This is the crux of the issue.
Author: Alertforalpha
Compiled by: Blockchain in Plain Language
As most cryptocurrencies struggle in 2025, one sector has quietly exceeded expectations: prediction markets. Their trading volume has seen explosive growth, accuracy surpassing polls, and a continuous influx of capital. However, behind this growth lies a more severe question: Are prediction markets becoming one of the most powerful tools in cryptocurrency, or are they just the next overhyped trade?
Core Concept
Simply put, prediction markets allow users to bet on future outcomes.
Will the election be won?
Will the policy pass?
Will a certain event occur before a specific date?
The trading price for each outcome ranges from $0 to $1, with the price reflecting the probability. If the outcome occurs, it settles at $1. If the market prices it at $0.63, it means there is a 63% chance of occurrence. This is the uniqueness of prediction markets: they rely on incentives rather than opinions. When real money is involved, predictions often become astonishingly accurate.
Why They Matter
The performance of prediction markets has always been related to polls and experts because they gather fragmented information.
Participants bring:
Local knowledge
Industry opinions
Insider intuition
Risk-adjusted beliefs
As the number of participants increases, prices adjust in real-time. This is why, during the 2024 U.S. election, prediction markets signaled before most mainstream media. The market leads, and the narrative follows.
Advantages of Cryptocurrency
Traditional market predictions face sudden limitations: centralized control, payment caps, regulatory pressure, and barriers to entry. Cryptocurrency has changed all that. On-chain prediction markets offer:
Global access
Transparent settlement
Permissionless participation
Automatic payouts
No intermediaries, no geographical barriers. This shift unleashes tremendous scale.
Growth Pressure
The industry's growth is an undisputed fact.
The current annual trading volume of prediction markets has reached hundreds of millions of dollars.
Analysts estimate that by 2030, the industry's revenue could reach $10 billion.
But rapid growth brings new problems: liquidity is fragmented across different platforms. Similar markets compete for the same pool of users, and attention is dispersed. Weak liquidity opens the door for queues.
Source of Controversy
Most criticisms are not aimed at the technology but at behavior. Some users have been accused of:
Trading on non-public information
Front-running outcomes
Influencing visual guidance through large bets
When market liquidity is insufficient, large positions can dramatically shift probabilities. This creates a feedback loop: odds change → media reports → public perception shifts. Even in the absence of evidence proving the listings, this appearance alone raises ethical concerns.
The Debate on Gambling
Another unresolved question is classification. Do prediction markets belong to financial instruments, event contracts, or gambling?
Regulators have yet to reach a consensus. Some platforms argue they provide information markets rather than games of chance. Critics contend the line between the two is very thin—especially when markets delineate sports and real crises. This legal gray area leaves regulation fraught with uncertainty.
Why They Won't Disappear
Despite the controversies, prediction markets will persist in the long term. Institutional investors are leveraging them to hedge risks:
Political risk
Regulatory volatility
Narrative shifts
Major trading platforms and wallets are integrating these features, and their effects are real. Prediction markets compress uncertainty into a single number, which is incredibly powerful.
How People Profit
There are generally clearing methods:
Information advantage: Identifying outcomes that the market has not priced correctly.
High-probability trades: Trading on outcomes that are nearly certain, compounding small gains.
Ecosystem incentives: Early participation may reward users on platforms in the future.
None of these are risk-free; it all depends on trading discipline.
A Greater Truth
Market failures do not stem from incorrect predictions but from distorting reality. As participation levels rise, these market mechanisms can become both the most steadfast voice in collective consciousness and the easiest tool to listen to. Which path they take depends not only on technology but also on predictions.
Conclusion
Prediction markets are not a fad. They are a reflection. They reflect what people believe, fear, and are willing to bet on. The question is no longer whether they will influence the future, but whether the market can withstand its own influence.
Article link: https://www.hellobtc.com/kp/du/01/6187.html
Source: https://medium.com/@alertforalpha/everyones-betting-on-prediction-markets-0d664e43abcc
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