Vitalik Buterin: Prediction markets are healthier than traditional markets and help in seeking the truth.

According to Odaily Planet Daily, Vitalik Buterin published an article on the Farcaster platform stating that prediction markets are the antidote to the irrational views expressed in emotionally charged issues. He believes that, in theory, the worst-case scenario for prediction markets is inducing harm for profit, but this is not the case for small-scale prediction markets targeting large-scale events. Traditional stock markets also suffer from similar drawbacks, where political actors can profit from disasters by shorting stocks.

Vitalik Buterin points out that prediction markets have advantages over social media and mainstream media. Social media lacks accountability, while prediction markets, through profit and loss mechanisms, ensure that the system tends to seek the truth over time, and the probabilities they display more accurately reflect the uncertainty of the world than other systems. Because prediction market prices are confined between 0 and 1, they are healthier than ordinary markets and less affected by reflexivity effects, the greater fool theory, or market manipulation.