Shorting the market

I'm not a gambler, nor do I understand the thrill of watching candlestick charts and feeling my heart race. But when CNN and CNBC announced they were integrating prediction market odds into their news broadcasts, I felt as if we were being manipulated by a new kind of "truth."

Crypto bro is preaching: traditional polls will be replaced, experts are the high priests of the old era, and only odds based on real money can reflect the wisdom of the masses and the truth of reality. However, the trading logic cultivated by prediction markets is exactly like Keynes's "beauty contest"—you no longer care who is the most beautiful, you only care about "who others think is the most beautiful." The concept of beauty itself is "dissolved," like the urinal Duchamp placed in the art gallery. Prediction markets will continue to accelerate, then stall, until more and more sober people begin to "short" this frenzy, "short" the prediction market narrative itself.

Exchanges and casinos are two distinct worlds. Farmers worry about falling grain prices, while downstream food processing plants worry about rising prices, so they come to the derivatives market to find people willing to take the risk. Trading is made possible by these differing demands.

However, in the context of prediction markets, such natural hedgers do not exist.

This results in a market filled only with market makers, smart money with insider information, and gamblers destined to be fleeced: if an informationally superior counterparty is willing to trade with you at this price, the trade is likely to result in a loss for you. Once the "dumb money" runs out, liquidity dries up rapidly. Because insider traders are allowed to exist in large numbers, prediction markets, without a constant influx of gamblers, become an unsustainable new Ponzi scheme. In natural systems, the thermometer reading doesn't change the temperature; no matter how much we bet, Halley's Comet will still return on time. But in social systems, probability itself has the power to "distort reality," and the greed of observers can alter the observed reality. Ethereum can guarantee the "economic security" of the blockchain network through its staking and forfeiture mechanism, but prediction markets completely fail to guarantee "social security." On the contrary, they even reward destruction. If a billionaire bets heavily on an extreme event, he is essentially funding that outcome and using market probability signals to create panic or consensus. Huge sums of money can generate immense potential energy, in turn influencing media reports and public confidence, forcibly shrinking an uncertain outcome into what the bettor desires. Kaito, which aimed to be an information distribution center, ultimately became a broadcasting station that only outputs noise. Prediction markets tout themselves as telescopes for the future, yet they can't stop themselves from becoming billboards for creating the future. Many believe that with relaxed regulations and the influx of capital, prediction markets will be the next big thing. But things always go too far. People are gradually realizing that we are at the peak of a "gambling culture" cycle. Complete financialization only brings emptiness. One day, people will tire of this high-frequency dopamine stimulation and return to real-life experiences. We begin to turn off the screen, go hiking, touch the real earth, read paper books, and build deep relationships outside the screen.

Short selling" to predict the market is actually not only about going long on "human agency," but also about going long on "life."

Since we can't go back to the past, perhaps the only way out is to stop wasting time at the virtual gambling table and turn around to step into the sunlight.