A crypto prediction market is a market that allows people to trade contracts based on the potential results of an event related to the crypto space. Usually, crypto enthusiasts predict the outcome of an event, and those that guessed correctly win a pool.
The individual places a prediction on what they think will occur in the future and place their money on the line based on their expectations.
This type of market is contingent on an event occurring in the future and the contracts are traded based on that. They can be likened to a betting session, and are seen as betting markets.
A crypto prediction market may involve something that may occur outside the crypto space. It is different from the futures market where traders bid on the future price of a digital asset. For instance, the event could be based on the new president of a country.
Usually, different individuals place their crypto on the line, hoping their outcome wins. In the case that the event happens to their advantage, they get to share the pool of the staked cryptocurrencies. The more individuals get involved in the market, the more the prize pool.
Crypto prediction markets have similar characteristics to the futures market, except that participants do not bid on the potential price of an asset in the future. This type of market involves predicting the outcome of an event outside prices such as election results, potential earnings from a movie release, and other random things.
Prediction markets have existed before the mainstream adoption of cryptocurrencies. People have been betting on the outcome of different things and placing their fiat currencies on it. With the coming of crypto prediction markets, people can now place their tokens in the smart contract and hope that they win.