The TRUTH About Crypto PREDICTION MARKETS!!

0:00Hello and welcome to Coin Bureau's official podcast channel. My name is Guy and if you're seeking unbiased in-depth information about Bitcoin, cryptocurrencies, Web3 and all manner of related topics, then you've come to the right place. I hope you enjoy today's episode. While 2025 was disappointing for many corners of the crypto market, there's one sector that exceeded expectations, prediction markets. These platforms have been growing exponentially, but now the sector risks oversaturation and fragmented liquidity, to say nothing of the controversy that prediction markets have aroused. This has many investors wondering if prediction markets are the next big thing or just a passing fat. So today, we'll uncover where prediction markets came from, how they work, how you can profit, and whether or not they're here to stay. My name is Guy. Let's dig in. Before we begin though, you need to know that I'm not a financial advisor,

1:02and nothing in this video is financial or investment advice. It's educational content intended to inform you about prediction markets. And if you enjoy content like this, then prove it by punching that like button. Now, if you're asking yourself what the heck is a prediction market, then here's what you need to know. In short, a prediction market is a place where people bet on the outcome of future events like an election, sports match, a product launch, or even an interaction between celebrities. Traders place their bets on these events with a standard yes or no option being the most common. So an example of a simple bet is will the Democrats win the mid-term elections? And an example of a slightly more complex bet is how many seats will the Democrats win in the house. Now, the price of each bet or share usually trades between zero and one dollar, but always settles at one dollar when the event finally occurs. While the betting is still active, the price will move up or down based on which way traders

2:06place their bets, reflecting the odds of that event happening in real time. So, if a yes result is trading at 63 cents, this basically means traders think there's a 63% chance of that outcome happening. If they're right, the trade will close at one dollar, and they pocket 37 cents in profit per share. If something happens and traders think the odds of the yes result are lower, the price for the yes shares will fall to say 43 cents. This not only presents a short-term trading opportunity, but a bigger return of 57 cents if traders stick to their guns and end up being proved right. And because lots of people bring their own insights together to place their bets, these markets often give surprisingly good forecasts. Case in point, prediction markets famously outperformed most traditional polls and news outlets in predicting the outcome of the 2024 US presidential election. Polymarket, which will revisit shortly, gave Donald Trump high odds of victory in October at times

3:11approaching 100%. This basically signaled a Trump win days before any major network reported any decisive results. Now, although prediction markets may seem new, given the recent hype, they've actually existed in some form or other for thousands of years. Ancient civilizations wagered on everything from gladiator matches and chariot races to political outcomes and even when the next war would occur. By the 1900s, Wall Street started running informal betting markets printed in financial papers. It wasn't until the early 1990s, though, that prediction markets went digital. This made them even more efficient to the point that they consistently surprised economists and policymakers with their increasing accuracy. Once the internet went mainstream, everyone and their mother was betting on politics, sport, economic indicators, you name it. And the more participants joined, the better these markets captured public opinion, the more accurate they became and the more lucrative they were

4:12for users. Naturally, this eventually attracted the attention of regulators like the commodity futures trading commission or CFTC. Some of their biggest targets included Intrade, an island-based prediction market that was the first to go mainstream. In late 2012, the CFTC sued Intrade for operating an unlawful off-exchange options market and the platform was shut down in 2013. Another example was predicted a New Zealand prediction market popular with US traders. Initially, it got a CFTC staff no action letter allowing it to run without regular scrutiny. But in August 2022, the CFTC withdrew the letter and ordered predicted to wind down operations. Luckily for them, court rulings overturned the withdrawal and predicted was able to continue. Anyway, from the CFTC's perspective, prediction markets operate in a gray area. In their view, offering betting contracts on things like election results constitutes gaming,

5:13which is essentially gambling. But the tide shifted in November 2023 when Kowshi, one of the largest traditional prediction markets of the modern day, sued the CFTC over its election contract ban. To the surprise of many, Kowshi actually won the case after the DC District Court ruled that in order to ban something as gaming, you must also label the underlying event as gambling. Now, since an election is the result of a political process and not the result of gambling, the court ruled that the CFTC had overstepped its authority. This was a huge win, not just for Kowshi, but for all prediction markets, and it set the stage for the enormous boom we've seen in the sector over the last couple of years. Now, doubtless you're finding all of this deeply fascinating, but what does any of it have to do with crypto, I hear you ask. Well, you see, prediction markets of old faced lots of hurdles. They were fully centralized systems prone to bottlenecks around accessibility, payments,

6:18and regulation. There were also concerns around transparency and manipulation. However, by putting prediction markets on public transparent blockchains, it became possible to overcome these hurdles. The fact that you need nothing more than an internet connection to access these crypto-based prediction markets also makes it possible for more people to get involved, regardless of where they live. It's just one of the many benefits of crypto, benefits that you can take advantage of by using the CoinBurier deals page. That's where you'll find exchange sign-up bonuses of up to $100,000, trading fee discounts of up to 50% and deposit cashbacks of up to 75% on the best crypto exchanges. Just hit the link in the description or scan this QR code, which will take you to the deals page. There, you'll see all of our offers across a range of exchange partners. Simply click one of the sign-up now buttons and that should take you right to the deal. Now, these deals won't be around forever though, so take advantage of them while you can using the link in the description

7:22or by scanning this QR code. Now, whereas traditional prediction markets have been around for thousands of years, crypto-based prediction markets trace their origins to the founding of Orga on Ethereum back in 2014. After several years of development, Orga launched in 2018, promising a decentralized alternative to prediction markets with a built-in oracle for reporting outcomes and even its own native token. But Orga was ahead of its time and failed to gain traction. The same was initially true for NOSIS, which was founded in 2015 in the consensus ecosystem. And if consensus sounds familiar, that's because it's the company behind the Metamask wallet. NOSIS was set up with the explicit goal of creating a decentralized prediction market on Ethereum. It developed the Conditional Tokens Framework, which laid the foundations for Omen, its own prediction market, which launched in 2016. At its peak, Omen had more than 85 million

8:28dollars in total value locked or TVL according to DeFi Lama. For comparison, Orga had just $18 million in TVL at its peak, so Omen was a big step forward for crypto-based prediction markets. The quantum leap forward didn't happen though until 2020 when Polymarket was founded by Shane Copeland. As a fun fact, Copeland built the protocol alone during the pandemic in his apartment bathroom due to financial constraints, motivated by a desire to combat misinformation through incentivized truth-seeking. As the name suggests, Polymarket initially launched on Polygon due to its fast low-cost transactions. And the platform experienced slow but steady growth at first, but gained significant traction during the US presidential elections of 2020. Trading volumes began to soar as people's interest in betting on the election outcome continued to grow. Perhaps unsurprisingly, the CFTC raised concerns about Polymarket in 2021,

9:30alleging that it offered unlicensed binary options. In early 2022, Polymarket settled the dispute, paying $1.4 million and shutting down non-compliant markets. The platform then restricted US users to viewing only preventing them from trading. Despite this massive setback though, Polymarket continued to see rapid growth. It raised $45 million in funding in 2024, with investment coming from the likes of Peter Teel's Founders Fund, and even Ethereum creator Vitalik Biterin. Polymarket then saw significant inflows during the 2024 presidential campaign. In fact, its peak TVL hit around $512 million on the 6th of November 2024, according to DeFi Lama. Once the results landed, traders rushed to cash out and TVL dropped fast. Still, the platform's broader growth helped its TVL settle around $100 million, and it's been rapidly climbing again since August. There have been lots of other

10:34prediction markets launching recently as well, but we'll stick to the biggest ones here for the sake of time. The key takeaway is that the sector is growing rapidly because people are now betting on everything. And as more people apply their knowledge to place these bets, more economists and journalists will cite their data, which only attracts more users. To put things into perspective, the prediction market industry is pulling in around $2 billion per year in revenue, at least for now. Analysts believe that prediction markets still have 5x growth ahead of them in the coming years, reaching $10 billion in annualized revenue by 2030. Now, as you've probably heard, crypto prediction markets have seen their fair share of controversies over the years, some being more severe than others. What you may not know, though, is that many of these controversies actually have to do with users rather than the platforms themselves. The scariest example is definitely what happened to Orga. The platform started receiving scrutiny when traders began placing bets

11:39on the deaths of key political figures. Quite besides the ethical issues this created, it also raised concerns that prediction markets could become assassination markets, with people being motivated to kill in real life to make online profits. Other controversies have been much more tame by comparison. For instance, there have been plenty of allegations of users, especially whales, placing bets using non-public information across all crypto prediction platforms. In other words, insider trading. A recent example of this came in early December, when a pseudonymous polymarket user, Alfa Rikun, allegedly made $1.5 million in a single day by correctly predicting Google's 2025 year-in-search rankings, which included some pretty obscure topics. However, on-chain data showed the bets were placed just before Google published its official data.

12:40And to make matters worse, Alfa Rikun allegedly made other Google-related predictions in November, including a bet on the exact release date of Gemini 3.0. The bet Julie paid off netting the trader a $150,000 profit. Now, obviously, many suspect that Alfa Rikun could be a Google insider, although there's no concrete proof, just speculation. And of course, this is just one example of many. Other accusations of alleged trading on insider information include trading on the results of the Nobel Peace Prize earlier in the year. For context, the prize went to Venezuelan opposition leader Maria Corina Makado, but what's crazy is that her odds were extremely low during the run-up. Polymarket had Makado at just 3.6% at 6.30pm the night before the results, but from there, the odds began to soar. By 7pm, just 30 minutes later, Makado's odds of winning shot up to 39%.

13:42An hour later, they were at 73%. Roughly 10 hours later, Makado was Julie declared the winner. And this suggests that traders knew something that the rest of us didn't, and anyone watching Polymarket got to see the winner before everyone else. But it's one thing to see the results early. Using prediction markets to alter odds or manipulate real world outcomes is something else entirely. You see, by taking advantage of the low trading volumes on each bet on a prediction market, users could, in theory, alter the odds to push an agenda or shift the public narrative. And many believe this is indeed what's been happening. A notable example of this was with the 2024 presidential election, where it was reported that four accounts had used Polymarket to place multi-million dollar bets on a Trump victory. One French trader allegedly bet over 50 million dollars that Trump would win, raising concerns that such massive wages inflate his odds and potentially

14:44influence the outcome. Some outlets even labeled it a threat to democracy. That said, multiple experts and Polymarket itself found no evidence of market manipulation. Even so, ethical concerns about using prediction markets to influence real world events are only likely to grow in the future as the usage of these prediction platforms increases. Now, although most controversies around prediction markets involve users, platforms themselves have been caught in the Crossfire too, including Polymarket and Kalshi. That's because both platforms have actively been recruiting internal market-making teams to provide liquidity, which some argue could be used to trade against users. Kalshi runs a unit called Kalshi Trading, which places bets on the opposite side of some customer bets. Executives say the intention is to create liquidity and improve the user experience. Critics, however, argue it creates a conflict of interest and puts customers at a disadvantage.

15:48And Polymarket recently announced it was doing the same. Just like Kalshi, Polymarket is using an internal trading team as part of an effort to boost liquidity and support trading on its platform. But many argue that, again, like Kalshi, this could make Polymarket resemble a sportsbook, especially as prediction markets have recently shifted from politics to sports. This is significant because Shane Copeland himself has described sportsbooks as a quote, scam that rips off the customer. There's also a bigger issue, and that's the similarity to gambling. Basically, prediction market operators have been accused of allegedly exploiting unclear legal definitions, allowing them to operate where traditional gambling platforms can't. That's because, unlike actual sportsbooks, which fall under state jurisdiction, prediction markets are overseen by the CFTC. This has sparked some backlash, but platforms like Kalshi and Polymarket argue that what they're offering is event contracts, which are different

16:52from gambling, albeit that the legal difference between the two is up for debate. Logically, this creates regulatory uncertainty at the state level, especially since the CFTC can't always override state law. The result is a regulatory patchwork of sorts, where operators can be legal in some states, but face cease and desist orders, or even lawsuits in others. Outside of this, there have also been concerns around questionable contracts and ethical boundaries, especially the darker examples like we mentioned earlier. Some platforms have hosted markets tied to real world crises, like the Los Angeles wildfires in February 2025, or even the war in Gaza. Now, to be clear, those prediction platforms didn't create those markets themselves, users did. But many argue there should be stronger safeguards to prevent sensitive human impacting events from being turned into a kind of digital casino, and honestly, they're not wrong. I mean, it's a pretty grim thought, people betting on catastrophic events, and then celebrating when

17:57tragedy turns into profit. So then, with everything we've covered today, you're probably wondering whether prediction markets are actually here to stay. Well, the answer is yes. Despite all the controversy, it's pretty clear that prediction markets aren't going anywhere. In fact, they're likely to become even more prominent in the years ahead. Platforms like Kalshi are already being integrated into major exchanges like Coinbase and Crypto Wallets like Phantom. Prediction markets are also being promoted by key players inside and outside of crypto, like the aforementioned Vitali buterin, who said that prediction markets are better than regular markets or social media. That's simply because contract settle between zero and one, which he argues reduces the hype and pump and dump nature of other speculative markets, like memecoins. Meanwhile, Elon Musk is also known as a supporter of prediction markets, saying that they're more accurate than polls and other

19:00forecasting methods because there's actual money on the line. As you'll recall from earlier, some experts estimate the prediction market sector could be worth $10 billion by 2030. But we actually believe it could grow even more, especially if it becomes a leading narrative in crypto, like many, including Coinbase, have predicted. Coinbase has even predicted that eventually there could be so many prediction markets that aggregate as emerge, becoming the sector's day facto interface. And you can learn more about Coinbase's predictions for 2026 by checking out our recent video right over here. And if you thought prediction markets are purely about speculation, then think again. They're also being used by institutions to hedge against things like policy risk, regulatory uncertainty, and shifts in narrative. Basically, these large players are purchasing event contracts to help offset losses in their equity portfolios, a strategy that's likely to

20:01expand in the future. So then, this begs the question of how you can profit from prediction markets. Well, as it happens, there are a number of methods. One way is to simply use these platforms to farm for potential air drops. For instance, polymarket is expected to air drop its own token very soon. Another way to profit from prediction markets is to pay attention to what's going on in the world and make educated bets about what could come next, especially if it's clear that the markets are not pricing them in. Now, it goes without saying that this strategy doesn't guarantee profits, but if you're keeping up with the headlines anyway, you might spot an opportunity that others have missed. And if you're not keeping up with the headlines, then you could also use a simple method that's becoming increasingly popular, and that's to bet on outcomes that are almost guaranteed. So for example, if you see an event contract trading at an 80% probability, then this means there's a pretty good chance of this outcome being the end result. That means an easy 20% profit in theory

21:07at least. Repeat this a few times and you could make decent returns. Just remember, though, that all markets are manipulated, including prediction markets. And don't forget that we're living in truly crazy times. Events that seem highly unlikely tend to happen more often than people expect, especially in politics and geopolitics. So pay attention to what's going on, stick to what you know, and good luck. Alright, if you want to see how the next major catalyst could come from China, then check out the video right over here. And if you're wondering what challenges Bitcoin will face in 2026, then check out the video here. Thank you all so much for watching and I'll see you again soon. This is Guy, signing off. Hello, Guy again. Before you go, if you have a moment, please do rate and review us. It really helps the podcast grow and find new listeners.

22:10Okay, that's all for this episode. Thank you for listening and see you again soon.