{"id":7954,"date":"2021-09-29T23:32:00","date_gmt":"2021-09-29T20:32:00","guid":{"rendered":"https:\/\/alfacash.blog\/?p=7954"},"modified":"2024-02-19T21:51:15","modified_gmt":"2024-02-19T18:51:15","slug":"what-prediction-markets-how-earn-with-them","status":"publish","type":"post","link":"https:\/\/alfacash.blog\/ja\/2021\/09\/29\/what-prediction-markets-how-earn-with-them\/","title":{"rendered":"\u4e88\u6e2c\u5e02\u5834\u3068\u306f\u4f55\u3067\u3059\u304b\u3001\u305d\u3057\u3066\u305d\u308c\u3089\u3067\u3069\u306e\u3088\u3046\u306b\u7a3c\u3050\u306e\u3067\u3059\u304b\uff1f"},"content":{"rendered":"\n

Prediction markets, also known as betting markets, are markets that operate based on the possible outcomes of future events \u2014 such as soccer matches and even presidential elections. If the participant gets the outcome right, they can earn more money<\/strong>; but they can also make some trading to earn.<\/p>\n\n\n\n

This type of market, which is present even on the stock exchange, hasn\u2019t been excluded from the cryptocurrency world. Below, we\u2019ll learn a bit about how traditional prediction markets work. We will also go over some prediction markets on blockchain<\/a> and how to make nice earnings with them.<\/p>\n\n\n\n

Concepts and a bit of history<\/strong><\/h2>\n\n\n\n

The oldest record about prediction markets dates back to the 16th century when bets were placed in the political arena. However, even at that time, the betting market was considered a primitive practice.<\/p>\n\n\n\n

\"prediction-markets-betting-history\"
Image by Ryan McGuire from Pixabay<\/figcaption><\/figure><\/div>\n\n\n\n

The economic theory behind these markets is usually attributed to two economists of the Austrian School: Friedrich Hayek and Ludwig Von Mises, for their publications “The Use of Knowledge in Society” (1945), and “Economic Calculation in the Socialist Commonwealth” (1990).<\/p>\n\n\n\n

Now, according to more modern sources<\/a>, \u201cthe prediction market is a market where people can trade contracts that pay based on the outcomes of unknown future events”<\/strong>. Likewise, “the market prices generated from these contracts can be understood as a kind of collective prediction among market participants”.<\/p>\n\n\n\n

Prices in prediction markets are based on participants’ expectations and their willingness to take risks based on them. Basically, these markets are made up of people who speculate on future events<\/a> based on the information they have and consider valuable. If the participant gets the outcome right, they\u2019ll make money; otherwise, they could lose money.<\/p>\n\n\n\n

As mentioned above, these markets are also called betting markets, given their similarity to betting on uncertain events. They\u2019re also compared to future markets and other financial assets. In this case, the more participants and information obtained, the better the results can be.<\/p>\n\n\n\n

How to earn cryptos with prediction markets?<\/strong><\/h2>\n\n\n\n

Traditional prediction markets are heavily regulated in jurisdictions such as the United States<\/a>. Also, the fees to access them are often very high. Fortunately, blockchain and cryptocurrencies have arrived into these markets as well, offering platforms with significant advantages.<\/a><\/p>\n\n\n\n

\"bitcoin-coins-handful-wallet\"<\/figure><\/div>\n\n\n\n

Prediction markets on blockchains are open to all interested participants.<\/strong> They\u2019re not limited by regulations, geographic scopes, and censorship. In addition, participation costs are much lower when compared to centralized marketplaces.<\/p>\n\n\n\n

The way to earn tokens or cryptocurrencies<\/a> in these markets can be split into three methods: winning the given bet, providing liquidity<\/a> to receive user fees, or trading the tokens or shares involved. So, for example, to participate, an average user must buy a certain amount of tokens or shares representing one of the outcomes of the bet.<\/p>\n\n\n\n

An example of prediction markets<\/em><\/strong><\/h3>\n\n\n\n

Let’s say the bet is as follows: will the yellow sports team win this season? Yes\/No. The first option (Yes) is represented by the token Y, while the second option (No), is represented by the token N. During that sports season, the value of these two tokens (or shares) will vary, depending on whether the yellow team is winning or losing the season (the odds).<\/p>\n\n\n\n

\"prediction-markets-yellow-team\"
Image by F1 Digitals from Pixabay<\/figcaption><\/figure><\/div>\n\n\n\n

Therefore, in theory, it\u2019s not even necessary for the user to “win” the bet to make a profit. <\/strong>They can simply buy the Y tokens (for example) at the beginning, and then sell them more expensively when they go up in price because the odds are in favor of the team involved (or the event being bet on). Of course, if the team wins, the user will make more profit if they still have the Y tokens at the time of closing the prediction.<\/p>\n\n\n\n

On the other hand, if the team loses at the end, and the user keeps their tokens in favor, the value of these tokens will collapse (and the invested funds will be lost). If the user sold them earlier, then they wouldn\u2019t be affected. In these markets, then, you\u2019re playing with collective probability, which isn\u2019t without risk<\/a>.\u00a0<\/p>\n\n\n\n

Remarkable platforms<\/strong><\/h2>\n\n\n\n

There\u2019s already a wide variety of platforms for prediction markets based on smart contracts<\/a>. However, if we check the market capitalization, the three leading projects in this field are Numeraire, Gnosis, and Augur<\/strong>. These occupy first, second and third place, respectively [CryptoSlate].<\/p>\n\n\n\n

Augur runs on the Ethereum blockchain<\/a>. This implies that ETH is used to complete transactions, in addition to its main token, the REP. The software was launched in July 2018 by Forecast Foundation (created by Jack Peterson, Joey Krug, and Jeremy Gardner), after receiving funding through an Initial Coin Offering (ICO<\/a>).<\/p>\n\n\n\n

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