Understanding Prediction Markets

Prediction markets are exchanges where participants can bet on the outcome of future events, offering a platform for trading on predictions. Unlike traditional betting, these markets allow users to vote with their dollars; the more someone believes in a particular outcome, the more they bet on it. This mechanism creates a transparent marketplace where prices reflect the collective wisdom of traders, which can provide insights into sentiments about events like elections. As such, prediction markets can serve as alternative indicators of public opinion, potentially more dynamic than standard polls due to their real-time nature.