We need a predictions market for bitcoin

[lemonginger]

A predictions market that allowed bitcoin trading on everything from football matches to elections to stock market movements to TV show outcomes would be fantastic. Hell, I see no reason why InTrade itself couldn't accept bitcoins and have made the suggestion to them. (Though I suppose the volatility of bitcoins would be difficult if you had someone using another currency on the other side of the bet, maybe a bitcoin only prediction market would work best for the time being)

[1714059907]

1714059907

[1714059907]

1714059907

[enmaku]

I'm already in talks with InTrade about how they can go about accepting bitcoin and automating the process of converting between BTC and USD.

[lemonginger]

That's exciting news if true. What do you mean by "in talks"? I sent them a few emails but just got basic customer service boilerplate about it looking interesting and they were looking into all options etc.

[byronbb]

A prediction market is a VERY good idea. The CIA wanted a prediction market to gauge terrorist risk but everyone went nuts.

[billyjoeallen]

I completely agree this is a good idea! 

[Fireball]

It's not exactly on-topic for this thread, but just for reference I'm working on a full featured futures contracts trading system (intraday, marginal trading, market making, interface for algorithmic traders). If there is such a demand, prediction market could be supported as well, however I specialize only in serious financial stuff and derivatives markets.

I will make more posts about this later, with a more thorough description. If there are any suggestions/etc - please feel free to discuss.

[Michiko]

It's not exactly on-topic for this thread, but just for reference I'm working on a full featured futures contracts trading system (intraday, marginal trading, market making, interface for algorithmic traders). If there is such a demand, prediction market could be supported as well, however I specialize only in serious financial stuff and derivatives markets.

I will make more posts about this later, with a more thorough description. If there are any suggestions/etc - please feel free to discuss.

Would you mind giving an update on your project? I must have missed the later post you're mentioning above. It might be interesting both for you and your future clients if you could sketch how you would handle core issues of Futures, settling, margining, matching? I'm sure many of us have pet hates about existing exchanges and how they deal with their users. Taking early feedback on board might prevent repeating mistakes certain exchanges or market data providers keep making over and over again.? I'd appreciate any information you can share, maybe an early prototype for testing the idea?

[Fireball]

It's not exactly on-topic for this thread, but just for reference I'm working on a full featured futures contracts trading system (intraday, marginal trading, market making, interface for algorithmic traders). If there is such a demand, prediction market could be supported as well, however I specialize only in serious financial stuff and derivatives markets.

I will make more posts about this later, with a more thorough description. If there are any suggestions/etc - please feel free to discuss.

Would you mind giving an update on your project? I must have missed the later post you're mentioning above. It might be interesting both for you and your future clients if you could sketch how you would handle core issues of Futures, settling, margining, matching? I'm sure many of us have pet hates about existing exchanges and how they deal with their users. Taking early feedback on board might prevent repeating mistakes certain exchanges or market data providers keep making over and over again.? I'd appreciate any information you can share, maybe an early prototype for testing the idea?

Yes, I have been discussing those things via PMs with a few members of this forum, there are some complexities related to bitcoin anonymous. However, I decided to create a universal trading engine, which would support both "spot" trading (robust currency exchange, as there is virtually no alternative to Mt. Gox, and Mt.Gox itself is highly vulnerable as we saw) and derivatives trading (including any kind of prediction market). If all goes well, we will announce a prototype of this product very soon.

Some of the features:

• Secure by design (writing exchange engine in PHP which runs on the same webserver is a non-sense, serious projects aren't done this way)
• Based on proven technologies (instead of inventing own vulnerable stuff, already existing and tested open solutions are used)
• Fast. PHP and other web development should be used only for web front-end, but under no ways for implementing time-critical business logic

[lemonginger]

bump

[TheKoziTwo]

I'm working on this, it will work similar to intrade where you can buy/sell shares depending on if you believe the event will occur or not. I'm not just making a prediction market, but multiple markets so it will take some time (aiming for 1-2 months).

The greatest issue with such market is probably the work involved setting up and ending predictions, I was thinking to create a system where members can submit suggestions and then make it available for voting where those suggested predictions with the most votes are being implemented (in addition to a few predictions that run continuously.)

[lemonginger]

or in the short-term, you could just copy, say the 50% most popular predictions being traded on the big prediction markets -- that would get people using the market and hopefully bootstrap the liquidity needed in any successful predictions market while not having to worry about the time and energy of either editing/cultivating predictions or allowing the downward spiral of everyone being able to offer whatever predictions they want to be traded and then everyone getting frustrated that there is not enough liquidity to actually trade any predictions

[nightwolf]

Buy Low. Sell High. There's a tip for ya!

In all seriousness, predicting BTC trends could be tricky. It's difficult even define what "liquidity" means for BTC. In normal currency terms, if a single entity is stopping major transactions, or trying to pump the market with a whack of cash, they are either holding up or intentionally interfering to create or destroy liquidity (sort of a dirty float). Reserve Banks of countries play this game a lot (esp. emerging markets). And trader expectations are tipped well ahead -- so the market prepares for it.

This cannot be done with BTC because we don't know where the vast majority of cash is trapped? Perhaps blockexplorer.com can pull off such a feat or MtGox? How are total number of BTCs in circulation tracked? And if necessary, can the tracking infrastructure estimate where major pools of BTC cash exist? That's the key for liquidity, and consequently, market prediction/direction.

[crispy]

Love the idea of prediction markets, and love the idea of having an other-than-play-money payoff. 

Hate the idea of the FBI seizing the server farm, or having DNS service shut off.

Have any readers here looked into how to balance easy access for users with resistance to censorship efforts?

Setting up a TOR "hidden service", for example, addresses the latter, but not the former.

[lemonginger]

As long as the servers are out of the US, I don't see anything happening anytime soon. As I have said, I think exchanges are in the most murky grey area for awhile. Predictions markets are legal in much of the world, the only problem would be with offering "gambling" to US residents. Even there, it is a grey area, since it is unknown whether the Wire Act or UIGEA apply to bitcoin. Even there it is an easy work around since there is no way to seize money exchanges and to seize actual servers belonging to actual businesses doing actual legal trade in other parts of the world is a big deal.

No need for a Tor hidden service.

[NothinG]

Maybe we can have a word with ThePirateBay.
They seem to be doing fairly well.

[Edit]:
Anyone else notice ThePirateBay not loading?

[done]

l