> 1. People who have insider information, or at least more sophisticated predictive capability than your average person.
This bucket as you've defined it is too broad.
There are a few different kinds of non-gambler participants in prediction markets:
1. People with "insider information" as we think of it - they "know" the answer to the market because they are "involved" somehow.
2. People who aim to do superior analysis of publicly available information to produce an edge. For example, an AI firm with better hurricane prediction modeling may try to monetize that by betting on whether or not a hurricane will impact an area.
2b. People who do the work to create new information. For example, the Trump 2024 election market on polymarket famously had better odds for Trump than polling. It turned out that a mega whale was bidding Trump up because he had paid for his own private polling in battleground states and that gave him confidence Trump was going to win.
In short, it's mostly incorrect to suggest that prediction market participants are either illegitimate insiders or gamblers; there is a third class of actors that are a very important cohort: those who do the work to create better predictions and monetize their work by betting in the markets. This third cohort of professional predictors is the most important in long-term prediction market growth.
> we live under a system that is arranged for the sole benefit of the owners of capital
This is totally false. The vast majority of consumers enjoy huge benefits from the system while owning almost no capital. For example, Walmart customers or iPhone owners.
A lot of people can't tell the difference between capitalism (which has made their lives materially wealthy beyond imagination) and the root cause of today's economic troubles for ordinary people, which is affordability, which is mostly driven by the housing crisis, which is dominated by nimbyism in megacities.
Fix megacity housing regulation to enable cheap/low risk building that the market wants, and you fix the affordability crisis.
No need to rebuild the (greatest system in the history of humankind) from scratch.
This is good analysis. The main longitudinal aspect omitted is that the profitability of the attack goes up as long as the price of BTC doesn't double or more each halving.
In ~6 more years, Bitcoin will undergo two more halvings, so if the price of BTC is not ~400k by then, then attack will have become more feasible.
> It's a centralized system with a facade of decentralization. Same applies to stablecoins.
Centralized assets in an on-chain wallet are much more useful than in the traditional financial system, for many reasons, but it comes down to friction reduction.
Crypto is a casino (often fraudulent) and a scam factory.
It's also the source of at least one great new global public institution (Ethereum) and is likely to run much of the global economy in the coming decades.
If you hate or are skeptical about crypto, it is crucial to at least understand the difference between three things:
1. Casino/scams/hacks
2. Crypto/on-chain technology
3. Ethereum as a decentralized chain and global public institution
I've been a full-time Ethereum person for many years. I hate the casino. I hate the scams and hacks. But I see something very special going on here. So let me try to describe it
The casino is just terrible and it'll likely get much worse. The steady stream of scam shit tokens sold to unsuspecting investors shows no sign of slowing down. And wait until r/wallstreetbets discovers perps (perpetual futures). Perps for equities are already live and scaling up.
The scams will get much, much worse. Crypto (on-chain) lets you send bearer assets over the internet, it's scam fuel. The bad guys will have access to a sophisticated internet financial system, too.
Hacks in mature protocols should get much better over time due to improved bug-finding techniques, including AI/tool-assisted auditing and formal verification.
The technology of crypto offers the world a number of benefits, including inherently globalized payments and instant settlement.
Centralized deployments of crypto technology are a big segment of the future. For example, Stripe is actively working on a centralized chain named Tempo that's optimized for payments. It is basically fintech 2.0 on the blockchain, but entirely centralized.
The last and most important part of crypto is the rise of decentralized chains. There are only two chains that are remotely decentralized, Bitcoin and Ethereum. Bitcoin has no programmable app layer, so its utility is limited beyond the whatever value the world assigns to BTC.
Ethereum is a decentralized programmable chain, a new kind global public institution. Ethereum can make a highly credible commitment that the rules of the programming environment will be followed in all cases. This makes Ethereum a uniquely excellent neutral hub for global commerce.
Ethereum's decentralization (what we sometimes call "credible neutrality") is driving massive grassroots adoption among corporations and institutions. This is the #1 thing in crypto to keep an eye on because if Ethereum gets large enough it will become a de facto global economic backbone.
I understand you hate crypto. I've lived since 2018 full-time in the industry, and it's been often soul-sucking and harrowing. Many days I hate it. But Ethereum as a platform is benevolent, virtuous, productive, and probably a key part of humanity's future.
> which defeats the whole point of a decentralized, trust-less blockchain, and you could let that trusted party just run a centralized database
A centralized token (like USDC) being held in a trustless wallet is much much better and more useful than the traditional financial system.
For example, USDC in my wallet can be lent out in any onchain lending venue I pick and be sent to anybody in the world instantly.
> lose a private key with real-world assets
You're right, private key security is super important. The practical solution here is that there will be many different kinds of wallets with different trust assumptions and recovery models, and people/corporations will be directed to use the one that's net best for them. Many will be fully or semi custodial.
> When the tokens represent real-world assets the two are not in sync, and there's a risk they may not be reconcilable
Right. The idea here is to have very stringent evaluations of tokenization frameworks, to figure out which real-world asset tokens are actually quality bearer assets (from both a legal and technical standpoint) and which are not. An early example of the work here is BlueChip's stablecoin ratings https://bluechip.org/en
It's true that perp platforms are zero-sum games mostly catering to extremely high risk traders that overwhelmingly rely on luck more than skill. I don't use perp platforms myself.
It's also true that perp platforms can provide very accessible and efficient hedging. For example, if you own NVDA and don't want exposure to their quarterly results volatility, you can take a much smaller amount of collateral than your underlying NVDA shares and use that to open a 10x leveraged short on NVDA in the same size as your main NVDA position. This makes you "delta neutral" so the USD value of your position won't change even if NVDA craters on quarterly results. All without selling your underlying shares. Then you can close the short after the quarterly results are absorbed by the market.
2. Tokenizing all assets (equities, commodities, real estate, etc.)
3. Being able to use those stablecoins/tokenized assets in DeFi protocols that are more automated, more impartial, and less extractive than corresponding traditional finance systems. Including lending and marketplaces to buy/sell. Many industries will see parts of their back offices go onchain. Tokenized real estate + onchain swapping = onchain real estate markets. Stablecoins + onchain swapping = onchain forex markets.
4. All of these being inherently global, so anyone in the world with a mobile phone can access these assets and the onchain financial system.
5. All of these being size-agnostic. The same assets and technologies work with a 5 cent buy of tokenized TSLA stock just as they do with a 50 million buy.
6. All of these capabilities enjoy instant settlement. The act of trading the tokenized asset also settles the trade. There is no more T+1 settlement risk or delay. This reduces risk and improves capital efficiency.
7. Decentralized public chains, especially Ethereum, offer new kinds of credible commitments that are strong enough to bind corporations and governments because the agreements are automated by the highly decentralized chain. Centralized chains (almost all chains) can't do this because they are too easy to rewrite history if governments apply pressure. When using Ethereum, instead of relying on a counterparty to keep their word and then suing them if they don't, parts of that agreement can become automated by the chain, reducing risk of breach of contract and cost of compliance. Maximum decentralization greatly reduces overall risk, which is very valuable at global scale.
8. Generally increased permissionless innovation, stronger property rights, and freer markets. Anybody can use onchain or build onchain, there's no gatekeepers.
I don't think many people on HN realize how globally systemically important public blockchains are on track to become, especially Ethereum.
The understandable hatred of the casino and many scams has blinded most of HN as to the true potential of the technology and its associated new public institutions.
That's what a decentralized public blockchain is, a new kind of public institution.
One small example of this is that the most state-of-the-art perpetual futures market in the world is an Ethereum Layer 2 named Lighter https://app.lighter.xyz/markets/
We should be increasingly skeptical of the claim that crypto can't do better than the existing system.
I myself use defi all the time. At this moment, I could go borrow money on the blockchain and send it to anybody in the world with 5 minutes of notice. I can also swap dollars into gold or NVDA 24/7/365 with 5 minutes of notice. How can we claim this isn't better than the incumbent traditional finance system?
One example is the potential for tokenization on public blockchains to provide a more globalized, automated, and efficient foundation, with stronger property rights, for global financial asset operations.
Good to see more recognition that the housing shortage in the West is actually caused pretty much entirely by policies that made it illegal for the market to provide sufficient housing, and not landlord greed as a popular belief.
lol, this thread has 1 comment and 19 points as of my writing this comment.
Historians will look back with amazement at how little HN seems to care about the future of money and economic systems.
95%+ of HN has been blinded with rage at the massive scams over the years in crypto, and now totally ignores the rapid pace with which this technology is going to eat the economic world.
Cloudflare had another product launch today. An email service. That post has 334 points and 252 comments right now.
With respect, HN is simply delusional about crypto.
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