The Value of Prediction Markets
These days it seems as if crowd sourcing is the best way to find information. In some respects we’ve been crowd sourcing since the dawn of language, yet with the internet comes the power to forecast more events with higher precision, in an instantaneous and agile manner.
This is the true power of prediction markets. Organizations and other large bodies such as governments, corporations, etc, can use prediction markets to gain information from their constituents and shareholders prior to action being taken. Ultimately, prediction markets powered by the blockchain could predict the outcome of political races while providing a method for seamless voting transactions.
More than just the ‘Wisdom of the Crowd’
Harnessing the power of the wisdom of the crowd is the true phenomenon behind prediction markets and their potential as information gathering platforms. The ability to accurately forecast events of all natures based upon the knowledge of a collective of individuals proves its validity time and again. The platforms will have the ability, powered by the wisdom of the crowd, in addition to artificial intelligence, to forecast the probability of as many events as imaginable.
The Stox platform allows users and STX token holders to participate in harnessing the wisdom of the crowd with the ability to make predictions across different markets of events from sports, social events, elections, speculation on cryptocurrency exchanges and more. The Stox app hosts the ability for operators to open markets for predictions on anything from ICO’s to the overall winner of the World Cup, to the weather forecast during the World Cup.
Challenges and Solutions with Prediction Markets
The potential for highly accurate predictions is easily accessible to the average person with an internet connection. While on the surface it can appear as though users are betting or speculating mostly on sporting events, the amount of information and data gathered even on the most simplistic events routinely proves to be highly accurate by percentage.
While predictive markets must deal with pitfalls such as overcoming bias and limiting manipulation, they can provide overall amazing benefits to predicting future events with more accuracy than traditional phonebank polling services.
‘Prediction markets are exchanges where individuals trade what are sometimes called “event contracts.” Broadly speaking, these contracts specify some future event with different possible outcomes, define a payment structure based on those outcomes, and state a date when the contract expires.’ — Adam Ozimek, The Regulation and Value of Prediction Markets
