Author: Nick Tomaino, founder of 1confirmation; Translated by: 0xjs@Golden Finance
The prediction market is exploding, with June being Polymarket’s highest volume month at over $100 million.
Get involved, or shut up
It is hard to know what is true today.
We know that the U.S. government routinely manipulates corporate media (see the CIA’s Operation Mockingbird) and social media (see the Twitter files) to spread lies for its own benefit.
One of the great things about Musk taking over X is that there is less censorship and top-down narrative control. But on X, anyone can easily make up their own false narrative, and the algorithm tends to reward popularity over truth. Community Notes has addressed this to some extent, but X still has a long way to go in helping people distinguish truth from lies.
If you talk to young people today, they feel this problem deeply. They know that the popular narratives created by corporate media and social media are often untrue, but they don't know how to tell what's true and what's false. So they usually just default to following what's popular.
The market is the best source of truth
A prediction market is an open market where anyone with knowledge of future outcomes can contribute their knowledge in the form of a bet, making money if they guess right and losing money if they guess wrong.
For example, “Will Joe Biden drop out of the 2024 U.S. presidential election?”
Talk is cheap. It’s easy for experts to say Biden will drop out, and they won’t lose anything if they’re wrong. But in prediction markets, there are real financial costs if you’re wrong. Currently, you can buy YES shares on Polymarket for $0.81 per share. If you buy YES, it means you’ll make a 23% profit if Biden drops out, and a 100% loss if Biden stays in the race. All independent opinions participating in it give an 81% chance of Biden dropping out.
The Biden Exit market on Polymarket has been the best way to get a sense of how Biden would perform in the 2024 election. As early as October 2023, the market indicated a 26% chance of Biden withdrawing. Meanwhile, the New York Times and other corporate media outlets continue to spread lies about Biden's mental state.
Polymarket continues to be a leading indicator of Democratic reality heading into the June 27, 2024 debate. The market immediately reacted to Biden’s apparent lack of sharp thinking, with the market pricing in his exit from the race nearly doubling.
The market is great but not perfect
If Biden doesn’t end up exiting with an 81% chance of winning, does that mean markets can’t provide the truth? Not at all. Markets at scale reflect current reality, represented by a wide range of players. They don’t always accurately predict outcomes. Market participants can be biased and irrational. And there’s a lot of new information that can be introduced that changes the outcome.
The point is that markets are better at delivering truth than a group of pre-selected elites (old media) and profit-seeking algorithms (new media), and will play a key role in bringing more truth to the world in the coming years. Especially at global liquidity scale, on-chain payment rails can make this possible. In the crypto industry, we have been waiting for a mainstream use case that people don’t even need to know is a crypto use case. Now, we have a use case that plays a big role in the future of the U.S.
