Vitalik Buterin Highlights the Benefits of Prediction Markets Over Social Media

According to Odaily, Vitalik Buterin recently expressed on the Farcaster platform that prediction markets serve as a remedy for extreme opinions on emotional topics. He believes that, in theory, the worst-case scenario for prediction markets is harm induced for profit, but small-scale prediction markets on large-scale events do not fall into this category. Traditional stock markets also have similar drawbacks, where political participants can profit from disasters by shorting stocks. Buterin emphasized that prediction markets have advantages over social media and mainstream media. Social media lacks accountability, whereas prediction markets use a profit and loss mechanism to ensure the system becomes more truth-seeking over time. The probabilities displayed by prediction markets more accurately reflect the world's uncertainties compared to other systems. Since prediction market prices are confined between 0 and 1, they are healthier than regular markets and less affected by reflexivity, the greater fool theory, or pump-and-dump schemes.