Blockchain Based Prediction Markets

Prediction markets are a form of collective intelligence that leverage market mechanisms to incentivise large numbers of individuals to make forecasts about future uncertain events. Since their origin in the 1980’s, they have been the subject of a small but steady stream of academic research. Proponents suggest that they have several advantages over comparable information aggregation mechanisms such as polls or expert groups. More recently the rise of blockchain, cryptocurrencies and decentralised finance (DeFi) has excited new interest in prediction markets. The characteristics of this triad of technologies has particular resonances with prediction markets. This research identifies the potential impact of blockchain technology on prediction market design and performance with a view to informing a research agenda to investigate those potential impacts.