Quality prediction markets have always been one of the "need to haves" for cypherpunks. These type of markets have been neutered by the State and the financial system up to this point. To date, the barrier to entry for creating these markets via the traditional financial system is very high. To the point where it has been impossible. If someone were to erect these markets and try to accept payments via the traditional avenues that money moves through, they would be quickly shut down.
Now that bitcoin exists, shutting down one of these markets has been made much harder because it's really hard to prevent people from sending bitcoin transactions. Decentralization and disconnection from the traditional rails FTW!
Over the years, many have tried to create decentralized versions of these prediction markets, but have failed to garner any meaningful liquidity or usage. Highlighting a very hard bootstrapping issue these "dapps" have experienced and will probably continue to experience for the foreseeable future. Enter FTX, a derivatives exchange that allows individuals to trade bitcoin and other cryptocurrencies on margin. As you can see from the tweet above from my co-host Matt Odell, FTX recently launched a US Election prediction market run on futures contracts. Giving individuals outside of the US (ironically), Canada, The EU, Hong Kong, the UK, Singapore the UAE, and Cambodia the ability to bet on who will win the election using bitcoin.
Why is this important, you may ask? Liquid prediction markets on elections like the one FTX is currently offering will provide much better signal on who is likely to win the election in the minds of the masses than any poll provided by the media can possibly hope to do. When people have skin in the game in the form of (the hardest) money on the line, they will be much more honest with their votes than they would if they had a mic or survey shoved in their face by people conducting polls. On top of this, the bias that creeps into traditional polls via media bias and bad sample sizes should be eliminated.
No more waiting for a few days or a week for the next poll to be released. The liquid prediction markets enabled by bitcoin will provide much better signal and will be materially more reflexive to real time developments than a poll could ever be. For example, here's what happened the other night when Mikey Bloomberg got his dick pushed in on during the Democratic debate.
As Mikey was getting ethered on the stage, individuals trading the election futures on FTX were reacting in real time and providing real time "polling" information about his chances of winning the election. As you can see, his chances took a pretty big hit. We'll probably find this out via polls at some point early next week.
The future is here, and it's way more efficient.
With all of this being said, FTX is still a centralized entity that could be shut down for a number of reasons, so this particular market isn't iron clad. However, it is a step in the right direction towards freer markets.
Natural light in the apartment. Essential.
Enjoy your weekend, freaks.