TechFlow news, on December 21, Vitalik Buterin posted that prediction markets are the antidote to wild opinions on emotionally charged issues. In his personal view, the worst theoretical scenario for prediction markets is incentivizing harm for profit, but this does not apply to small-scale prediction markets about large-scale events. Traditional stock markets have similar drawbacks, as political actors can profit from disasters by shorting stocks.
Vitalik Buterin pointed out that prediction markets have advantages over social media and mainstream media. Social media discourse lacks accountability, whereas prediction markets use profit-and-loss mechanisms to ensure the system increasingly converges toward truth-seeking over time, with their displayed probabilities more accurately reflecting the world's uncertainty than other systems. Since prediction market prices are bounded between 0 and 1, they are healthier than conventional markets and less susceptible to reflexivity, the greater fool theory, or pump-and-dump effects.
