The Future of Prediction Markets and Financial Information

Prediction markets are an emerging blockchain application that is constantly evolving. They not only provide participants with opportunities to make money, but more importantly, they can become an important channel for ordinary people to obtain information. Vitalik Buterin, as a co-founder of Ethereum, has always been a staunch supporter of prediction markets. He believes that prediction markets have the potential to be applied in various fields such as social media, science, news, governance, and classifies them as "information finance".

Vitalik pointed out that prediction markets are not just a gambling site, but also a news site. Taking the U.S. election as an example, a certain prediction platform not only accurately predicted the results but also reflected the actual situation in a timely manner when the results were announced, faster and more accurately than many professional news media. Another case is the Venezuelan presidential election, where the prediction market indicated a 23% chance of Maduro being overthrown, which caught Vitalik's attention and made him realize that the opposition's actions were serious.

Vitalik believes that prediction markets and traditional news should be used in conjunction to corroborate each other in order to obtain more comprehensive information. For gamblers, this is a platform for placing bets, while for others, it serves as a channel for acquiring information.

The broader concept of information finance is to use finance as a coordinating incentive mechanism to provide valuable information to the audience. Unlike traditional finance, information finance starts from the facts that people want to understand and intentionally designs market mechanisms to obtain information. In addition to prediction markets, decision markets are also an application that can be used to evaluate the outcomes of different decisions.

Vitalik predicts that artificial intelligence will have a huge impact on the financial industry in the next decade. AI can enable small-scale markets to access high-quality information, which will greatly expand the application of information finance.

Information finance can also be used to "refine" human judgment. By establishing prediction markets to predict the outcomes of expensive mechanisms, a credible, neutral, fast, and inexpensive "refined version" can be obtained. This approach can be applied in fields such as social media and DAO governance.

Other potential applications of information finance include improving personal token projects, optimizing advertising placements, scientific peer review, and funding for public goods. Vitalik believes that now is a good time to explore the potential of information finance, as it can address real-world trust issues, and the development of blockchain technology and artificial intelligence provides solid infrastructure support for it.