Vitalik Buterin Warns of Prediction Markets Turning into Casinos

Vitalik Buterin warns of prediction markets becoming casinos.

Ethereum co-founder Vitalik Buterin has voiced concerns about the current state of prediction markets. He believes the growing reliance on uninformed speculators threatens the sector’s viability.

Recently I have been starting to worry about the state of prediction markets, in their current form. They have achieved a certain level of success: market volume is high enough to make meaningful bets and have a full-time job as a trader, and they often prove useful as a…

— vitalik.eth (@VitalikButerin) February 14, 2026

“Prediction markets seem to be increasingly sliding into an unhealthy model: they focus on short-term bets on cryptocurrency rates, sports wagers, and other things that provide only momentary dopamine but offer neither long-term value nor societal benefit,” the programmer wrote.

Buterin categorized market participants into “smart traders,” who profit from information, and “losers,” who absorb losses. He primarily included retail investors in the latter group.

Platforms dependent on such dynamics risk creating communities that encourage uninformed trading.

“There is nothing inherently immoral about taking money from people with foolish opinions. But there is something fundamentally ‘cursed’ about relying on it too much,” he noted.

AI Personalization and Moving Away from Stablecoins

To address the issue, Buterin proposed a new architecture: prediction markets should become a hedging tool tied to price indices of goods and services by region.

The concept suggests that users will run local language models. Neural networks will analyze individual consumer habits and form a portfolio of bets that offset the rising costs of essential goods.

The Ethereum co-founder also suggested that such markets could be denominated in income-generating assets. This would create conditions for a complete move away from stablecoins pegged to fiat currencies.

“We don’t need fiat currencies at all! People can hold stocks, ETH, or something else for wealth growth, and use personalized shares of prediction markets for stability,” he stated.

Buterin’s stance echoes his recent comments on DeFi’s reliance on the dollar. The programmer believes the industry should abandon fiat currency as a unit of account—”stablecoins” should be oriented towards generalized broad market indices.

Back in December, the Ethereum co-founder described prediction platforms as a filter against fake news and panic.