Prediction markets are increasingly being positioned not as gambling platforms, but as financial systems designed to monetize information. However, industry founders admit that the distinction between informed forecasting and insider trading can sometimes blur , and that blockchain transparency may be the only structural safeguard.
At a recent global crypto conference, founders discussed how prediction markets are evolving into what some describe as an “information asset class,” while acknowledging the ethical and regulatory challenges ahead.
📊 Monetizing Information, Not Gambling
Founders argued that prediction markets are closer to insurance underwriting or poker than roulette.
The core idea is simple:
Participants trade based on insight, research, and probability.
Skilled forecasting is rewarded.
Information becomes an asset that can be priced and traded.
Rather than pure chance, prediction markets aim to reward those who correctly interpret data and hedge risk. In this framing, they function as tools for price discovery around future events , from elections to economic trends.
💡 Financializing Information
Some industry leaders describe prediction markets as the “financialization of information.”
Instead of information benefiting only media outlets or bookmakers, users can directly monetize their knowledge. As volumes increase, the sector is being viewed by some as a potential multi-trillion-dollar asset class in the making.
However, user intent varies. While some participants trade based on research, others may approach these platforms as speculative bets.
This dual nature keeps the debate alive: Are prediction markets a legitimate financial instrument, or just structured speculation?
⚠️ The Insider Trading Problem
The bigger issue raised was insider information.
Examples such as leaked corporate developments, entertainment announcements, or geopolitical events have highlighted how information asymmetry can distort markets.
If someone trades on non-public information, it creates an uneven playing field , similar to insider trading in traditional financial markets.
Founders acknowledged that while insider activity is not acceptable, fully eliminating it is extremely difficult.
🔍 Blockchain Transparency as a Safeguard
One major advantage of onchain prediction markets is transparency.
Because transactions are recorded publicly on blockchain networks:
Suspicious wallet activity can be traced.
Unusual trading patterns can be analyzed.
Market manipulation may become more visible than in traditional systems.
However, transparency does not automatically equal enforcement. There will always be loopholes and attempts to exploit information advantages.
🏛️ Institutional Future Depends on Governance
As prediction markets grow and attract regulatory attention, their long-term legitimacy will depend on:
Stronger surveillance tools
Clearer disclosure standards
Better governance frameworks
Defined policies on manipulation and insider activity
How platforms address these issues will determine whether prediction markets evolve into a recognized financial category , or remain viewed as speculative betting platforms.
🎯 The Bigger Picture
Prediction markets sit at the intersection of finance, information, and regulation. They promise a new way to price future outcomes, but they also raise familiar questions about fairness and insider advantage.
For now, blockchain transparency is seen as the strongest structural defense , but how effectively it’s used will shape the sector’s credibility in the years ahead.