What is a Prediction Market?

By turning information into a tradable asset✨

Introduction

Cryptocurrencies are known element of volatility in prices and trading. This is true for fast-paced markets, and it adds a level of complexity for investors, such as the need to interpret finances, technology, and human behavior to predict each different movement. For that reason, accurately predicting events can be a very valuable ability. This is where prediction markets come into play.

In a world of uncertainty, people have always sought to predict future events—from elections and sports outcomes to economic trends. Now, blockchain technology is powering a new approach: prediction markets. These platforms allow participants to trade on the results of future events across a wide range of fields, including finance, sports, politics, global trends, and industry developments. Unlike traditional betting platforms, they gather the collective wisdom of participants to measure the likelihood of outcomes.

The market price of a prediction reflects the collective wisdom and probability of an outcome. By leveraging blockchain, these markets ensure transparency, fairness, and accessibility, making them a powerful tool for forecasting the future.

I. Event Prediction

Event prediction refers to forecasting whether a clearly defined, verifiable external event will occur within a specific time frame. Predictions cover five main categories: 1. Technology and Cryptocurrency (e.g., regulatory approvals, technological milestones), 2. Sports (e.g., match results, award winners), 3. Politics (e.g., election outcomes, policy changes), 4. Entertainment (e.g., awards, releases of works), 5. Other (e.g., economic and social events). Such predictions rely on objective facts and authoritative information for resolution. Their outcomes are not influenced by participants and aim to reflect the true probability of events occurring through market consensus.

II. Price Movement Prediction

This involves predicting whether the price of a specific token will be above or below a certain value within a specified time period (e.g., 5 minutes). It requires analyzing market trends, technical indicators, and news events that may impact the token's price.