Prediction markets are important because they create renewed value for accurate, fact-based information.
It's no secret that our internet world is deeply entrenched in false information. While “false-facts” are not a new problem, with the proliferation of information via the world wide web, we have entered a new era of concern for good quality information. Currently, anyone can call themselves an expert and offer unsolicited advice, and can do so anonymously.
One of the greatest concerns about cryptocurrencies is their volatility. Part of the reason for this is that with so many new projects entering the playing field, it is difficult to suss out the quality projects.
However, prediction markets can make value out of accuracy by going directly to the people who use the product. With the increased popularity of prediction markets, individuals will be able to give their two-cents and make it valuable, while demanding accountability by way of blockchain technology.
Improving Accuracy
Prediction markets are as they sound: markets created from predictions that are formed from a collective of knowledge. Essentially prediction markets monetize accurate information by rewarding it. The advantage of these markets is that only accurate predictions are rewarded.
Another potential benefit of the increased popularity of prediction markets is better, more accurate information. Many economic studies demonstrate that market predictions are effective because they gather information from many people who have different, valuable information and expertise to offer. Since prediction markets have a monetary incentive to be correct, those who participate are significantly more inclined to do better research.
Wisdom of the Crowds
Another positive is that they are not limited by location or citizenship. Anyone with internet access and knowledge to share can participate. On the other hand, there are significant limitations to accessing centralized markets.
This means not only are they better sources of prediction data, but this valuable information is accessible to anyone, anywhere in the world.
Monetary incentivization has a proven positive effect on information accuracy. If you want to participate in the market prediction, you need to put your money where your mouth is. If ignorance becomes expensive, then people will work to contribute accuracy to the market.
