7 reasons to make a predictoin

  1. Buy information – remove uncertainty – Lets say you need information if a future event will happen or not for a decision. Putting up bets on a prediction market could be the most cost efficient way to get this information. By creating bets on and against the outcome of the event you create an incentive for everyone who has more information about this event. To achieve this the use of a automated market maker like this is most efficient.

  2. Selling information – Corresponding you can sell information. Either because you are a great researcher and you want to monetize your work or because you just have inside information. There are good reasons to legalize insider trading. Why should a information that is already available be withhold from public?

  3. Hedging, insure yourself – An insurance is basically a bet. A fire insurance for example is a bet that your house will burn down. If it does you get a lot of money, if it doesn’t you loose the money invested. Prediction markets could open the role of an insurance company to everyone a could make the margins razor

  4. Creating an incentive – setting up a bounty – Bet that something will not happen to give others an incentive to make it happen. Lets say you bet 10 BTC against a new feature beeing in the next Bitcoin core version. This is basically setting up a bounty for everyone to make it happen. We have written more about this scheme here.

  5. Signaling, make a statement – Lets say you are starting a kickstarter campaign for a product. It probably would increase your credibility significantly if you place a big bet on the event that you will deliver in time if the funds are raised.

  6. to govern – Futarchy – This is similar to 6. However, with this type of bet you want to change the price of a market since the price will directly determine what decision will be made.

  7. Gambling – While today bookmakers pay out only about 90% of the wagers prediction markets could increase this number close to 100%. Even a weekly random bet of $100 on a sport event would sum up to average costs of less than $50 per year (assuming a payout rate of > 99%)