Prediction Markets Explained: Betting on the Future with Crypto
Prediction markets let you trade on the outcomes of real-world events. Here is how they work, why they are powerful, and where to use them.
Prediction markets are exchanges where you buy and sell shares representing the probability of real-world outcomes. "Will Bitcoin exceed $150,000 in 2026?" trades at 42 cents — meaning the market collectively assigns 42% probability to that outcome. They are simultaneously a financial product, a forecasting tool, and a form of information aggregation.
How Prediction Markets Work
- A market is created for a specific outcome: binary (Yes/No) or multiple choice
- Shares representing "Yes" trade between $0 and $1 — price reflects market's probability estimate
- If the outcome resolves Yes, Yes shares pay $1 each; No shares pay $0
- You profit if you buy Yes shares below the eventual resolution price (or No shares if the event doesn't happen)
- Market prices aggregate information from all participants — often more accurate than polls or expert predictions
Why Prediction Markets Are Useful
- Information aggregation: market prices incentivise people to share their private information
- Election forecasting: Polymarket and Metaculus have consistently outperformed poll-based models
- Corporate forecasting: internal prediction markets help companies aggregate employee knowledge
- Scientific forecasting: community prediction of research outcomes and replication probabilities
- Trading: identify information asymmetries for profitable trades when you have knowledge others don't
How to Get Started
Polymarket is the dominant decentralised prediction market in 2026, built on Polygon and settled in USDC. No KYC required (for non-US users), instant resolution via oracle verification, and a large active market with thousands of active contracts. Access Polymarket via Steyble using your USDC balance — connect your wallet, select a market, and take a position.