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"Would you like to make a bet?"

A simple verbal battle between friends has now been turned into a large social platform with over a million participants.

In recent months, a prediction market platform called Polymarket has rapidly emerged and attracted a lot of attention.

Polymarket allows users to bet on real-world events with cryptocurrency. Some popular bets include the results of the U.S. election,What words will Trump and Musk mention in their conversations, how many tweets will they send, when GPT-5 will happen, and more。

The platform believes that it has gathered the "wisdom of the crowd" and its predictions about the future are more accurate than traditional expert models and opinion polls.

Why is Polymarket so popular? It has even been listed as a data source for public opinion forecasts by various media outlets. What exactly is this website?

Trump and tampons

"Bet on what you believe in." On Polymarket, users can bet on a wide variety of events, including political elections, sporting events, economic indicators, pop culture events, business, scientific events, etc., both serious and absurd.

Not long ago, Polymarket users bet about $5 million on what words Trump would say during his conversation with Elon Musk on August 12.

The highest payout came from a last-minute bet that Trump would say "Tampon."

The most money was spent on predicting whether Trump would say "cryptocurrency," followed by "MAGA" and "illegal immigrants." Trump ended up saying three words: "MAGA," "illegal immigrants," and "tampons."

When Trump said the slogan "MAGA," the odds were 59%, meaning bettors would receive a return of just under double. For "tampons," the odds were 7%, meaning bettors received a return of up to 14 times.

"Congratulations my tampon brothers," one Polymarket user commented when Trump uttered the word.

A user who didn't make the prediction commented, "Tampons are the first bet I lost out of 51 times. I'm sad."

Users bet on what Trump and Musk will say in their conversation｜Image source: Polymarket

In contrast, users who bet on "cryptocurrency" suffered a heavy blow, as this market had the most money, but it ultimately did not happen. The odds that Trump mentioned "cryptocurrency" were initially 65%, but fell to zero by the end of his speech, causing those who bet on this item to suffer heavy losses.

Polymarket’s betting markets have seen a surge in activity following Trump’s return to social media platform X (formerly Twitter). These markets allow participants to bet on a variety of outcomes, with huge sums involved, on Trump’s online behavior and public statements.

One of the more active betting pools is predicting how many tweets Trump will send out in the next week. Participants can bet on different ranges, from 11-15 tweets to more than 50 tweets.

There is also an active betting pool on whether Trump will tweet again before the election. Any original post, reply or quote tweet from Trump will be considered a "yes"; retweets are not counted.

In addition, markets on Polymarket also focus on other events, such as predicting the country with the most Olympic medals, predicting movie box office performance, predicting Premier League results, predicting the number of interest rate cuts by the Federal Reserve, etc.

Users bet on the first weekend box office of "Alien: Taken"｜Image source: Polymarket

There are also questions like "Will August 2024 be the hottest on record?" "Will the United States confirm the existence of aliens in 2024?" "When will GPT-5 be released?" "When will Sony release the Playstation 5 Pro?" "Will Taylor Swift get pregnant in 2024?" "Will Taylor Swift support Kamala Harris?" "Bieber Baby: Boy or Girl?" and so on.

Users bet on predictions for "Bieber Baby: Boy or Girl?" | Image source: Polymarket

Users bet on predictions: "Will the United States confirm the existence of aliens in 2024?" | Image source: Polymarket

There are more than $100,000 in bets on whether the US government will confirm the existence of aliens by the end of the year, but Polymarket shows only a 3% chance, which is about the same as the prediction that Trump will go to jail before the election.。

But overall, the platform's most popular bet is on the US election results. So far, Polymarket users have bet more than $500 million on the election results.

US election results prediction | Image source: Polymarket

Prediction markets have even begun to emerge as an information tool, believed to reflect collective sentiment and event probabilities.

It is said that it is becoming increasingly popular in American political circles to look beyond polls and focus on betting markets to understand voters' thoughts. Polymarket's predictions are also frequently cited as data by media such as The Wall Street Journal, The New York Times, The Washington Post, Fortune, and Bloomberg.

Jason Furman, a Harvard University economist who served as chairman of the Council of Economic Advisers in the Obama administration, also said the White House "frequently consults prediction markets on election results and specific events."

Over the past few months,Polymarket reportedly successfully predicted US President Joe Biden's withdrawal from the re-election race and Donald Trump's selection of JD Vance as his running mate。

Polymarket executives directly stated that people have become less and less trusting of traditional opinion polls and the media's use of polls as a source of predictions, and the platform has found "A crazy product-market fit, as we’re currently going through what is probably the most unpredictable and turbulent election in U.S. history.」

Many people lie to pollsters but tell the truth when it comes to betting real money。

The Polymarket team said, "It is very easy for people to only believe the media that confirms their biases and expected results, and the algorithm will ultimately only provide people with information they agree with. Polymarket tells people the true probability regardless of what anyone wants to happen."

However, like traditional polls, Polymarket is not infallible.

In June 2024, users of the platform predicted a 61% chance that Trump would mention Bitcoin in his debate with Biden, but this did not happen. Similarly, they failed to successfully predict the outcome of the 2024 French election, and of course, some traditional polls did not predict it either.

The birth of the "world's largest prediction platform"

Polymarket isn’t just a novelty on the U.S. election scene. It’s also a hot startup, with $70 million raised to date, including a $45 million round in May.

Investors include the founder of Ethereum and Peter Thiel, author of "Zero to One". The latter is best known for acquiring 10.2% of Facebook's shares for $500,000 in 2004, becoming Facebook's first external investor that year.

Polymarket received investment from Peter Thiel and others｜Image source: X

The founder of Polymarket, who is almost unknown outside the cryptocurrency circle, is a 26-year-old New York native named Shayne Coplan, who studied computer science at New York University, is obsessed with cryptocurrency and predicting markets, and has been featured in Fortune magazine.

Shayne Coplan, who learned to code as a teenager, is rumored to have been the youngest participant in the initial sale of Ethereum in 2014 for 30 cents, with ETH now trading at $2,600.

Shayne Coplan on X said Polymarket was the first place to predict that JD Vance would be former President Donald Trump’s vice presidential pick. He also wrote,Polymarket “priced” the probability of Biden withdrawing from the presidential race earlier and with higher probability than the media predicted。

Polymarket founder Shayne Coplan | Image source: Polymarket

In July this year, according to Dune Analytics data,Polymarket achieves record monthly trading volume of over $387 million with over 40,000 active tradersIn comparison, the site had just 1,200 monthly active traders and $6 million in bets during the same period last year.

Unlike traditional platforms, Polymarket runs on the blockchain and uses smart contracts to settle and pay bets. It is one of the fastest growing on-chain applications and uses automated market makers (AMMs) to provide liquidity to the market. One of the radical ideas of the platform is to break the shackles of traditional prediction tools through a decentralized market mechanism.

They believe thatWhen predictors have money to invest, they work very hard to find the right answer.。

"Prediction markets are more accurate than expert models or surveys in predicting the future." Polymarket once claimed this in a blog post, giving two basic reasons.

The platform said that first,When people have money to invest, they will combine all the best analysis they can find., consulting polls, models, expert commentary and other factors not necessarily reflected in popular indicators.

The second reason is,Prediction markets allow people to express not only their opinions, but also their confidence in those opinions.This is a distinction that cannot be matched by opinion polls or simple thumbs-up, thumbs-down systems, which allow a small number of very confident people to move the market in a direction that reflects their views through their bets even when the majority of people hold different views.

Polymarket posted an example: For example, in a certain election, suppose there are a hundred people who believe that a certain candidate will win, but their certainty is only 80%. Then suppose there is one person with superior knowledge who is 100% sure that this candidate will lose, perhaps because he has a proprietary analysis of early mail ballots and clearly sees that others have misread the data.

In a rational free market, this person would make a very large bet, and the market would shift to reflect his view.Even if only one person has better information, he can overcome the "misinformation" guiding the majority by betting big enough.。

Polymarket claims: “In an unconstrained rational free market, the best answer wins: market odds will shift to reflect the views of those with the best information.”

Because it operates on a blockchain network, information about its transaction volumes is public, which the platform says makes it a better source of real-time public sentiment data than polls or traditional media.

They also feel that this is very different from social media.On social media, the news that gets amplified is the most popular news, not the most accurate news.。

What is the problem with social media discussions? “One problem is that, because of the way algorithms and product features on platforms like Facebook and Twitter work, opinions and predictions on social media tend to be optimized for maximum engagement. Well-researched, thoughtful predictions shared on these platforms are often replaced by other information that lacks analysis or evidence but is deliberately extreme or provocative, or that simply repeats what the audience already wants to believe. In addition, many social media platforms are rife with bots, fake accounts, state-sponsored manipulation, and paid promotional content. Understanding the world through social media is bound to produce a rather distorted picture of reality.”

Instead, Polymarket claims that prediction markets are used only to facilitate transactions between individuals who believe they have enough information and analysis to predict future events.Prediction markets reward those who make successful predictions, are free from the distortions of large amounts of online activity, and expand global access to unbiased information。

The platform claims that their platform is "good for society" because businesses, policymakers, and organizations can use the predictive insights generated by prediction markets to accurately understand the world and plan accordingly. "It doesn't take a large number of people to participate in a particular market to generate valuable information that has the potential to help people around the world better plan for their future."

“Polymarket is a decentralized global prediction market platform that enables predictors to earn money by speculating on world events, giving everyone a clearer view of the future. Prediction markets are one of the most effective tools for improving society’s ability to predict the future and make decisions. Polymarket’s mission is to drive adoption of prediction markets to reward accuracy and repair the information ecosystem,” the platform claims.

 Become a "predictive indicator"

Even for those who don’t want to “bet”, they can still watch various predictions. The platform’s information, predictions, and data visualizations are publicly available. So, for some people, Polymarket has become a data information source website.

「Engagement data shows that while average site visit time is consistent with content publishing sites, most of the approximately 1 million unique visitors never engage with the marketplace. This suggests that users primarily derive informational value from Polymarket.. " the platform said.

Polymarket is launching a series of newsletters and is also working with major media outlets to include its data in stories, and its charts have appeared in outlets such as The Wall Street Journal.

In mid-August, Polymarket also announced a partnership with AI search engine Perplexity AIAccording to Perplexity, in the future its more than 10 million users will see news summaries with real-time probability predictions when searching for events, such as election results, market trends, etc.

Polymarket and Perplexity AI reach a cooperation | Image source: Perplexity

Similarly, Polymarket announced a partnership with Substack last month, allowing Substack writers to embed data from prediction markets in their articles.

Now Polymarket calls itself the “world’s largest prediction market” on its website, but according to investors, the website pays for expenses such as a New York City office and dozens of employees, and the platform’s revenue is still “very low.” Its founders are considering charging fees in the future.

It is worth noting that to this day, the voices against Polymarket on the Internet have not disappeared. Critics have such views: "Isn't the prediction market a euphemism for online gambling?" "Polymarket is a haven for cryptocurrency scammers" "This is a gambling site, right? The dealer sets the odds, and the gamblers place their bets... If you want, you can call it a prediction market, very smart, but still very ruthless. Is this what the world needs?"

As prediction markets grow, they also have some issues, such as if someone has inside information about a news event and creates a market to bet on an outcome they already know, it is unclear how this would be handled.People are beginning to rely on prediction markets to form opinions about the future outcomes of major events, and those with enough capital can become manipulators。

In May this year, the CFTC (Commodity Futures Trading Commission) released a proposed rule aimed at banning all derivatives trading related to the US election.

In August this year, eight Democratic senators and representatives jointly wrote a letter to the CFTC urging it to ban political gambling markets, which they believed "could influence and interfere with election results."

Even with the hat of "innovation", in the eyes of those who hold a neutral attitude, how Polymarket can find a balance between the ideas it promotes and the actual legal requirements remains a question.

Image source: Polymarket