I'm not a gambler, nor do I understand the thrill of watching candlestick charts and getting my heart racing. But when CNN and CNBC announced that they would integrate digital odds from prediction markets into their news broadcasts, I felt as if we were being played by a new kind of "truth."
Crypto bro is preaching: traditional polls will be replaced; experts are the high priests of the old era; only odds based on real money can reflect the wisdom of the masses and the truth of reality. However, the trading logic cultivated by prediction markets is exactly like Keynes's "beauty contest"—you no longer care who is the most beautiful, you only care about "who others think is the most beautiful." The concept of beauty itself is "dissolved," like the urinal Duchamp placed in the art gallery. Prediction markets will continue to accelerate, then stall, until more and more sober people begin to "short" this frenzy, "short" the prediction market narrative itself.
Exchanges and casinos are two distinct worlds. Farmers worry about falling grain prices, while downstream food processing plants worry about rising prices, so they come to the derivatives market to find people willing to take the risk. It is this difference in demand that allows transactions to occur.
However, in the context of prediction markets, such natural hedgers do not exist. This results in a market consisting only of market makers, smart money with insider information, and gamblers destined to be fleeced: if an informationally superior counterparty is willing to trade with you at this price, the trade is highly likely to result in a loss for you. Once the "dumb money" runs out, liquidity dries up rapidly. Because insider traders are allowed to exist in large numbers, prediction markets, without a continuous influx of gamblers, become an unsustainable new Ponzi scheme.
In natural systems, a thermometer reading doesn't change the air temperature, and Halley's Comet will still return on schedule no matter how much we bet. But in social systems, probability itself has the power to "distort reality," and the observer's greed can alter the observed reality.
Ethereum can guarantee the "economic security" of its blockchain network through its staking and staking mechanism, but prediction markets are completely incapable of guaranteeing "social security." On the contrary, they even reward destruction.
If a billionaire bets heavily on an extreme event, he is essentially funding that outcome and using market probability signals to create panic or consensus. Huge sums of money can generate immense potential energy, in turn influencing media reports and public confidence, forcibly shrinking an uncertain outcome into what the bettor desires.
Kaito, which aspired to be an information distribution center, ultimately became a radio station that only radiated noise. Prediction markets, which tout themselves as telescopes for the future, couldn't prevent themselves from becoming billboards for creating the future.
Many people believe that with the relaxation of regulations and the influx of capital, the prediction market will definitely be the next big trend. But things always go to extremes.
People are gradually realizing that we are at the top of the cycle of "gambling culture".
Complete financialization will only lead to emptiness. People will eventually tire of this high-frequency dopamine stimulation and return to the experiences of life. We will start turning off the screen, going hiking, touching the real earth, reading paper books, and building deep relationships outside the screen.
Short selling to predict the market is not only about going long on "human agency," but also about going long on "life."
Since we can't go back to the past, perhaps the only way out is to stop wasting time at the virtual gambling table and turn around and step into the sunlight.
