Zeitgeist and the Infrastructure of Prediction Markets
Introduction
Prediction markets are a niche of financial markets where participants trade contracts that generate payouts depending on the occurrence of an event. These markets are used to generate prices that can be used to forecast the likelihood of future events. Prediction markets have been used for centuries to predict everything from election results to the weather. These markets have also gained traction in many areas of the post-information age including business operations and artificial intelligence, but also things like governance, blockchain technology, and decentralized communities and economies. Prediction markets are an important part of the efficient-market hypothesis, which theorizes that markets that behave this way can be efficient in aggregating information and therefore produce effective results.
With this in mind, it’s no wonder that predictive markets have increased in the blockchain world. There are many natural layers to blockchain technology that align with the scope of what predictive markets want to achieve.
And a project like Zeitgeist not only understands this but has the DNA of predictive markets built directly into their mission and implementation.
The Zeitgeist Gap
Zeitgeist is a predictive market platform that is built on Substrate with a dynamic outlook for the predictive and informational world. Zeitgeist is not subtle about what the platform does and accomplishes – it provides communities a place to thrive based on their thoughts of the world around them, trying to quantify this in a predictive manner. The platform gives people a voice for making decisions – Zeitgeist lets users create markets where they’d like to see an outcome based on the input of others, lets those people vote and determine a predictive outcome, and rewards users based on their participation or for being on the correct side of that outcome.
Zeitgeist is built to be permissionless and immutable so that users can get straight to the point of what predictive markets should be. It is also powered by the ZTG token, which is used for the unity token of the protocol but also a way to reward users. Zeitgeist also has three more features that make them unique amount other projects doing the same thing:
- Completely Governed By Users: Zeitgeist lets their users operate the platform in full capacity, making predictive markets owned by the same people that are using them. This creates a sense of predictive operation built into the platform itself, where the success of the project is directly applied to its function. Users get to decide things like payouts, markets, and new changes over time.
- Fair Disputes: in line with self-governing of the platform, Zeitgeist users have the chance to dispute a market result if they feel it was reported incorrectly. This gives a judicial process in determining if that result should be changed or if it was reported as accurate.
- Futarchy: part of the governance of the users for Zeitgeist revolves around the concept of futarchy, meaning that prediction markets are directly used as an issue for determining well-being and preservation of a business or group of people. In the case of Zeitgeist, futuracy is used to determine a governing outline on how the future of the project should function.
All of these contribute to the full function of Zeitgeist and show a deep connection to the idea of decentralization as a form of governance.
Prediction Markets and Blockchain Technology
From top to bottom, Zeitgeist considers predictive markets part of the future of sharing and reacting to information. Our world has increasingly used information to determine things like voting patterns, behaviors, and what people buy. For businesses, data and information can make the difference between success and failure. Taking information and analyzing it through a predictive lens gives a comprehensive look for all participants of that information. Predictive markets make use of that information and a consensus is formed by all involved parties.
Zeitgeist takes this approach on their platform by giving users the ability to set these predictive parameters, vote among themselves, and let it be governed by network participants.
Zeitgeist is also a protocol built on Substrate for Polkadot and there are some innate advantages for using blockchain technology for predictive markets. Most of the time, blockchain technology usages concepts like distributed ledger technology, decentralization, and immutability. At its core, this enables blockchain to function through a group of people vs a single centralized entity. And this is also the design for things like futuarchy to be successful.
Reflection
As crypto grows, blockchain expands, and people around the world operate in more decentralized circles, the concept of predictive markets will strive. Zeitgeist is a protocol layer that understands this from beginning to end. Powering the future of futarchy with the ZTG token, Zeitgeist is giving a platform for users to interact with predictive markets in the most realistic way possible. And Substrate is one of the best chains to support this due to its interoperability.
It’s only a matter of time when predictive markets will show the true potential of information exchange.
For more information, you can check out Zeitgeist in addition to some supplemental reading:
Zeitgeist Website
The Zeitgeist Blog
Primer on Predictive Markets
Disclaimer: All content shared on this website is for informational purposes only and is not professional or financial advice. Always consult a qualified financial advisor and do you own research before investing.
