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Date: Wed, 7 Apr 2021 21:07:45 +0200 (CEST)
From: Prayank <prayank@tutanota.de>
To: Bitcoin Dev <bitcoin-dev@lists.linuxfoundation.org>
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Subject: [bitcoin-dev] Prediction Markets and Bitcoin
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Positives:

You need money to participate even though your position size may not matter=
 if really small based on liquidity and volume.
Useful information if looking at overall sentiments especially traders
Noise filter because its not same as trolling on social media
Opportunity for some people to make money
Entertainment and something new to discuss or confirm bias

Negatives:

You need money to participate. "Full nodes enforce consensus rules" becomes=
 a meme. Full nodes will still enforce consensus rules but some full nodes =
are being influenced by people with money which can be anything not necessa=
rily bitcoin.
Information that may not be useful for everyone.
The exchanges who have created such markets in past and the traders involve=
d know how to manipulate illiquid markets at least for a short time period.=
 And sometimes "markets can remain irrational longer than you can remain so=
lvent".=C2=A0
If such markets affect Bitcoin development in any way, it will be great opp=
ortunity for governments to attack Bitcoin. Example: Consider we have a sof=
t fork or hard fork for confidential transaction on-chain in future, if som=
eone is able to find a secure way to implement it. All the governments that=
 love to spy will have some issues with it and won't be the first time if t=
hey participate in such markets indirectly to manipulate or start some inve=
stigation against exchanges involved or something else.
Focus which should have been on improving Bitcoin will now shift to futures=
 markets and their involvement in Bitcoin.

I think prediction markets or such tokens might help in adding to the infor=
mation we already have however they don't decide or replace anything. Bitco=
in development should impact such markets and not the other way around.=C2=
=A0 Nobody can stop markets from betting on something related to Bitcoin an=
d it can even be done using P2P exchanges like HodlHodl: https://prediction=
s.hodlhodl.com=C2=A0or create something new with oracles which can be imple=
mented using DLC:=C2=A0https://github.com/discreetlogcontracts/dlcspecs=C2=
=A0

Not everyone is a trader or interested to take risk in such markets even if=
 a Bitcoin user from years, lot of transactions, contributions and some opi=
nion on Taproot based on things that are publicly available to everyone but=
 scattered. In past we had things that made some sense for prediction marke=
ts like 2x and Bcash but right now nobody has issues with Taproot and even =
the best traders won't be aware of all the technical details about Bitcoin =
development to predict something related to activation mechanism.=C2=A0

If the point of using prediction markets is to filter noise or spam then ma=
ybe we can have one chatroom that requires some sats to enter and pay some =
sats for each post. We will have better information here and sats can be us=
ed to donate to devs who review PRs related to Taproot.=C2=A0
--=20
 Prayank

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<div>Positives:<br></div><div><br></div><ol><li>You need money to participa=
te even though your position size may not matter if really small based on l=
iquidity and volume.<br></li><li>Useful information if looking at overall s=
entiments especially traders<br></li><li>Noise filter because its not same =
as trolling on social media<br></li><li>Opportunity for some people to make=
 money<br></li><li>Entertainment and something new to discuss or confirm bi=
as<br></li></ol><div><br></div><div>Negatives:<br></div><div><br></div><ol>=
<li>You need money to participate. "Full nodes enforce consensus rules" bec=
omes a meme. Full nodes will still enforce consensus rules but some full no=
des are being influenced by people with money which can be anything not nec=
essarily bitcoin.<br></li><li>Information that may not be useful for everyo=
ne.<br></li><li>The exchanges who have created such markets in past and the=
 traders involved know how to manipulate illiquid markets at least for a sh=
ort time period. And sometimes "markets can remain irrational longer than y=
ou can remain solvent".&nbsp;<br></li><li>If such markets affect Bitcoin de=
velopment in any way, it will be great opportunity for governments to attac=
k Bitcoin. Example: Consider we have a soft fork or hard fork for confident=
ial transaction on-chain in future, if someone is able to find a secure way=
 to implement it. All the governments that love to spy will have some issue=
s with it and won't be the first time if they participate in such markets i=
ndirectly to manipulate or start some investigation against exchanges invol=
ved or something else.<br></li><li>Focus which should have been on improvin=
g Bitcoin will now shift to futures markets and their involvement in Bitcoi=
n.<br></li></ol><div><br></div><div>I think prediction markets or such toke=
ns might help in adding to the information we already have however they don=
't decide or replace anything. Bitcoin development should impact such marke=
ts and not the other way around.&nbsp; Nobody can stop markets from betting=
 on something related to Bitcoin and it can even be done using P2P exchange=
s like HodlHodl: <a href=3D"https://predictions.hodlhodl.com">https://predi=
ctions.hodlhodl.com</a>&nbsp;or create something new with oracles which can=
 be implemented using DLC:&nbsp;<a href=3D"https://github.com/discreetlogco=
ntracts/dlcspecs">https://github.com/discreetlogcontracts/dlcspecs</a>&nbsp=
;<br></div><div><br></div><div>Not everyone is a trader or interested to ta=
ke risk in such markets even if a Bitcoin user from years, lot of transacti=
ons, contributions and some opinion on Taproot based on things that are pub=
licly available to everyone but scattered. In past we had things that made =
some sense for prediction markets like 2x and Bcash but right now nobody ha=
s issues with Taproot and even the best traders won't be aware of all the t=
echnical details about Bitcoin development to predict something related to =
activation mechanism.&nbsp;<br></div><div><br></div><div>If the point of us=
ing prediction markets is to filter noise or spam then maybe we can have on=
e chatroom that requires some sats to enter and pay some sats for each post=
. We will have better information here and sats can be used to donate to de=
vs who review PRs related to Taproot.&nbsp;</div><div><br></div><div>-- <br=
></div><div> Prayank<br></div>  </body>
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