- Ethereum founder Vitalik Buterin says prediction markets promote truth-seeking behavior on emotionally charged topics better than social media.
- Buterin acknowledges concerns about assassination markets but says that small markets on big events do not create harmful incentives.
- Prediction markets experience less volatility than cryptocurrency and stock markets.
Vitalik Buterin, founder of Ethereum, revealed through a series of posts on Farcaster that he believes prediction markets are a remedy for extreme opinions.
Ethereum founder Vitalik Buterin discussed the ethics of prediction markets, considering them an important balance against misinformation on social media platforms.
### Can betting on Polymarket become an ethical issue?
In a series of posts on Farcaster, Buterin responded to critics who questioned whether betting on tragic events like wars and deaths is an ethical failure for the cryptocurrency industry.
The discussion started when a user named Cassie criticized the practice of "gambling on whether a number of people will die," calling it one of the reasons for widespread hatred of the cryptocurrency industry.
Buterin explained that small prediction markets focused on big events do not create dangerous incentives for individuals to cause harm. He also noted that traditional stock markets carry similar risks.
Unlike other social media platforms where sensational claims generate engagement without accountability, Buterin says prediction markets are truth-seeking environments.
"Prediction markets as a remedy for extreme opinions on emotionally charged topics," he wrote.
In conclusion, Buterin believes that on social media, users can make dramatic predictions about wars or disasters without facing consequences if proven wrong. Mainstream media uses sensational headlines that distort the public's perception of actual risks.
Buterin shared personal examples of verifying Polymarket prices after reading alarming news headlines, only to discover that experienced participants still placed the probability of that event at just 4%.
He argued that prediction markets face less manipulation from rebound effects, "greater fool theory" dynamics, and pump-and-dump schemes that plague cryptocurrency and stock trading, as their prices are bounded between zero and one, representing probabilities from 0% to 100%.
### Can betting on prediction markets cross a line?
Cassie wondered whether markets predicting someone's death could actually influence outcomes rather than just following information, directly asking if Buterin was "okay with that."
"Yes, this is an assassination market. I oppose that," Buterin replied.
He then listed several measures that prevent such markets from functioning effectively, including supporting "social norms that weaken the oracles to make such markets break more."
As examples, he pointed to Augur's historical design feature of "unethical voting," which allowed participants to nullify markets deemed inappropriate.
Buterin suggested that journalistic standards play a role by avoiding the publication of death details that make such markets easily solvable. He suggested that if assassination markets become a bigger problem, making it easy for people to temporarily fake their deaths and claim rewards themselves could help break the incentive structure.
This is not the first time Buterin has defended the right to bet on events through prediction markets like Polymarket. Last year, he shared similar thoughts on the ethical and literary questions surrounding some markets, referring to the Israel-Hezbollah war at that time.
