Vitalik Buterin: Prediction markets are healthier than traditional markets and are better for finding the truth.

According to a report from 深潮 TechFlow, on December 21, Vitalik Buterin stated that prediction markets are an antidote to the crazy opinions surrounding emotional topics. His personal view is that the worst-case scenario for prediction markets is that they incentivize harm for profit, but this is not the case for small-scale prediction markets focused on large-scale events. The traditional stock market also has similar drawbacks, as political participants can profit from disasters by shorting stocks.

Vitalik Buterin pointed out that prediction markets have advantages over social media and mainstream media. Social media comments lack accountability, while prediction markets ensure that the system tends to seek the truth over time through profit and loss mechanisms, with probabilities displayed that more accurately reflect the uncertainties of the world than other systems. Because prediction market prices are constrained between 0 and 1, they are healthier compared to ordinary markets and are less affected by reflexivity, the greater fool theory, or pump and dump schemes.