In this article, we will discuss the real reason why these prediction markets exist in the world. Also, we will discuss what the origin of this market is and why this market is not like the sportsbook style.
What is the real reason for this market to exist?
Prediction markets are like a giant experiment that is going on all over the world. This experiment is kept to see which person is good with facts and figures and wins all the time. This is done so that people can get help in predicting what will happen in the future of mankind. These were established for academic purposes, not to make a profit as it is now.
The main idea under this kind of market is the wisdom of the crowd in the world. They wanted to see if the wisdom of the crowd is bigger than the knowledge of a person. In simple term, wisdom means the knowledge which emerges from the opinion of people in the crowd.
Instead of using the knowledge of a single person, they use the knowledge of every person in the group. They think that involving a broad range of people with broad knowledge will give them results. The prediction market uses this wide range of beliefs, knowledge, and data through its free market.
They provide data in the form of money to see what the crowd or the people in them choose from it. They use real money in this project because they want people to take an interest in this. People think that by using money, they will double their winning. This is somewhat true. As the company setting up this project runes this kind of operation for their benefit and uses these people.
What is the origin of this market?
According to the economist’s Paul Rhode and Koleman Strumpf, the origin can go back to 1503 and 1884. They tell us that in 1503 this kind of prediction existed but was closed or shut down by the rulers. Then they also stated that in the year 1884, it started again and was being used by many people.
In the year 1884, this kind of prediction was done on Grover Cleveland or James blain, who would become president. This shows us that this kind of market has a connection to politics and elections in the US. It is a popular belief that the prediction market is still in connection with election and politics, which is true. They have also told that many of this market was shut down before 1945 and newly opened in this year.
Why does the prediction market not operate in sportsbook style?
The common difference is that when you visit a game of soccer or football, you have to pay cash to the bookmaker. He will then set the odds and keep the amount of minimum and maximum bet, which is not a free market. Whereas, in the prediction market, you can bet any amount of money you want. Also, there are no fixed odds or anything like this in the prediction market, which makes it a free and better market.