Prediction markets is one of the oldest market since the times of sports and the events were being treated as an event of bets. Ever since that time prediction markets have thrives in the world. Some nations treat them with illegal status while some of the other ones are being treated like stock market and are regulated.
First such markets were super personal. And then they turned out to be on the computers and internet was used to gather larger userbase. Then turns out the blockchain started keeping the prediction market data with smart contracts for further automation.
How much legal are these crypto prediction markets? So far every nation keeps an eye on the betting and prediction markets and anything that is put up needs a ledger so that they can have more granular control over the revenue. So blockchain makes it more transparent to handle these changes.
So let's take a look at how the crypto prediction markets work on blokchain.
Real Life Based Prediction Events into Market
Just like the prediction markets of the past. Blockchains too allow you to look at the real life event. Say between trump and biden, there is a chance of getting biden elected again. So you set this event for another prediction level. You set the blockchian oracles and the research attached to such research event. And then let the betters add their leaning to the market event.
Regardless of what happens to the event, it'd get triggered onthe time. It takes a look at the leaning side that wins and then declare the result through automated results being posted on the site. And this would complete the smart contract, winners would be earning their dues and those who lose the funds would give in to the funding pool. More transparency and the more data on the blockchain.
Decentralized Crypto Prediction Market
Prior to internet, the prediction markets were done by the people who were into the gambling business. And then the market moved more regulated through the places where govt used to take the cut for such betting and the prediction markets pool of funds. Now with the blockchain, there is an event of the crypto prediction market being decentralized and amount of the smart contracts rising on such prediction events.
With decentralization, you can check when the contract is made. And also every vote and the funding movement would be able to track on the chain. Provided that the company that makes use of this makes the data open source. Which kind of makes the approach more decentralized and this is what most of the chains would be doing. Currently polygon, DeSo and many other chains have this.
Regulation, Money Laundering and Manipulation
This market was always risky and the way it worked out. It always made you lose money. Because there are too many strings which manipulate the results and also it would be leading to some of the worst results if these results are skewed in real life which would hurt the domino of events outside this market. Which is where the govt regulation comes into the prediction market.
Money laundering is another issue which deserves to be regulated. China recently managed to take people into custody who were actively involved into the prediction market where it turns out they were betting on the upcoming election results. And in the disguise of that they managed to move the funds across the nation withoout any regulation and the banks involved. Like this there is going to be massive manipulation in this space for money movement.