Buterin Sees Prediction Markets as a Filter Against Fake News and Panic

Buterin sees prediction markets as a rational alternative to social networks.

Ethereum co-founder Vitalik Buterin described prediction markets as a more rational alternative to social networks, particularly when discussing contentious topics.

According to him, users of online platforms can irresponsibly incite panic. Similarly, media outlets often heighten anxiety with sensational headlines, thereby fueling disputes.

Prediction platforms address this issue through a mechanism of financial accountability: reckless or “foolish” bets lead to real losses.

Buterin believes that the risk of losing money compels participants to seek objective information rather than succumb to emotions. As a result, such markets provide a more accurate assessment of probabilities and better reflect the real state of the world.

“Personally, I can recall several instances when, after reading a news headline, I felt anxious, then checked prices on Polymarket and calmed down — people knowledgeable in this area know what is happening, and the probability of any unusual event is only 4%,” he wrote.

The programmer added that he finds using prediction platforms “healthier” than traditional markets.

“The key reason is that prices are limited to a range from 0 to 1, so they are much less susceptible to reflexivity effects, the ‘greater fool’ theory, Pump & Dump schemes, etc.,” emphasized the Ethereum co-founder.

Threats

Santiago Roel Santos, CEO of venture firm Inversion Capital, believes that integrating prediction markets into financial applications provokes user attrition and poses long-term business risks.

However, he clarified that he supports the concept of such platforms.

“The problem with casino-like products is not that users lose money. The problem is that they accelerate customer attrition. The longer you stay inside the casino, the higher the likelihood of liquidation. And liquidation means you are completely out of the game. A departed user is worth zero,” Santos stated.

A number of fintech and crypto projects have already integrated prediction markets:

• Robinhood developed this direction throughout 2025;
• Gemini received regulatory approval to launch a platform;
• Coinbase announced plans to launch its own product.

Santos remains skeptical. He believes that companies are paying too much attention to a niche tool, which could ultimately negatively impact their primary goal — providing simple and understandable financial services.

“Products like Robinhood initially succeed because they are simpler and more accessible by nature than traditional services,” he explained.

However, audience needs are changing. The true strategic opportunity lies in “growing up with users, gradually capturing a larger share of their overall financial lives.”

“If your goal is a sustainable, rather than a momentary business, you must build it around long-term value, not short-term gain,” emphasized the head of Inversion Capital.

Santos is confident that in the short term, prediction markets “will look good in reports,” but later they will appear more fragile due to inherent risks.

Earlier, market maker Keyrock stated that prediction platforms are becoming a leading indicator of key economic data.