The Power of Prediction Markets

I really love prediction markets, and I think they are likely to be one of the first "killer apps" that will be built on blockchains. This is an insightful overview into the power of prediction markets and the different ways that they might be used. 

Prediction markets are speculative markets with the primary purpose of aggregating information rather than hedging risks. Regardless of the main purpose, speculative market prices generally turn out to be quite accurate estimates of future prices due to their ability to aggregate vast amounts of available information. Orange juice commodity futures markets, for example, make better weather predictions than the government, and horse races are better predicted by betting markets than by professional handicappers. 


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