Betting is one of the most lucrative industries in the world, though there’s nothing particularly new about that. But having a betting market where you can ostensibly bet on the outcomes of anything, with the security of blockchain technology, is new.
That’s where Polymarket and other prediction-market platforms come into the picture, allowing you to bet on something like who is going to win the US federal election. But how does Polymarket work, is it a good thing, and will it last?
How Does Polymarket Work?
Polymarket is a decentralized exchange (DEX) and prediction marketplace built on the Polygon blockchain network, where users can bet on the outcome of events such as the outcome of the US federal election, who will win the Super Bowl next year, or whether there will be a military response in the Middle East.
Each bet has a total value of $1, with the price being then split between the potential outcomes, often seen as “Yes” and “No” shares.
For example, if you think that the Kansas City Chiefs will win the Super Bowl next year, then you would buy “Yes” shares at whatever their market price currently is. If that was 13 cents a share, then you have the potential to profit 87 cents per share if the Chiefs do in fact win the Super Bowl.
Polymarket traders are then looking to bet on things they believe are currently incorrect odds in order to make profit on a trade. You can sell your shares at any time until the event is decided, meaning you can sell shares you bought at a loss, or for a profit, before the event locks in the results.
Essentially, you are able to bet on whether you think the news and media is correct in their assessment of stories, leading Polymarket to call themselves “the future of news”.
Is it the Future of News?
The idea that prediction markets could be the future of news is a bit of a dangerous idea, much for the same reason that centralization of media outlets has been a bit of an issue when it comes to reporting biases.
Someone with enough money could easily swing prediction markets one way or the other, which could sway public opinion if users think that the “majority” think something is going to happen.
Manipulation of news and the truth aside, money does tend to talk, meaning people tend to be more honest when money is involved. Prediction marketplaces such as Polymarket create a place where people have to put money on the table to back up their statements, and this often can result in a more honest accounting.
It’s worth noting that betting on election results has long been illegal in the US, which is why US users can’t even use Polymarket.
Competition Coming?
Though Polymarket is currently stealing the show when it comes to prediction market platforms, there may be competition on the horizon. Vega, a blockchain network backed by Coinbase, is getting a major upgrade, and its decentralized perpetuals exchange will allow users to bet on the outcomes of future events in a similar manner to Polymarket.
If prediction markets continue to be lucrative, then more platforms will likely consider adding such an offering.
Closing Thoughts
Morality of gambling aside, blockchain is one of the best places for this sort of market to exist. The ability to look at the public ledger and see how bets have been placed, while also knowing that the platform will pay out through smart contracts creates a reliable platform for betting.
Though there could be manipulation of public opinion through markets like these, that’s not much different than how the mainstream media works anyways. Hopefully, marketplaces like Polymarket will help lead to more honest news outlets.
