In a recent social media post, Ethereum co-founder Vitalik Buterin poured cold water on the idea of romanticizing “hyperstition,” which is the concept of a prediction market actually forcing reality to happen.
This comes after Charlotte Fang stated that prediction markets with sufficient liquidity could end up programming reality.
Buterin, however, would view this as a highly negative outcome, viewing this as a failure mode.
“One of the danger cases”
When people with huge amounts of money bet on a certain event happening, the odds shoot up close to 99%.
Since the market is stating that something is likely, the real world could create the event that could match the market.
For instance, if there is a market about a certain company failing, investors might pul funding or so on. Hence, the market is causing the future.
The Ethereum co-founder claims that this actually could be one of the danger cases. If prediction markets gain the ability to manufacture the truth, they will lose their fairness.
The Canadian prodigy has specifically singled out two issues with such markets. First of all, there is a danger of a whale monopoly being established, which will lead to a hyperstition being created exclusively by large actors. Hence, the reality could be engineered by whales. There is also the so-called “hitman” problem, meaning that a prediction market could actually incentivize people to cause harm. Bad actors could potentially make bad outcomes materialize after making massive bets.
Source: https://u.today/danger-case-ethereums-buterin-argues-prediction-markets-can-be-manipulated
