What is a prediction market?

Definition

A prediction market is a trading venue where participants buy and sell contracts tied to the outcome of future events. The price of each contract reflects the market's collective belief about the probability of that outcome. If a contract trades at 70 cents on the dollar, the market is saying there is roughly a 70% chance the event happens.

How prediction markets aggregate information

Prediction markets are often described as truth machines. When traders with different beliefs and private information participate, market prices incorporate their knowledge. Traders who believe an outcome is underpriced buy contracts; traders who believe it is overpriced sell. The result is a continuously updated probability estimate that any observer can use to glimpse what the market believes will happen in the future.

As events approach resolution, prices tend to converge toward the truth. This makes prediction markets powerful tools for forecasting — often more responsive than polls or expert panels, because participants have money at stake.

What can you trade on a prediction market?

Prediction markets host contracts on financial and global outcomes: whether an asset price finishes above a threshold, the result of an election, or other verifiable future events. Each market resolves to a definite outcome, and contracts pay out based on that resolution. The instruments traded are called event contracts.

Prediction markets on Glimpse

Glimpse is a regulated Bitcoin prediction market. Event contracts on Glimpse are denominated in Bitcoin, and deposits and withdrawals settle instantly over the Bitcoin Lightning Network. Glimpse Ltd. is licensed by the Bermuda Monetary Authority under the Digital Asset Business Act 2018, and qualified custody of client digital assets is provided by BitGo Trust Company.

To go deeper into the mechanics and mathematics of prediction markets, read the Glimpse whitepaper or the Glimpse Wiki. Common questions are answered in the FAQ.