Re:Thoughts on Tokens
by mifeng on Monday May 29, 2017 @06:56PM
(#14441965)
Are those just prediction markets or is there something else to them? I remember there was a site called TradeSports everyone was excited about in the early 2000s. It's problem was that there was very little liquidity for any bet other than presidential elections and the Super Bowl.
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Why is low liquidity a problem? As long as there is someone betting for and someone against an outcome, a prediction market is successful, right?
I bet 50 cents to your dollar that the S&P 500 will be above 2,500 on Jan. 1, 2018. Would I have bet 51 cents if offered? 55 cents? 75 cents? Without a bunch of participants, we'll never know.
Markets with low liquidity are terrible at price discovery. Price in a prediction market is (if we believe in the concept) directly tied to how likely a prediction is to be true.