If we use insurance to describe the prediction market, the essence of betting in predictions is actually two things:

The first is hedging against risk.

Buying insurance is not for the purpose of having an accident, but to lock in the maximum loss. Engaging in futures is not about guessing the direction, but about hedging the spot exposure. Betting in the prediction market is essentially about reverse configuring the risk exposure of a certain outcome.

The second is "capital transfer."

In low liquidity prediction markets, large funds can artificially raise the odds of NO by creating an implied probability of YES, and then have associated accounts take on NO, completing the capital transfer when the outcome fails.

The essence of the prediction market is binary options, but to treat binary options purely as gambling is narrow-minded.

Looking back, why are some prediction markets not popular? Why do we see a mismatch between the East and West?

The value of the prediction market lies in transforming uncertainties that are originally unhedgeable and non-tradable into risks that are priceable and transferable.

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