14 ms·

Prediction Markets: Tales from the Election

209 points by 0-_-0 6y ago

hatsunearu 6y ago
I considered myself pretty in-the-know and knew about Predictit, all kinds of crypto, and therefore I thought I was up-to-date on the crypto news but I did not even know that there was a crypto clone of Predictit. >blockchain-based markets are highly niche Not sure if he means if the whole of blockchain is highly niche or blockchain-based prediction markets are highly niche, but if it's the latter, I definitely agree.
- solveit 6y ago
  Check out Polymarket, much smoother UX than Augur (at the cost of being more centralized, as I'm sure you guessed).
- ruuda 6y ago
  https://astralcodexten.substack.com/p/metaculus-monday https://astralcodexten.substack.com/p/metaculus-monday and https://astralcodexten.substack.com/p/metaculus-monday-2821 https://astralcodexten.substack.com/p/metaculus-monday-2821 mention a few other markets.
- elwell 6y ago
  I had heard of Augur but not PredictIt.
ErikAugust 6y ago
"The best way to predict the future is to create it." I always thought the the problem with prediction markets is you have the incentive to make the prediction come true. And that gets ugly fast. But hell, I guess that's what all this is at the end of the day.
- ahelwer 6y ago
  Yep, it clearly leads into assassination markets - for example, opening a large bet that person X will die on a specific date.
  - solveit 6y ago
    Yes, just like you can short Tesla and assassinate Musk. This is ridiculous, regulate prediction markets like any other financial market (in particular, your identity should be traceable) and then all your clever plan does is get your funds frozen pending a very thorough investigation.
    - lostlogin 6y ago
      > assassinate Musk. Would this cause Tesla stock to rise or fall?
      - bidirectional 6y ago
        Fall massively, I would imagine. Tesla's valuation is obviously not driven by fundamentals, Musk's personality is one of the things it is based on.
  - ouid 6y ago
    Isn't that just life insurance?
    - mbg721 6y ago
      It sounds like term life for an unusually specific term. But you do typically have to have an insurable interest in order to buy insurance on someone's life.
    - m463 6y ago
      That got ugly too until they prevented people from taking out life insurance on people without their knowledge/consent
- pdonis 6y ago
  > the problem with prediction markets is you have the incentive to make the prediction come true If players in the market have ways outside the market to significantly affect the outcome that the market is betting on, then it isn't a prediction market. The whole point of a prediction market is that there is no such feedback mechanism. For example, the article discusses prediction market bets on Trump winning the election. The underlying assumption of such markets is that no player has more than one vote in the actual election, out of some 150 million or so votes, so each individual player's ability to affect the outcome is negligible.
  - Imnimo 6y ago
    >The underlying assumption of such markets is that no player has more than one vote in the actual election, out of some 150 million or so votes, so each individual player's ability to affect the outcome is negligible. But this is not necessarily true. In the extreme case, a bettor could be one of nine Supreme Court justices. Or a participant in some sort of fantasy vote-rigging conspiracy. Or even a political insider tanking their candidate's own chances and betting against themselves. There's a pretty wide range of people who could plausibly (or not-so-plausibly in the conspiracy example) have more than a one-vote influence over the result of the election.
    - tshaddox 6y ago
      Sure, that’s why there are rules about when and how a CEO can sell their company’s stock (they generally have to announce the sale in advance). I’m not sure about the laws around Supreme Court justices, but I’m pretty sure it’s at least well-accepted that no judge should work a case when they have a personal interest in the outcome. I hope that would be grounds for removing a justice.
    - jtxxwl2 6y ago
      >Or a participant in some sort of fantasy vote-rigging conspiracy. This is even more relevant outside of the US. In the US vote rigging conspiracies are impossible for some inexplicable reason, perhaps related to magical soil, but outside of the US they are a real concern.
- hugh-avherald 6y ago
  That's why you have counterfactual prediction markets. You don't have markets on an outcome; you have two markets of an outcome conditional on some action, and on an outcome conditional on that action not being taken.
  - dylan604 6y ago
    did you just describe sports betting?
- jetrink 6y ago
  One recent example is the man who ran onto the field at the Super Bowl after having proxies place $370,000 in bets on that occurring. However, he bragged about what he had done on a radio show and those bets were invalidated.
  - notahacker 6y ago
    Another example that springs to mind is a British bookmaker that ran a promotional betting offer on a fat lower division substitute goalkeeper eating a pie during a televised cup match. The fat goalkeeper ate a pasty whilst sitting on the bench, and was promptly banned for a couple of months even without any evidence of financial gain for "intentionally influencing a betting market"
    - roganartu 6y ago
      There was another example of this in Australia back in 2016 where some prediction markets offered a novelty bet on what colour tie one of the TV hosts would wear. The host got wind of it and, for fun, changed ties at least five times throughout the evening. https://twitter.com/sportsbetcomau/status/749219697359396864 https://twitter.com/sportsbetcomau/status/749219697359396864 https://www.smh.com.au/politics/federal/federal-election-2016-laurie-oakes-ties-up-bookies-with-multicoloured-offering-20160703-gpxhr0.html https://www.smh.com.au/politics/federal/federal-election-201...
- rmb177 6y ago
  Rumor on PredictIt was one of the reasons they shut down tweet markets was Andrew Yang's campaign received email threats in regards to him tweeting.
- __s 6y ago
  Just have to keep in mind that bets could be a strange gofundme & don't participate in bets that can be bought out against you
- gumby 6y ago
  That's similar to short sellers trying to manipulate a stock: pretty much only works in the shallows (small cap, thin coverage, moderate liquidity). You could manipulate the dogcatcher election (or, more profitably, a bond initiative) but a presidential election is probably too hard, especially in this case (amount of money you'd need to spend is much larger than the amount you could make on these markets).
monkeydust 6y ago
>Blockchains are often criticized for being speculative toys and not doing anything meaningful except for self->referential games (tokens, with yield farming, whose returns are powered by... the launch of other tokens). There >are certainly exceptions that the critics fail to recognize; I personally have benefited from ENS and even from >using ETH for payments on several occasions where all credit card options failed. But over the last few months, >it seems like we have seen a rapid burst in Ethereum applications being concretely useful for people and >interacting with the real world, and prediction markets are a key example of this. Was hunting this week for real-world use cases for blockchains, this is one to add to the list I feel.
- tptacek 6y ago
  It is in the same way drug bazaars are: states have been hesitant to regulate blockchain applications, so they're a form of regulatory arbitrage. Without regulation, nothing prevents conventional predication markets from removing limits.
IAmEveryone 6y ago
I've always had the impression that the cryptocurrency community was trending rightwards. So it's good to see some quantifiable evidence of it. Which leaves the question: why? Technology as a whole is centre-left, so there's something else going on. One common theme seems to a loss of trust in any institutions, and democracy itself: "the FED is just a private bank" isn't far away from "the mainstream media is lying", and even the latter is an opinion more common among the crypto bubble as far as I can tell. Or are crytocurrencies of interest primarily to people interested in "getting rich, fast" and therefore liable to glorify a self-annoited master of making money with little work?
- Fireflite 6y ago
  The enormously wasteful environmental cost of PoW is certainly a turn off to those of us on the left as well.
- whatshisface 6y ago
  That's not quantifiable evidence of a political bias. You win in a prediction market by guessing who will win, not by stating who you want to win.
  - avarun 6y ago
    Right, and as mentioned in the article: The markets were guessing Trump would win after he had already lost. If that's not evidence of a political bias to you I'm not sure why.
    - whatshisface 6y ago
      When hurricane forecasters predict that a hurricane will strike a city, would that be evidence of their pro-hurricane bias? If they were consistently overeager to predict hurricane strikes, would that be evidence that they supported hurricanes, or merely were overcalibrated to predicting them?
      - SpicyLemonZest 6y ago
bigpumpkin 6y ago
One thing he didn't talk about was capital gains tax. If I wanted to bet on the election, I would first have to realize my short term capital gains.
- ahnick 6y ago
  He avoids capital gains in the article by using a MakerDAO CDP. This is a loan that is collateralized by his Ethereum holdings. (IIRC 1.5 ETH to the amount of DAI you want)
  - mannykannot 6y ago
    Indeed, though at 3:2 you are apparently at considerable risk of the loan being called by anyone (with no margin call beforehand): If the value of the ETH collateral that you deposited drops to less than 150% the value of the DAI you withdrew, anyone can come in and "liquidate" the vault, forcibly selling the ETH to buy back the DAI and charging you a high penalty. Hence, it's a good idea to have a high collateralization ratio in case of sudden price movements; I had over $3 worth of ETH in my CDP for every $1 that I withdrew.
    - as300 6y ago
      While this is true, you could easily write a listener script (very easy with ETH due to the extensive bloom filter use) that adds more collateral to your position if it reaches, say, within %175 of the capital you withdrew.
      - Sargos 6y ago
        DeFi Saver does this and has a large userbase. https://defisaver.com/ https://defisaver.com/
- tantalor 6y ago
  Prediction market positions are not capital gains in the same way that lottery tickets are not capital gains. It is gambling.
phpnode 6y ago
The problem with making this bet is that the value of the underlying crypto can move by far more than the possible 15% return while the result is pending. 2 months is more than enough for the price to double or halve and people want to be able to exit to fiat at a moment's notice when they think things are heading south.
- fairity 6y ago
  There are cash-based markets like Predictit where you could've made a similar bet. Predictit charges 5% withdrawal fees + 10% of profits, but if you expect a 15% ROI, it's still profitable.
  - dragonwriter 6y ago
    The fiat-based prediction markets tend to limit the number of people in a particular markets, the size of positions in the market, and a number of other aspects of the market in a way which make it difficult to seize apparent opportunities and to limit the possible returns from doing so, even before considering the way that their fees eat up returns.
    - tialaramex 6y ago
      These limits are because the ones you're thinking of are research projects, not in fact betting markets (even though as an individual you can treat them as betting markets just fine). This makes them accessible (legally) to US residents. Betfair is a British gambling firm, and isn't a research project, when Betfair's "Did Donald Trump win the US presidential election?" and "Did Joe Biden win the US presidential election?" closed it had hundreds of millions of pounds of bets across those two questions. I got paid, as in I put cash in and a couple of weeks later more cash was paid out to my bank account when BetFair closed it, for knowing that Donald Trump did not win that election in December. It was even possible (though of course risky) to buy the lows and sell the highs as MAGA rallied when they thought the Kraken had been released, or when Rudy was going to prove everyone wrong, or whatever other nonsense. I was actually underwater for more than 50% of the two weeks between placing my "bet" and the cash returned, because MAGA were bidding up the "Donald Trump won" position even as it became increasingly obvious that they'd lose everything.
Supermancho 6y ago
What I read was a story of making money from some niche prediction market sites (that I would never touch). There is also quite a bit of handwaving, eg "I saw more and more arguments from Very Smart People whom I respected arguing that the markets were in fact being irrational and I should participate and bet against them if I can. Eventually, I was convinced." and showing some math from trivial arbitrary scenarios the author poses (nothing to do with the story). This then dovetails into how ETH is a good bet because, they know some calculus? This is crypto-promotion, plain and simple.
- avarun 6y ago
  ...it's written by Vitalik Buterin. Of course he thinks Ethereum is good?
  - lucasverra 6y ago
    Vitalik is Ethereum founder
  - vonwoodson 6y ago
    Thank you for pointing out the obvious: That even on HN people talk before they know even they tiniest thing about who or what they are talking about.
    - Supermancho 6y ago
      > That even on HN people talk before they know even they tiniest thing about who or what they are talking about. Regardless of the author (I don't bother to google every author) the content is as stated. It's a crypto-ad and not much else.
      - drdeca 6y ago
        I think the expectation of the article is that the reader knows who the author is, and therefore expects the article to be pro ETH , insofar as it mentions it.
- 6y ago
Temasik 6y ago
how do i downvote this scammer
fallingfrog 6y ago
I think what we’re seeing is that the set of people making bets on political outcomes leans sharply Republican. It’s selection bias. There may be a broader message there about representation too: if you are sitting in a meeting and 8 people think something is going to happen, but you disagree, and they are all upper class men (for example), and you’re a lower class woman, you probably have a better than 1 in 9 chance of being right, if it’s an issue that affects the public generally. People don’t realize their views are non representative if they live in an echo chamber.
- viklove 6y ago
  You should start a quant firm employing only lower class women, and use their insight to decide which companies to invest in. If your hypothesis is correct, you'll be filthy rich in no time at all.
  - fallingfrog 6y ago
    That’s actually a pretty good idea.. but in the short term and during a speculative bubble, you make the most money by chasing what everyone else is also investing in, so it pays to have groupthink. The approach you suggest would probably work though if you could be patient over the course of the whole business cycle, 20 or 30 years.
  - chillacy 6y ago
    This is already kind of true but you don’t have to employ them, just run focus groups and surveys.
- fallingfrog 6y ago
  By the way the point I’m making is about echo chambers not women being wiser than men. If you are the only white man in the room the same rule might hold. I feel like people are making an excessively shallow reading of what I just wrote.
xalava 6y ago
"Prediction markets" is a fancy word for gambling. It is a highly regulated activity almost everywhere, mainly has it can have terrible consequences at the individual levels and major side-effects such as corrupt games in sports. Let's not even talk about politics where it is generally forbidden for obvious reasons. The conclusion is disheartening "It shows a lot about how market efficiency actually works in practice, what are the limits of it and what could be done to improve it." Yes at a small scale, but at the current rate of adoption of crypto it will not go well if it is still treated as a playground.
- f430 6y ago
  It's worse that people actually believe it is a reliable way to predict the future especially now with the pseudo-intellect speak that people in the crypto space resort to. If wisdom of the crowd worked then casinos would be out of business. There's an entire industry on the other side.
  - jldugger 6y ago
    > people actually believe it is a reliable way to predict the future It's comical because I made like 30 percent in the span of a few months by betting against well known biases in IEM -- the investment stakes are too low for informed participants to move the market meaningfully. But it's too low stakes to bother automating arbitrage strategies that would remove some of the bias of the public market.
  - myownpetard 6y ago
    What is the relationship between casinos and wisdom of the crowd? Just about all casino games I am familiar with have known and controlled odds. There is no need for a 'wisdom of the crowd' to compute the probability distribution.
  - rspeele 6y ago
    > If wisdom of the crowd worked then casinos would be out of business. That does not follow. In prediction markets or sports betting, the gamblers aren't betting against the casino. They're betting against each other, and the casino (PredictIt, BetFair, etc) is skimming off the top, just like Duke & Duke in Trading Places. Most forms of gambling where players do bet directly against the house are games of pure chance where no amount of wisdom will help you beat the odds -- odds which are naturally always stacked in the house's favor. Not to say that I think these betting markets are good at predicting future outcomes. They're clearly very bad at it! But I do think in concept they could be at least as good as any other method, since the existence of a betting market essentially sets a bounty for beating that market. What is limiting them is a mix of: obscurity, bet size limits, bet participant count limits, counterparty risk of shady betting sites, cost of fees/taxes making many bets not worth taking. Some prediction markets eliminate parts of that equation but amplify others, like the crypto markets not having the bet size limitations but also being much more obscure and shady. Furthermore, I don't even think those are problems that should be solved, because if none of those problems existed you'd see big traders like investment companies playing in prediction markets with billions of dollars, and then you'd have way bigger problems with insider trading and the market affecting the outcome. Things as mundane as surprise resignations and as shocking as assassinations. People already joke about stuff like that happening on PredictIt, with its $850 investment cap. No way to prove that it did, but it would be very easy for certain employees to do and get away with it. For example, in the 2020 election there was a market for when the GSA would ascertain the winner (releasing funds to the transition team). That was a decision made by one government employee. The market started on Nov 18th and had brackets like "Nov 23 or earlier", "Nov 24-Nov 30", "Dec 1-Dec 7", and so on. By the afternoon of Nov 23, with no news, the "Nov 23 or earlier" bracket was trading at 1c. Then the ascertainment happened and it settled. Now, that could have been a coincidence. It probably was a coincidence. But if you were the GSA administrator you could've made around $70k taking those 1c shares on the 23rd, and nobody would have to know.
as300 6y ago
I see quite a bit of disappointing talk that disregards the contents of the article, here. Namely, the author names one sort of bias that led 'Very Smart People' to give an outsized likelihood of Trump winning: >I remember thinking at the time that this particular opinion of his was over-confident, perhaps even a result of over-internalizing the heuristic that if a viewpoint seems clever and contrarian then it is likely to be correct. Doesn't this explain crypto-user's pro-Trump bias? Someone who uses crypto as a way to play on a prediction market is necessarily going to be contrarian, to some degree (remember we're being constantly bombarded by claims of how all crypto is "just speculation"). In the same way, believing Trump actually has a case for overturning the election results is a highly contrarian view.
- pwinnski 6y ago
  Note that PredictIt offered similar options for all-cash users, and they were also still at 15% for Trump winning after he had clearly long lost. This was not solely, or even primarily, a crypto thing.
  - as300 6y ago
    This was addressed in the article, though. PredictIt odds could've been skewed by: * Maximum of $1000 being able to be invested on the platform * A small fee being taken by PredictIt out of every bet.
    - pwinnski 6y ago
      So PredictIt odds were skewed by bet limits and fees, but you assert that the crypto markets, skewed to almost exactly the same degree, were instead skewed by the contrarian nature of crypto users? Occam's razor suggests that when two different sites correlate so closely, their reasons are likely not so completely different.
- vbuterin 6y ago
  > Doesn't this explain crypto-user's pro-Trump bias? It does. But I was never surprised that there were people willing to bet for Trump. I was surprised by the lack of people taking the opportunity that was sitting there for over a month to bet against them.
nojito 6y ago
Prediction markets, more specifically predictit, have an hard extreme bias towards the right. I was basically printing money last year.
- NovaJehovah 6y ago
  You may be correct, but since we are dealing with long tail events, I really doubt that we have anywhere close to enough data to make statistically significant empirical statements about bias. You are almost certainly being results-oriented.
  - nojito 6y ago
    Nope. Prediction markets always have a hard right bias. I have been doing this for years.
didibus 6y ago
> There just really are far fewer people than I thought who are actually motivated enough to take a weird opportunity even when it presents them straight in the face It Me hehe I feel my only motivation is fomo, but I'm actually not interested in putting in the effort and time with associated stress, my job already delivers on a lifestyle I'm happy with, so the potential additional money isn't enough to push me to act.
ja3k 6y ago
I had a similar experience on Predictit which I wrote about here: https://ja3k.com/blog/predictit https://ja3k.com/blog/predictit It's still very strange to me that the prices were so irrational.
zone411 6y ago
There was news out on Wednesday about YC-backed Kalshi raising $30 million: https://www.wsj.com/amp/articles/online-trading-platform-will-let-investors-bet-on-yes-or-no-questions-11613557800 https://www.wsj.com/amp/articles/online-trading-platform-wil.... The big difference is that they are approved by the CFTC, hopefully resulting in higher trading limits and more liquidity.
didibus 6y ago
He did need 1 million dollar simply to make a one time 50k return, and it also seemed like it took considerable effort to do it. I don't know how many people with that money also have the know how, are aware of these betting markets, and care much that they'd make an extra one time 50k. I think it'll be interesting to see how crypto based betting markets evolve and if regulations will strike them or not. I don't really know what to think about people simply full on gambling on whatever world event, is that a good thing?
- Tenoke 6y ago
  He locked 1m dollars to take a loan to use, he didn't use 1 million dollars. You can use your assets directly and do earn a 10%+ profit on whatever you put in this case (which I did).
  - dragandj 6y ago
    I don’t know why everyone here is talking about dollars, while there is zero dollars involved all the time. The author did not put in any dollars, but his ETH, which he has plenty, since he created the Ethereum thingy. That may be a large part of the answer why no one “exploited” that hole: most people would have to put real dollars in, expose themselves to all kinds of crypto gymnastics, and end up with ETH, which may or may not be convertible to real dollars where they live. And, yes, they would also have the always pleasant exposure to tax authority now (which may or may not be solvable, depending on the place of Earth one happens to live at).
oramit 6y ago
I actively participated in the prediction market this election cycle on Predict-It. I didn't know anything about the Ethereum applications so this was an insightful read. My main takeaway from this whole election cycle was that the betting markets were not that great at predicting the outcome. As the article points out, and I agree with, a big reason is just that these markets are underdeveloped. You have to really be interested in politics or gambling to get involved and the transactions costs are high. Because of this you end up with a mix of die-hard partisans and gamblers looking for an edge. No normal people are participating on these sites. In fact the markets on predictit were sometimes comically wrong because of partisan money. As the author mentions there were contracts trading at 15 cents for Trump to win states after he had already lost them. I bought the NO contracts for 85 cents and made good money on that. For quite a while on predictit there was a persistent pro Trump bias to almost every state level contract. It persisted even after the count was over! The second reason is that the betting markets themselves were just a reflection of polling data. I'm sure some sophisticated people were using other sources to make bets but most of the predictit discussions were just about polling and how to weight certain polls. There didn't seem to be some big insight that analysts like Nate Silver had missed that the prediction market sniffed out. In the interest of full disclosure I fall into both the partisan and gambling camps. I wanted Biden to win but knowing that I avoided contracts that were political since I knew I would bias myself. I went instead for proxy contracts where pricing was out of whack. I settled on the total vote count: https://www.predictit.org/markets/detail/6882 https://www.predictit.org/markets/detail/6882 Each bracket has a 3 million vote range and about a month out from the election I saw that the higher range contracts were underpriced. For some reason the predictit market had concentrated the betting around the 2016 vote total which made no sense to me. I knew this was going to be a big turnout (even more partisan than 2016 and everyone was at home with covid). At the very least it was going to be more than 2016. The prices were so low on the contracts I just bought all of them above the 2016 numbers with a bias to the upside and it worked out quite well. It was a fun game but I didn't think it gave me much more insight into the final result.
lend000 6y ago
Prediction markets are fascinating to me. Of course they are not perfect, as demonstrated by this post, and also by the spreads of certain "fan favorite" sports teams that people throw money at irrationally. I still think that on average (just like prices in any other decentralized markets), the prediction prices are better than any known centralized system, and with a robust implementation, could be used for important planning.
woeirua 6y ago
This seems like an extremely risky way to make this bet. By trying to keep his exposure to ETH price changes, he set himself up for a scenario in which he could lose $1 million for a potential upside of $50k. Not sure I would make that bet. A lot of people recognized this for what it was, but chose not to play because of how finicky PredictIt and other prediction markets were around the rules of the game. In most previous elections they would have already closed the markets. Personally, I made off with a nice chunk of change buying No-Trump on WI, MI, GA, and AZ after the election, but I only played with what I could afford to lose.
- ttul 6y ago
  Vitalik is worth hundreds of millions (if not more - I haven't checked in a while). He can afford to play games like this.
eargaaadfa 6y ago
Clearly Trump won and the Democrats staged a coup: https://hereistheevidence.com/ https://hereistheevidence.com/ We're currently under occupation by a geriatric pedo that is completely mentally shot and controlled by Xi Jinping.
- NickLamp 6y ago
  I'd like to sell you a bridge
ttul 6y ago
Say what you will about cryptocurrencies, it sounds like a damn interesting area in which to be spending your time as an engineer, even if 90% of the stuff ends up being total crap or a fraud.
- PragmaticPulp 6y ago
  > even if 90% of the stuff ends up being total crap or a fraud Working on something that turns out to be total crap or a fraud is actually very demoralizing, not to mention not great for your resume. In the distributed systems space, I've interviewed a lot of burnt out engineers who thought they were getting in on the next big blockchain company that turned out to be a couple founders use blockchain as a get rich quick scheme. For every story we hear about people getting lucky by timing something blockchain-related just right, there are many more people who got the timing wrong and lost out when the hype collapsed. Be careful out there.
  - Tenoke 6y ago
    >Working on something that turns out to be total crap or a fraud is actually very demoralizing, not to mention not great for your resume. Too bad most people here have worked on startups that failed then.
  - ttul 6y ago
    On the other hand, my friend worked as CTO for a doomed blockchain startup that raised a huge amount in an ICO. They paid him handsomely and then imploded. No harm.
jldugger 6y ago
Interesting that Vitalik doesn't mention that presidential gambling is illegal in the US, save for a few no-action letters[1] to specific clearing houses. That alone puts a massive selection bias when trading contracts on platforms like Augur or Polymarket. [1]: https://en.wikipedia.org/wiki/Prediction_market#Legality https://en.wikipedia.org/wiki/Prediction_market#Legality
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Sniffnoy 6y ago
I mean speaking personally, the reason I don't get in on such things is that I'd have to hold cryptocurrency. This means both technical complexity (Buterin discusses the fairly low complexity of getting into such markets once you know how to effectively use Ethereum, but not that of getting up to speed on using Ethereum in the first place) and a security problem: Either I keep it in an exchange and have to worry about how trustworthy that exchange is, or I keep it myself and have to worry about losing it all should my private key accidentally become exposed. So, that's the specific reason I haven't gotten in on it. Get past that barrier and yeah I would've been buying NTRUMP for sure.
- Tenoke 6y ago
  It took me just under 5 minutes to go from debit card to Poly.market in the summer the first time I bet on it, though I later did it with my bank account via Coinbase for slightly lower fees.
  - Kranar 6y ago
    I decided to just go for it, I mean if there's free money like this article suggests, why not take it? I can throw the minimum 250 bucks at this and expense it on the company card for research purposes. There's literally a market for whether Donald Trump will be president on March 31st of 2021 with offers available at 98 cents, so presumably I can make a 2% return in a month right? Okay well I signed up, I had to buy USDC and that cost me 8%. In the future I should use Coinbase to cut that down to 0.50%, but for now my motivation is just to see if this thing is for real. After a fairly smooth sign up process that took about 10 minutes, involved confirming my e-mail address, an SMS and then verifying a credit card transaction, I got the 230 USDC sent to me and immediately used it to buy NO on Trump being president. I wont lie, this was easier than I expected, the whole process took about 10-15 minutes tops and as far as I can tell I do legitimately have this position. I guess the only concern left is whether there's some loophole that will cause this market not to resolve at all/become invalid. I will do a few more transactions later today since the site is literally displaying some fairly significant arbitrage opportunities. I will do it with just a couple hundred dollars at a time as a proof of concept, and if this works out then perhaps I go a little deeper, use Coinbase Pro to buy and sell the USDC.
mywittyname 6y ago
> There was also another problem: I did not have any DAI. I had ETH, and I could have sold my ETH to get DAI, but I did not want to sacrifice my ETH exposure; it would have been a shame if I earned $50,000 betting against Trump but simultaneously lost $500,000 missing out on ETH price changes. Doesn't this fact pervert the underlying market? Now there are two components at play: the actual underlying odds of the election result, and the price fluctuation inherent in DAI/ETH. Another way to frame this bet is as a high interest loan with some probability of not needing to be paid back. They are borrowing $0.85 worth of DAI/ETH now and may need to repay it in the future. That being said, I could be misunderstanding how this all is working. The system seems complicated.
vlovich123 6y ago
What happens if Jan 6 had happened and Trump was successful in remaining president despite having lost the election. Who would win the payout? However the market makers decided?

209 points by 0-_-0 6y ago

I considered myself pretty in-the-know and knew about Predictit, all kinds of crypto, and therefore I thought I was up-to-date on the crypto news but I did not even know that there was a crypto clone of Predictit. >blockchain-based markets are highly niche Not sure if he means if the whole of blockchain is highly niche or blockchain-based prediction markets are highly niche, but if it's the latter, I definitely agree.

solveit 6y ago
Check out Polymarket, much smoother UX than Augur (at the cost of being more centralized, as I'm sure you guessed).
ruuda 6y ago
https://astralcodexten.substack.com/p/metaculus-monday https://astralcodexten.substack.com/p/metaculus-monday and https://astralcodexten.substack.com/p/metaculus-monday-2821 https://astralcodexten.substack.com/p/metaculus-monday-2821 mention a few other markets.
elwell 6y ago
I had heard of Augur but not PredictIt.

ErikAugust 6y ago

"The best way to predict the future is to create it." I always thought the the problem with prediction markets is you have the incentive to make the prediction come true. And that gets ugly fast. But hell, I guess that's what all this is at the end of the day.

ahelwer 6y ago
Yep, it clearly leads into assassination markets - for example, opening a large bet that person X will die on a specific date.
- solveit 6y ago
  Yes, just like you can short Tesla and assassinate Musk. This is ridiculous, regulate prediction markets like any other financial market (in particular, your identity should be traceable) and then all your clever plan does is get your funds frozen pending a very thorough investigation.
  - lostlogin 6y ago
    > assassinate Musk. Would this cause Tesla stock to rise or fall?
    - bidirectional 6y ago
      Fall massively, I would imagine. Tesla's valuation is obviously not driven by fundamentals, Musk's personality is one of the things it is based on.
- ouid 6y ago
  Isn't that just life insurance?
  - mbg721 6y ago
    It sounds like term life for an unusually specific term. But you do typically have to have an insurable interest in order to buy insurance on someone's life.
  - m463 6y ago
    That got ugly too until they prevented people from taking out life insurance on people without their knowledge/consent
pdonis 6y ago
> the problem with prediction markets is you have the incentive to make the prediction come true If players in the market have ways outside the market to significantly affect the outcome that the market is betting on, then it isn't a prediction market. The whole point of a prediction market is that there is no such feedback mechanism. For example, the article discusses prediction market bets on Trump winning the election. The underlying assumption of such markets is that no player has more than one vote in the actual election, out of some 150 million or so votes, so each individual player's ability to affect the outcome is negligible.
- Imnimo 6y ago
  >The underlying assumption of such markets is that no player has more than one vote in the actual election, out of some 150 million or so votes, so each individual player's ability to affect the outcome is negligible. But this is not necessarily true. In the extreme case, a bettor could be one of nine Supreme Court justices. Or a participant in some sort of fantasy vote-rigging conspiracy. Or even a political insider tanking their candidate's own chances and betting against themselves. There's a pretty wide range of people who could plausibly (or not-so-plausibly in the conspiracy example) have more than a one-vote influence over the result of the election.
  - tshaddox 6y ago
    Sure, that’s why there are rules about when and how a CEO can sell their company’s stock (they generally have to announce the sale in advance). I’m not sure about the laws around Supreme Court justices, but I’m pretty sure it’s at least well-accepted that no judge should work a case when they have a personal interest in the outcome. I hope that would be grounds for removing a justice.
  - jtxxwl2 6y ago
    >Or a participant in some sort of fantasy vote-rigging conspiracy. This is even more relevant outside of the US. In the US vote rigging conspiracies are impossible for some inexplicable reason, perhaps related to magical soil, but outside of the US they are a real concern.
hugh-avherald 6y ago
That's why you have counterfactual prediction markets. You don't have markets on an outcome; you have two markets of an outcome conditional on some action, and on an outcome conditional on that action not being taken.
- dylan604 6y ago
  did you just describe sports betting?
jetrink 6y ago
One recent example is the man who ran onto the field at the Super Bowl after having proxies place $370,000 in bets on that occurring. However, he bragged about what he had done on a radio show and those bets were invalidated.
- notahacker 6y ago
  Another example that springs to mind is a British bookmaker that ran a promotional betting offer on a fat lower division substitute goalkeeper eating a pie during a televised cup match. The fat goalkeeper ate a pasty whilst sitting on the bench, and was promptly banned for a couple of months even without any evidence of financial gain for "intentionally influencing a betting market"
  - roganartu 6y ago
    There was another example of this in Australia back in 2016 where some prediction markets offered a novelty bet on what colour tie one of the TV hosts would wear. The host got wind of it and, for fun, changed ties at least five times throughout the evening. https://twitter.com/sportsbetcomau/status/749219697359396864 https://twitter.com/sportsbetcomau/status/749219697359396864 https://www.smh.com.au/politics/federal/federal-election-2016-laurie-oakes-ties-up-bookies-with-multicoloured-offering-20160703-gpxhr0.html https://www.smh.com.au/politics/federal/federal-election-201...
rmb177 6y ago
Rumor on PredictIt was one of the reasons they shut down tweet markets was Andrew Yang's campaign received email threats in regards to him tweeting.
__s 6y ago
Just have to keep in mind that bets could be a strange gofundme & don't participate in bets that can be bought out against you
gumby 6y ago
That's similar to short sellers trying to manipulate a stock: pretty much only works in the shallows (small cap, thin coverage, moderate liquidity). You could manipulate the dogcatcher election (or, more profitably, a bond initiative) but a presidential election is probably too hard, especially in this case (amount of money you'd need to spend is much larger than the amount you could make on these markets).

monkeydust 6y ago

>Blockchains are often criticized for being speculative toys and not doing anything meaningful except for self->referential games (tokens, with yield farming, whose returns are powered by... the launch of other tokens). There >are certainly exceptions that the critics fail to recognize; I personally have benefited from ENS and even from >using ETH for payments on several occasions where all credit card options failed. But over the last few months, >it seems like we have seen a rapid burst in Ethereum applications being concretely useful for people and >interacting with the real world, and prediction markets are a key example of this. Was hunting this week for real-world use cases for blockchains, this is one to add to the list I feel.

tptacek 6y ago
It is in the same way drug bazaars are: states have been hesitant to regulate blockchain applications, so they're a form of regulatory arbitrage. Without regulation, nothing prevents conventional predication markets from removing limits.

IAmEveryone 6y ago

I've always had the impression that the cryptocurrency community was trending rightwards. So it's good to see some quantifiable evidence of it. Which leaves the question: why? Technology as a whole is centre-left, so there's something else going on. One common theme seems to a loss of trust in any institutions, and democracy itself: "the FED is just a private bank" isn't far away from "the mainstream media is lying", and even the latter is an opinion more common among the crypto bubble as far as I can tell. Or are crytocurrencies of interest primarily to people interested in "getting rich, fast" and therefore liable to glorify a self-annoited master of making money with little work?

Fireflite 6y ago
The enormously wasteful environmental cost of PoW is certainly a turn off to those of us on the left as well.
whatshisface 6y ago
That's not quantifiable evidence of a political bias. You win in a prediction market by guessing who will win, not by stating who you want to win.
- avarun 6y ago
  Right, and as mentioned in the article: The markets were guessing Trump would win after he had already lost. If that's not evidence of a political bias to you I'm not sure why.
  - whatshisface 6y ago
    When hurricane forecasters predict that a hurricane will strike a city, would that be evidence of their pro-hurricane bias? If they were consistently overeager to predict hurricane strikes, would that be evidence that they supported hurricanes, or merely were overcalibrated to predicting them?
    - SpicyLemonZest 6y ago

bigpumpkin 6y ago

One thing he didn't talk about was capital gains tax. If I wanted to bet on the election, I would first have to realize my short term capital gains.

ahnick 6y ago
He avoids capital gains in the article by using a MakerDAO CDP. This is a loan that is collateralized by his Ethereum holdings. (IIRC 1.5 ETH to the amount of DAI you want)
- mannykannot 6y ago
  Indeed, though at 3:2 you are apparently at considerable risk of the loan being called by anyone (with no margin call beforehand): If the value of the ETH collateral that you deposited drops to less than 150% the value of the DAI you withdrew, anyone can come in and "liquidate" the vault, forcibly selling the ETH to buy back the DAI and charging you a high penalty. Hence, it's a good idea to have a high collateralization ratio in case of sudden price movements; I had over $3 worth of ETH in my CDP for every $1 that I withdrew.
  - as300 6y ago
    While this is true, you could easily write a listener script (very easy with ETH due to the extensive bloom filter use) that adds more collateral to your position if it reaches, say, within %175 of the capital you withdrew.
    - Sargos 6y ago
      DeFi Saver does this and has a large userbase. https://defisaver.com/ https://defisaver.com/
tantalor 6y ago
Prediction market positions are not capital gains in the same way that lottery tickets are not capital gains. It is gambling.

phpnode 6y ago

The problem with making this bet is that the value of the underlying crypto can move by far more than the possible 15% return while the result is pending. 2 months is more than enough for the price to double or halve and people want to be able to exit to fiat at a moment's notice when they think things are heading south.

fairity 6y ago
There are cash-based markets like Predictit where you could've made a similar bet. Predictit charges 5% withdrawal fees + 10% of profits, but if you expect a 15% ROI, it's still profitable.
- dragonwriter 6y ago
  The fiat-based prediction markets tend to limit the number of people in a particular markets, the size of positions in the market, and a number of other aspects of the market in a way which make it difficult to seize apparent opportunities and to limit the possible returns from doing so, even before considering the way that their fees eat up returns.
  - tialaramex 6y ago
    These limits are because the ones you're thinking of are research projects, not in fact betting markets (even though as an individual you can treat them as betting markets just fine). This makes them accessible (legally) to US residents. Betfair is a British gambling firm, and isn't a research project, when Betfair's "Did Donald Trump win the US presidential election?" and "Did Joe Biden win the US presidential election?" closed it had hundreds of millions of pounds of bets across those two questions. I got paid, as in I put cash in and a couple of weeks later more cash was paid out to my bank account when BetFair closed it, for knowing that Donald Trump did not win that election in December. It was even possible (though of course risky) to buy the lows and sell the highs as MAGA rallied when they thought the Kraken had been released, or when Rudy was going to prove everyone wrong, or whatever other nonsense. I was actually underwater for more than 50% of the two weeks between placing my "bet" and the cash returned, because MAGA were bidding up the "Donald Trump won" position even as it became increasingly obvious that they'd lose everything.

Supermancho 6y ago

What I read was a story of making money from some niche prediction market sites (that I would never touch). There is also quite a bit of handwaving, eg "I saw more and more arguments from Very Smart People whom I respected arguing that the markets were in fact being irrational and I should participate and bet against them if I can. Eventually, I was convinced." and showing some math from trivial arbitrary scenarios the author poses (nothing to do with the story). This then dovetails into how ETH is a good bet because, they know some calculus? This is crypto-promotion, plain and simple.

avarun 6y ago
...it's written by Vitalik Buterin. Of course he thinks Ethereum is good?
- lucasverra 6y ago
  Vitalik is Ethereum founder
- vonwoodson 6y ago
  Thank you for pointing out the obvious: That even on HN people talk before they know even they tiniest thing about who or what they are talking about.
  - Supermancho 6y ago
    > That even on HN people talk before they know even they tiniest thing about who or what they are talking about. Regardless of the author (I don't bother to google every author) the content is as stated. It's a crypto-ad and not much else.
    - drdeca 6y ago
      I think the expectation of the article is that the reader knows who the author is, and therefore expects the article to be pro ETH , insofar as it mentions it.
6y ago

Temasik 6y ago

how do i downvote this scammer

fallingfrog 6y ago

I think what we’re seeing is that the set of people making bets on political outcomes leans sharply Republican. It’s selection bias. There may be a broader message there about representation too: if you are sitting in a meeting and 8 people think something is going to happen, but you disagree, and they are all upper class men (for example), and you’re a lower class woman, you probably have a better than 1 in 9 chance of being right, if it’s an issue that affects the public generally. People don’t realize their views are non representative if they live in an echo chamber.

viklove 6y ago
You should start a quant firm employing only lower class women, and use their insight to decide which companies to invest in. If your hypothesis is correct, you'll be filthy rich in no time at all.
- fallingfrog 6y ago
  That’s actually a pretty good idea.. but in the short term and during a speculative bubble, you make the most money by chasing what everyone else is also investing in, so it pays to have groupthink. The approach you suggest would probably work though if you could be patient over the course of the whole business cycle, 20 or 30 years.
- chillacy 6y ago
  This is already kind of true but you don’t have to employ them, just run focus groups and surveys.
fallingfrog 6y ago
By the way the point I’m making is about echo chambers not women being wiser than men. If you are the only white man in the room the same rule might hold. I feel like people are making an excessively shallow reading of what I just wrote.

xalava 6y ago

"Prediction markets" is a fancy word for gambling. It is a highly regulated activity almost everywhere, mainly has it can have terrible consequences at the individual levels and major side-effects such as corrupt games in sports. Let's not even talk about politics where it is generally forbidden for obvious reasons. The conclusion is disheartening "It shows a lot about how market efficiency actually works in practice, what are the limits of it and what could be done to improve it." Yes at a small scale, but at the current rate of adoption of crypto it will not go well if it is still treated as a playground.

f430 6y ago
It's worse that people actually believe it is a reliable way to predict the future especially now with the pseudo-intellect speak that people in the crypto space resort to. If wisdom of the crowd worked then casinos would be out of business. There's an entire industry on the other side.
- jldugger 6y ago
  > people actually believe it is a reliable way to predict the future It's comical because I made like 30 percent in the span of a few months by betting against well known biases in IEM -- the investment stakes are too low for informed participants to move the market meaningfully. But it's too low stakes to bother automating arbitrage strategies that would remove some of the bias of the public market.
- myownpetard 6y ago
  What is the relationship between casinos and wisdom of the crowd? Just about all casino games I am familiar with have known and controlled odds. There is no need for a 'wisdom of the crowd' to compute the probability distribution.
- rspeele 6y ago
  > If wisdom of the crowd worked then casinos would be out of business. That does not follow. In prediction markets or sports betting, the gamblers aren't betting against the casino. They're betting against each other, and the casino (PredictIt, BetFair, etc) is skimming off the top, just like Duke & Duke in Trading Places. Most forms of gambling where players do bet directly against the house are games of pure chance where no amount of wisdom will help you beat the odds -- odds which are naturally always stacked in the house's favor. Not to say that I think these betting markets are good at predicting future outcomes. They're clearly very bad at it! But I do think in concept they could be at least as good as any other method, since the existence of a betting market essentially sets a bounty for beating that market. What is limiting them is a mix of: obscurity, bet size limits, bet participant count limits, counterparty risk of shady betting sites, cost of fees/taxes making many bets not worth taking. Some prediction markets eliminate parts of that equation but amplify others, like the crypto markets not having the bet size limitations but also being much more obscure and shady. Furthermore, I don't even think those are problems that should be solved, because if none of those problems existed you'd see big traders like investment companies playing in prediction markets with billions of dollars, and then you'd have way bigger problems with insider trading and the market affecting the outcome. Things as mundane as surprise resignations and as shocking as assassinations. People already joke about stuff like that happening on PredictIt, with its $850 investment cap. No way to prove that it did, but it would be very easy for certain employees to do and get away with it. For example, in the 2020 election there was a market for when the GSA would ascertain the winner (releasing funds to the transition team). That was a decision made by one government employee. The market started on Nov 18th and had brackets like "Nov 23 or earlier", "Nov 24-Nov 30", "Dec 1-Dec 7", and so on. By the afternoon of Nov 23, with no news, the "Nov 23 or earlier" bracket was trading at 1c. Then the ascertainment happened and it settled. Now, that could have been a coincidence. It probably was a coincidence. But if you were the GSA administrator you could've made around $70k taking those 1c shares on the 23rd, and nobody would have to know.

as300 6y ago

I see quite a bit of disappointing talk that disregards the contents of the article, here. Namely, the author names one sort of bias that led 'Very Smart People' to give an outsized likelihood of Trump winning: >I remember thinking at the time that this particular opinion of his was over-confident, perhaps even a result of over-internalizing the heuristic that if a viewpoint seems clever and contrarian then it is likely to be correct. Doesn't this explain crypto-user's pro-Trump bias? Someone who uses crypto as a way to play on a prediction market is necessarily going to be contrarian, to some degree (remember we're being constantly bombarded by claims of how all crypto is "just speculation"). In the same way, believing Trump actually has a case for overturning the election results is a highly contrarian view.

pwinnski 6y ago
Note that PredictIt offered similar options for all-cash users, and they were also still at 15% for Trump winning after he had clearly long lost. This was not solely, or even primarily, a crypto thing.
- as300 6y ago
  This was addressed in the article, though. PredictIt odds could've been skewed by: * Maximum of $1000 being able to be invested on the platform * A small fee being taken by PredictIt out of every bet.
  - pwinnski 6y ago
    So PredictIt odds were skewed by bet limits and fees, but you assert that the crypto markets, skewed to almost exactly the same degree, were instead skewed by the contrarian nature of crypto users? Occam's razor suggests that when two different sites correlate so closely, their reasons are likely not so completely different.
vbuterin 6y ago
> Doesn't this explain crypto-user's pro-Trump bias? It does. But I was never surprised that there were people willing to bet for Trump. I was surprised by the lack of people taking the opportunity that was sitting there for over a month to bet against them.

nojito 6y ago

Prediction markets, more specifically predictit, have an hard extreme bias towards the right. I was basically printing money last year.

NovaJehovah 6y ago
You may be correct, but since we are dealing with long tail events, I really doubt that we have anywhere close to enough data to make statistically significant empirical statements about bias. You are almost certainly being results-oriented.
- nojito 6y ago
  Nope. Prediction markets always have a hard right bias. I have been doing this for years.

didibus 6y ago

> There just really are far fewer people than I thought who are actually motivated enough to take a weird opportunity even when it presents them straight in the face It Me hehe I feel my only motivation is fomo, but I'm actually not interested in putting in the effort and time with associated stress, my job already delivers on a lifestyle I'm happy with, so the potential additional money isn't enough to push me to act.

ja3k 6y ago

I had a similar experience on Predictit which I wrote about here: https://ja3k.com/blog/predictit https://ja3k.com/blog/predictit It's still very strange to me that the prices were so irrational.

zone411 6y ago

There was news out on Wednesday about YC-backed Kalshi raising $30 million: https://www.wsj.com/amp/articles/online-trading-platform-will-let-investors-bet-on-yes-or-no-questions-11613557800 https://www.wsj.com/amp/articles/online-trading-platform-wil.... The big difference is that they are approved by the CFTC, hopefully resulting in higher trading limits and more liquidity.

didibus 6y ago

He did need 1 million dollar simply to make a one time 50k return, and it also seemed like it took considerable effort to do it. I don't know how many people with that money also have the know how, are aware of these betting markets, and care much that they'd make an extra one time 50k. I think it'll be interesting to see how crypto based betting markets evolve and if regulations will strike them or not. I don't really know what to think about people simply full on gambling on whatever world event, is that a good thing?

Tenoke 6y ago
He locked 1m dollars to take a loan to use, he didn't use 1 million dollars. You can use your assets directly and do earn a 10%+ profit on whatever you put in this case (which I did).
- dragandj 6y ago
  I don’t know why everyone here is talking about dollars, while there is zero dollars involved all the time. The author did not put in any dollars, but his ETH, which he has plenty, since he created the Ethereum thingy. That may be a large part of the answer why no one “exploited” that hole: most people would have to put real dollars in, expose themselves to all kinds of crypto gymnastics, and end up with ETH, which may or may not be convertible to real dollars where they live. And, yes, they would also have the always pleasant exposure to tax authority now (which may or may not be solvable, depending on the place of Earth one happens to live at).

oramit 6y ago

I actively participated in the prediction market this election cycle on Predict-It. I didn't know anything about the Ethereum applications so this was an insightful read. My main takeaway from this whole election cycle was that the betting markets were not that great at predicting the outcome. As the article points out, and I agree with, a big reason is just that these markets are underdeveloped. You have to really be interested in politics or gambling to get involved and the transactions costs are high. Because of this you end up with a mix of die-hard partisans and gamblers looking for an edge. No normal people are participating on these sites. In fact the markets on predictit were sometimes comically wrong because of partisan money. As the author mentions there were contracts trading at 15 cents for Trump to win states after he had already lost them. I bought the NO contracts for 85 cents and made good money on that. For quite a while on predictit there was a persistent pro Trump bias to almost every state level contract. It persisted even after the count was over! The second reason is that the betting markets themselves were just a reflection of polling data. I'm sure some sophisticated people were using other sources to make bets but most of the predictit discussions were just about polling and how to weight certain polls. There didn't seem to be some big insight that analysts like Nate Silver had missed that the prediction market sniffed out. In the interest of full disclosure I fall into both the partisan and gambling camps. I wanted Biden to win but knowing that I avoided contracts that were political since I knew I would bias myself. I went instead for proxy contracts where pricing was out of whack. I settled on the total vote count: https://www.predictit.org/markets/detail/6882 https://www.predictit.org/markets/detail/6882 Each bracket has a 3 million vote range and about a month out from the election I saw that the higher range contracts were underpriced. For some reason the predictit market had concentrated the betting around the 2016 vote total which made no sense to me. I knew this was going to be a big turnout (even more partisan than 2016 and everyone was at home with covid). At the very least it was going to be more than 2016. The prices were so low on the contracts I just bought all of them above the 2016 numbers with a bias to the upside and it worked out quite well. It was a fun game but I didn't think it gave me much more insight into the final result.

lend000 6y ago

Prediction markets are fascinating to me. Of course they are not perfect, as demonstrated by this post, and also by the spreads of certain "fan favorite" sports teams that people throw money at irrationally. I still think that on average (just like prices in any other decentralized markets), the prediction prices are better than any known centralized system, and with a robust implementation, could be used for important planning.

woeirua 6y ago

This seems like an extremely risky way to make this bet. By trying to keep his exposure to ETH price changes, he set himself up for a scenario in which he could lose $1 million for a potential upside of $50k. Not sure I would make that bet. A lot of people recognized this for what it was, but chose not to play because of how finicky PredictIt and other prediction markets were around the rules of the game. In most previous elections they would have already closed the markets. Personally, I made off with a nice chunk of change buying No-Trump on WI, MI, GA, and AZ after the election, but I only played with what I could afford to lose.

ttul 6y ago
Vitalik is worth hundreds of millions (if not more - I haven't checked in a while). He can afford to play games like this.

eargaaadfa 6y ago

Clearly Trump won and the Democrats staged a coup: https://hereistheevidence.com/ https://hereistheevidence.com/ We're currently under occupation by a geriatric pedo that is completely mentally shot and controlled by Xi Jinping.

NickLamp 6y ago
I'd like to sell you a bridge

ttul 6y ago

Say what you will about cryptocurrencies, it sounds like a damn interesting area in which to be spending your time as an engineer, even if 90% of the stuff ends up being total crap or a fraud.

PragmaticPulp 6y ago
> even if 90% of the stuff ends up being total crap or a fraud Working on something that turns out to be total crap or a fraud is actually very demoralizing, not to mention not great for your resume. In the distributed systems space, I've interviewed a lot of burnt out engineers who thought they were getting in on the next big blockchain company that turned out to be a couple founders use blockchain as a get rich quick scheme. For every story we hear about people getting lucky by timing something blockchain-related just right, there are many more people who got the timing wrong and lost out when the hype collapsed. Be careful out there.
- Tenoke 6y ago
  >Working on something that turns out to be total crap or a fraud is actually very demoralizing, not to mention not great for your resume. Too bad most people here have worked on startups that failed then.
- ttul 6y ago
  On the other hand, my friend worked as CTO for a doomed blockchain startup that raised a huge amount in an ICO. They paid him handsomely and then imploded. No harm.

jldugger 6y ago

Interesting that Vitalik doesn't mention that presidential gambling is illegal in the US, save for a few no-action letters[1] to specific clearing houses. That alone puts a massive selection bias when trading contracts on platforms like Augur or Polymarket. [1]: https://en.wikipedia.org/wiki/Prediction_market#Legality https://en.wikipedia.org/wiki/Prediction_market#Legality

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Sniffnoy 6y ago

I mean speaking personally, the reason I don't get in on such things is that I'd have to hold cryptocurrency. This means both technical complexity (Buterin discusses the fairly low complexity of getting into such markets once you know how to effectively use Ethereum, but not that of getting up to speed on using Ethereum in the first place) and a security problem: Either I keep it in an exchange and have to worry about how trustworthy that exchange is, or I keep it myself and have to worry about losing it all should my private key accidentally become exposed. So, that's the specific reason I haven't gotten in on it. Get past that barrier and yeah I would've been buying NTRUMP for sure.

Tenoke 6y ago
It took me just under 5 minutes to go from debit card to Poly.market in the summer the first time I bet on it, though I later did it with my bank account via Coinbase for slightly lower fees.
- Kranar 6y ago
  I decided to just go for it, I mean if there's free money like this article suggests, why not take it? I can throw the minimum 250 bucks at this and expense it on the company card for research purposes. There's literally a market for whether Donald Trump will be president on March 31st of 2021 with offers available at 98 cents, so presumably I can make a 2% return in a month right? Okay well I signed up, I had to buy USDC and that cost me 8%. In the future I should use Coinbase to cut that down to 0.50%, but for now my motivation is just to see if this thing is for real. After a fairly smooth sign up process that took about 10 minutes, involved confirming my e-mail address, an SMS and then verifying a credit card transaction, I got the 230 USDC sent to me and immediately used it to buy NO on Trump being president. I wont lie, this was easier than I expected, the whole process took about 10-15 minutes tops and as far as I can tell I do legitimately have this position. I guess the only concern left is whether there's some loophole that will cause this market not to resolve at all/become invalid. I will do a few more transactions later today since the site is literally displaying some fairly significant arbitrage opportunities. I will do it with just a couple hundred dollars at a time as a proof of concept, and if this works out then perhaps I go a little deeper, use Coinbase Pro to buy and sell the USDC.

mywittyname 6y ago

> There was also another problem: I did not have any DAI. I had ETH, and I could have sold my ETH to get DAI, but I did not want to sacrifice my ETH exposure; it would have been a shame if I earned $50,000 betting against Trump but simultaneously lost $500,000 missing out on ETH price changes. Doesn't this fact pervert the underlying market? Now there are two components at play: the actual underlying odds of the election result, and the price fluctuation inherent in DAI/ETH. Another way to frame this bet is as a high interest loan with some probability of not needing to be paid back. They are borrowing $0.85 worth of DAI/ETH now and may need to repay it in the future. That being said, I could be misunderstanding how this all is working. The system seems complicated.

vlovich123 6y ago

What happens if Jan 6 had happened and Trump was successful in remaining president despite having lost the election. Who would win the payout? However the market makers decided?