"Dare to make a bet?"

A simple oral bet between friends has now turned into a large-scale social platform with over a million participants battling each other.

In the past few months, a prediction market platform called Polymarket has risen rapidly, attracting a lot of attention.

Polymarket allows users to bet on real-life events with cryptocurrencies. Some popular betting topics include the result of the USA election, what words will be mentioned in the conversation between Trump and Musk, how many tweets they will post, and the release date of GPT-5, etc.

The platform believes that it has gathered "collective wisdom," making its future predictions more accurate than traditional expert models and opinion polls.

Why is Polymarket so popular? Why has it even been listed as a data source for public opinion predictions by various media? What kind of website is it exactly?

01 Trump and "sanitary pad"

"Bet on your beliefs." On Polymarket, users can bet on a wide range of events, including political elections, sports events, economic indicators, popular culture events, business, and scientific events, both serious and absurd.

Recently, Polymarket users bet approximately 5 million USD on the words that Donald Trump would say during a conversation with Elon Musk on August 12th.

In this conversation, the user who bet in the last minute that Trump would say "tampon" received the highest return.

The most money was bet on predicting whether Trump would say "cryptos", followed by "MAGA" and "illegal immigrants". Trump ultimately said three words: "MAGA", "illegal immigrants", and "tampon".

When Trump said the slogan "MAGA", the odds were 59%, meaning that bettors would receive a return of less than double. As for the word "tampon", when he mentioned it, the odds were 7%, meaning that bettors received a return of up to 14 times.

"Congratulations to my tampon brothers." commented a Polymarket user when Trump said the word.

Users who didn't predict correctly commented, "Tampon was the first bet I lost out of 51 bets, I'm really sad."

In comparison, users betting on 'cryptos' suffered a heavy blow because this market had the most funds, but ultimately nothing happened. Trump mentioned that the odds for 'cryptos' initially were 65%, but dropped to zero by the end of the speech, resulting in significant losses for those who bet on it.

User known as 'bama124' joined Polymarket in July 2024, traded in 77 different markets with a total trading volume exceeding 10 million USD. This user lost 67,000 USD in the bet that Trump would not use the term 'sanitary napkin', but eventually made a profit of 964,402 USD by correctly betting that Trump would not say words like 'cryptos', 'bitcoin', 'tesla', etc.

With Trump returning to the social media platform X (formerly Twitter), Polymarket's betting market activities surged. These markets allow participants to bet on various outcomes related to Trump's online behavior and public statements, involving huge amounts of money.

One of the more active betting pools is predicting how many tweets Trump will make in the next week. Participants can bet on different ranges, from 11-15 tweets to over 50 tweets.

There is another active betting pool focusing on whether Trump will tweet again before the election. Any original posts, replies, or quoted tweets by Trump will be considered as 'yes', retweets are not counted.

In addition, markets on Polymarket also focus on other events, such as predicting the country with the most Olympic medals, predicting movie box office performance, predicting Premier League soccer results, predicting the number of interest rate cuts by the US Federal Reserve, and more.

Will August 2024 be the hottest on record? Will the United States confirm the existence of aliens in 2024? When will GPT-5 be released? When will Sony release the Playstation 5 Pro? Will Taylor Swift get pregnant in 2024? Will Taylor Swift support Kamala Harris? Bieber Baby: Boy or girl? And so on.

Regarding whether the U.S. government will confirm the existence of aliens before the end of the year, there are currently over $0.1 million bet on this, but Polymarket shows only a 3% chance, similar to the probability of predicting Trump going to jail before election day.

But overall, the hottest bets on the platform are still on the U.S. election results. So far, Polymarket users have bet over $0.5 billion on the election results.

The prediction market has even become an information tool, believed to reflect collective emotions and event probabilities.

It is said that in the U.S. political circles, there is a growing trend to move beyond polls and focus on betting markets to understand the voters' thoughts. Predictions on Polymarket are also frequently cited by media such as The Wall Street Journal, The New York Times, The Washington Post, Fortune, Bloomberg, etc., as a form of data reference.

Jason Furman, an economist at Harvard University who once served as the chairman of the Council of Economic Advisers in the Obama administration, also stated that the White House "often refers to prediction markets for election results and specific events".

In the past few months, Polymarket has reportedly successfully predicted Joe Biden's decision not to seek re-election as President, as well as Donald Trump's choice of JD Vance as his running mate.

Executives of Polymarket have openly stated that people are increasingly distrustful of traditional opinion polls and how the media uses polls as sources of prediction. The platform has found 'a crazy product-market fit, as we are currently experiencing what may be the most unpredictable and turbulent election in American history.'

Many people lie to pollsters, but when real money is involved in betting, they tend to speak the truth.

The Polymarket team said, 'People are very easy to only believe the media that confirms their biases and expected outcomes, and algorithms ultimately only provide people with information they agree with. Polymarket tells people the real probabilities, regardless of what anyone wants to happen.'

However, like traditional polls, Polymarket is not foolproof.

In June 2024, the platform predicted that there was a 61% probability that Trump would mention Bitcoin in the debate with Biden, but this ultimately did not happen. Similarly, they also failed to successfully predict the outcome of the 2024 French election, of course, some traditional polls did not predict it either.

The birth of 'the world's largest prediction platform.'

Polymarket is not only a novel presence in the US election scene. It is also a popular startup that has raised $70 million so far, including a $45 million funding round in May.

Investors include Ethereum founder, as well as Peter Thiel, the author of 'Zero to One,' who is best known for acquiring 10.2% of Facebook's shares for $0.5 million in 2004, making him Facebook's first external investor.

Polymarket's founder, Shayne Coplan, a 26-year-old New Yorker who is virtually unknown outside the cryptocurrency community, studied computer science at New York University and has a passion for cryptocurrencies and prediction markets. He has been featured in Fortune magazine.

Shayne Coplan started learning programming as a teenager. It is rumored that he participated in the initial sale of Ethereum in 2014 with a price of 30 cents, making him the youngest participant. The current trading price of ETH is $2600.

According to Shayne Coplan on Twitter, Polymarket is the first place to predict that J.D. Vance will become Donald Trump's vice presidential candidate. He also wrote that Polymarket was earlier and had a higher probability than the media's predictions when pricing the probability of Biden dropping out of the presidential race.

In July of this year, according to Dune Analytics data, Polymarket set a record with a monthly trading volume of over $387 million, involving more than 0.04 million active traders. In comparison, during the same period last year, the website had only 1,200 monthly active traders with a betting amount of $6 million.

In fact, there are many other online betting platforms worldwide, offering a variety of content, including the probability of alien arrival. However, Shayne Coplan says that Polymarket is different from them in that its odds are determined by a group of bettors rather than centralized oddsmakers, allowing users to buy and sell shares of future event outcomes.

Unlike traditional platforms, Polymarket operates on the blockchain, settling and paying bets through smart contracts. It is one of the fastest-growing decentralized applications and provides market liquidity through automated market makers (AMM). One of the platform's innovative concepts is to break away from the constraints of traditional prediction tools through decentralized market mechanisms.

They believe that when prophets invest money, they will work very hard to find the right answer.

"The prediction market is more accurate in predicting the future than expert models or surveys," Polymarket claimed in a blog post, and gave two basic reasons.

The platform claims that first, when people invest money, they will integrate the best analysis they can find, consulting opinion polls, models, expert comments, and other factors that may not be reflected in popular indicators.

The second reason is that the prediction market allows for the expression of not only people's opinions, but also their confidence in these opinions. This is a distinction that cannot be compared to opinion polls or simple approval/disapproval systems, allowing a few very confident people to influence the market in the direction that reflects their views even when most people believe otherwise through their bets.

Polymarket gave an example: for instance, in an election, suppose there are one hundred people who believe that a certain candidate will win, but they are only 80% sure. Then, suppose there is one person with superior knowledge who is 100% sure that the candidate will lose, perhaps because of proprietary analysis of early mail-in voting, clearly seeing where others misread the data.

In a rational free market, this person will make a very large bet, and the market will turn to reflect his view. In other words, even if only one person has better information, he can overcome the 'misinformation' guiding the majority through a large enough bet.

Polymarket claims: "In an unrestricted rational free market, the best answer wins: market odds will turn to reflect the views of the person with the best information."

Due to its operation on the blockchain network, information about its transaction volume is public. The platform claims this makes it a better real-time public sentiment data source than surveys or traditional media.

They also feel that this is very different from social media, where the most popular news is amplified rather than the most accurate news.

What are the issues discussed on social media? "One issue is that due to the way algorithms and product features operate on platforms like Facebook and Twitter, opinions and predictions on social media are often optimized for maximum engagement. Well-researched and thoughtful predictions shared on these platforms are often replaced by other extreme or provocative information that lack analysis or evidence, or these information simply repeat what the audience already wants to believe. In addition, many social media platforms are filled with robots, fake accounts, state-sponsored manipulation, and paid promotional content. Understanding the world through social media is bound to produce a distorted reality."

On the contrary, Polymarket claims that prediction markets are only used to facilitate transactions between individuals who believe they have enough information and analysis to predict future events. In addition, prediction markets reward those who successfully predict, free from the distortion of extensive online activity, and expand global access to unbiased information.

The platform claims that their platform "benefits society" because businesses, policy makers, and organizations can use the predictive insights generated by prediction markets to accurately understand the world and plan accordingly. "It doesn't take a large number of people to participate in a specific market, as long as valuable information can be generated, this information has the potential to help people around the world better plan their future."

"Polymarket is a decentralized global prediction market platform that allows prophets to earn money by speculating on world events, enabling everyone to have a clearer understanding of the future. Prediction markets are one of the most effective tools to improve society's ability to predict the future and make decisions. Polymarket's mission is to promote the adoption of prediction markets, reward accuracy, and restore the information ecosystem." This is how the platform claims itself.

Become a "predictive indicator".

Even for those who don't want to "bet", they can observe various predictions, and the platform's information, predictions, and data visualization are publicly available. So, for some people, Polymarket becomes a website for data and information.

"Participation data shows that although the average website visit time aligns with content publishing websites, most of the approximately 1 million unique visitors have never participated in the market. This indicates that users primarily obtain informational value through Polymarket." the platform claims.

Polymarket is launching a series of newsletters and partnering with major media outlets to include its data in their coverage. The website's charts have already appeared in media outlets such as The Wall Street Journal.

In mid-August, Polymarket also announced a partnership with AI search engine Perplexity AI. According to Perplexity, its over 10 million users will see news summaries with real-time probability predictions when searching for events, such as election results and market trends.

Similarly, Polymarket announced a partnership with Substack last month, allowing Substack authors to embed data from prediction markets in their articles.

Polymarket now refers to itself as the "world's largest prediction market," but according to investors, the website still has "very low" revenue despite expenses such as a New York City office and dozens of employees. Its founder is considering implementing fees in the future.

It is worth noting that, as of today, the voices against Polymarket on the internet have not disappeared. Critics have the following views: "Isn't a prediction market just a euphemism for online gambling?" "Polymarket is a safe haven for cryptocurrency scammers." "It's a gambling website, right? The bookmaker sets the odds, and the bettors place their bets... If you'd like, you can call it a prediction market, very clever, but still very ruthless. Is this what the world needs?"

As prediction markets continue to grow, they also face some issues. For example, it is unclear how they would handle someone who has insider information about a news event and creates a market to bet on results they already know. Another concern is that people start relying on prediction markets to form opinions about future outcomes of major events, and those with enough funds could become manipulators.

In May of this year, the CFTC (Commodity Futures Trading Commission) issued a proposed rule aiming to ban all derivative trading related to US elections.

In August of this year, eight Democratic senators and representatives jointly wrote a letter to the CFTC, urging it to ban political gambling markets, as they believe these markets may "affect and interfere with election results."

Even with the "innovation" hat on, how Polymarket finds a balance between its promoted ideas and the legal requirements of reality remains a question for those who hold a neutral view.

Editor/Somer