Vitalik Buterin: belief

Transcript context

…My colleague Robin Hanson has promoted the idea of prediction markets, or betting on ideas. Why are there, right now, so few prediction markets? You can bet on the outcome of an election. There’s plenty of sports betting, but they seem quite thin when it comes to actual economic events. I know that on the centralized side, the traditional prediction market side, there’s a lot of regulatory issues that make it more difficult to set one up. Also, on top of that, I think part of what makes cryptocurrency so attractive is that traditional financial systems have a lot of inefficiencies and annoyingness that go beyond the strictly regulatory. Even something like, “Oh, I have money. How do I move it into some particular application?” Very often it involves bank wires. It involves all of these various systems which each individual person may or may not have. You have to figure it out, and there’s a lot of friction involved. I see cryptocurrency in part as this grand experiment of, what happens if you create a financial system that really is fully frictionless, where moving bitcoin or ether from your wallet into an application, into a smart contract or whatever, really is as simple as logging into a website or clicking an email. I do think that, even already, the cryptocurrency ecosystem has, first of all, managed to get people to accept micropayments — specifically paying for transaction fees — when a lot of people thought that that’s impossible. I do have hopes that the higher levels of liquidity and efficiency in the cryptocurrency space could make cryptocurrency prediction markets succeed more. That’s one aspect. Another aspect is that, even if the cryptocurrency base solutions actually manage to be censorship resistant, and if they manage to be more convenient, then there is the possibility that this kind of gambling, betting, or whatever is a kind of betting that people aren’t as interested in. Basically, the amateurs don’t find it interesting enough, and there’s not enough people playing for it to be worth for the professionals to really participate. That is possible, though I don’t really think it’s fair to say that prediction markets as a category can be really called a failed experiment yet, given that there have only been a few years of trying to make them work and only a couple of different approaches. But if Augur and Gnosis and all of these other Ethereum and blockchain-based prediction markets end up launching, and it continues to be the case that lots of people don’t end up using them, then it’s probably more reasonable to consider that idea as, at least, a failure in its dream of growing beyond the niche, but I don’t think we’re quite there yet. As for frictionless trading, let’s take what’s called the Oracle problem. As you well know, you can have smart contracts on Ethereum, but those are closest to frictionless when everything is within the system. But if you have an external event — a property title — and you need someone in the physical, real world to rule how an actual piece of property is assigned to someone and how that information is then translated into cyberspace, does the Oracle problem mean that the frictionless trading of, say, Ethereum, is never actually that scalable, or is there some way around it that we don’t yet see?…

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