Prediction Markets and Cryptocurrency
Link: https://www.cryptocoinsnews.com/ethereum-based-prediction-market-moirai-become-one-first-regulated-icos/
As we discussed prediction markets in class, there are many applications of this market in decentrailized institutions such as bitcoin and ethereum. One such initiative which is gaining significant traction is called Moirai, an ethereum-based prediction market. Moirai has been fighting very hard to obtain licenses that can help it become one of the first legally regulated ICOs (initial coin offering) in the market, and this in turn will allow it to be one of the first legally regulated prediction markets. Interestingly, there is stark criticism about the idea of prediction markets in cryptocurrency. This is primarily because of the fact that ideas that are spread in a prediction market may or may not be something that everyone agrees on, and this fact becomes more and more apparent as the amount of people in the market scale up.
A bit of background into Moriari – Moirari utilizes collective intelligence, which is very much related to prediction markets, in an open-source manner. It is a project created by Prediction Markets LTD, a London-based company, and is on track to be one of the first legally regulated ICOs in the platform allows anyone to make prediction in anything in politics and entertainment. This is related to what we discussed in class about the ‘wisdom of the crowd’, except that shares translates to the amount of money placed on this outcome. People can also see what the overall opinion is on the issue, and this can drive overall decisions as well. The most important aspect to note about these predictive markets is the fact that you need to place actual money on certain issues. This encourages people to be truthful with their responses. Additionally, these bets can act as a kind of insurance on other people, and the overall decentralization through markets such as bitcoin and ethereum place it completely on the market’s responsibility to uphold itself and the truthful nature of its discussions.
Expanding on the idea of cryptocurrency-related prediction markets, there are many such expanding markets on bitcoin as well as ethereum. These include BitBet, BetMoose, and Augur. With the recent news on the regulation of Moirai, there is increasing legitimacy to this form of a predictive market. All of these markets are similarly built upon the idea of prediction markets, and it is interesting to see where these markets will go in the future.