Vitalik Buterin: Prediction markets are healthier than traditional markets and help in seeking the truth.

In an article published on the Farcaster platform, Vitalik Buterin stated that prediction markets are the antidote to the irrational views expressed in emotionally charged issues. He believes that, theoretically, the worst-case scenario for prediction markets is inducing harm for profit, but this is not the case for small-scale prediction markets targeting large-scale events. Traditional stock markets also suffer from similar drawbacks, where political actors can profit from disasters by shorting stocks. Buterin points out that prediction markets have advantages over social media and mainstream media. Social media lacks accountability, while prediction markets, through profit and loss mechanisms, ensure that the system tends to seek the truth over time, and their displayed probabilities more accurately reflect the uncertainty of the world than other systems. Because prediction market prices are confined between 0 and 1, they are healthier than ordinary markets and less susceptible to reflexive effects, the greater fool theory, or market manipulation.