gain clout in the moment,” Buterin said, specifically referring to Elon Musk’s post about a “civil war” in the UK.
Buterin stated that in prediction markets, wrong bets could lead to financial losses, which, over time, makes the system more “truth-seeking” and better at reflecting “genuine” probabilities.
On The Flip Side
On the negative side, he said that such platforms could, in theory, create incentives to do “harm” by allowing people to profit from bad outcomes.
When asked about a market where someone gets killed to influence a prediction market outcome, Buterin called it an “assassination market,” and he is opposed to it.
See Also: Binance To Rival Polymarket, Kalshi With Zero-Fee Prediction Market
Prediction Markets: The Next Big Opportunity?
Buterin was among the notable backers of Polymarket’s $70 million funding round last year, which also saw investments by billionaire investor Peter Thiel’s Founders Fund.
His endorsement comes in the context of the growing popularity of the trend of placing wagers on the outcome of events.
According to Dune Analytics, Polygon (CRYPTO: POL)-based Polymarket and Kalshi have processed cumulative trading volumes worth $39.86 billion and $22.96 billion, respectively.
Bernstein analysts remarked previously that prediction markets are evolving into an asset class, backed by capital, users, and regulatory support.
However, the rise has invited legal scrutiny, with many influential observers deeming them as “unlicensed sports betting operations” that violate state gaming laws.
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