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May 24, 2013, 10:54:37 PM |
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A prediction exchange is similar to a stock exchange; but instead of trading stocks, you trade shares of the likely hood of an event taking place in a specific time frame.
An example of a statement you might find on an exchange is, "Bitcoin to cost at least $500/Bitcoin by 11:59PM (EST) on 12/31/2013".
You would then buy (agree) or sell (disagree) as many shares as you like on the likelihood of this event coming true (price ranging from .001BTC-.099BTC per share). You make or lose money as the market fluctuates between now and then. The market will then settle at either 0BTC or 0.1BTC depending on if the event comes true.
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