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Vitalik Buterin
@vitalik.eth
Debate on whether prediction markets are good or bad. One major point I will add is that right now the major markets mostly don't pay interest, which makes them very unappealing for hedging because to participate at all you sacrifice a guaranteed 4% APY on the dollar. I expect lots of hedging use cases to open up once that gets solved and volumes increase more. https://docs.google.com/document/d/1jc_46jk6UEdDY7Dc3hoX0gkTAyXAE07sjV93jPbrU40/mobilebasic
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RoboCopsGoneMad
@robocopsgonemad
Bad. There is no correlation between monetary conviction (which scales relative to personal capital) and accuracy. Even if you believe in "the wisdom of crowds" (and I don't) these markets are no better than coin based governance voting. Calling gambling a "prediction market" is weird NIH we should avoid.
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Vitalik Buterin
@vitalik.eth
In a coin vote, if you vote for the wrong thing you pay no penalty, beyond the very slight chance that you personally are the one to push it over the edge. In a prediction market, if you are wrong you lose money, and if you are wrong while betting a lot you lose a lot of money. I personally find the probabilities that prediction markets give to generally be more accurate than what I am driven to believe by the (professional or social) media vibe. They actually help me stay grounded and know not to overrate things (but also know when something genuinely important happens)
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RoboCopsGoneMad
@robocopsgonemad
The pain of loss is a matter of outside funds, which isn't captured at all in the system. My $5k bet has far more "conviction" than Elons $10k bet, so I am more motivated to get it right, but it moves the market less. Tracking? My successful bets compound only as much as my capital - if I went 8/10 on $10 bets, i'm actually amazing at this and nobody cares. Then, there is the matter of cognitive biases that need to be controlled for are a function of the phrasing of the bet, or subject matter... it's a long list of problems.
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