Vitalik Buterin on Why Prediction Markets Can Combat Misinformation

• Vitalik Buterin defends prediction markets as truth-seeking tools, countering misinformation.
• Polymarket and Kalshi compete for dominance, with Polymarket expanding in finance.
• Critics caution that prediction markets may undermine trust and lead to user attrition.

Prediction markets have moved from being a niche part of the crypto world to becoming a key player in mainstream finance. According to Ethereum founder Vitalik Buterin, prediction markets have the potential to cut through sensationalism and provide evidence-based probabilities. 

In 2025, major financial institutions and social platforms adopted these markets, while competition intensified between the decentralized Polymarket and the regulated Kalshi. Despite regulatory scrutiny and ethical concerns, the sector recorded billions in trading volume, prompting debate over its future role.

Buterin Emphasises Accountability Over Speculation

During discussions on the social platform Farcaster, Buterin described prediction markets as information tools rather than casinos. He said the risk of losing money forces participants to seek reliable data, filtering out sensational claims. He added that he sometimes checks Polymarket prices to calm himself after reading alarming headlines.

Buterin contrasted this mechanism with social networks, where people gain clout for dramatic statements without repercussions. He noted that contracts settle at either zero or one, limiting speculation. 

Still, he acknowledged potential misuse; he warned against so‑called assassination markets and supported measures that make them unworkable. He believes small markets covering large events do not create incentives to cause harm.

Institutional Adoption Fuels Platform Competition

Polymarket’s adoption by traditional finance signalled a shift. In October, Intercontinental Exchange (ICE)—parent of the New York Stock Exchange—announced plans to invest up to $2 billion in the platform and distribute its data to institutional clients. 

ICE executives said the partnership marries historic finance with decentralised innovation, while Polymarket sees it as a path to mainstream acceptance. Social network Stocktwits also made Polymarket its official prediction partner, embedding real‑time probabilities into earnings discussions for millions of users.

These partnerships coincided with record activity. Polymarket’s daily trading volume reportedly reached $179 million in 2025 as sports seasons and elections drove interest. The platform is developing a token and a new layer‑2 network and plans to re‑enter the U.S. market after resolving a 2022 ban. It has acquired a regulated clearinghouse to meet U.S. derivatives rules.

Kalshi, a CFTC‑regulated rival, has also integrated decentralized finance. In December, it launched tokenized versions of its event contracts on the Solana blockchain. These moves helped Kalshi capture more than half of global prediction‑market volume, with monthly trading nearing $1.3 billion in September compared with Polymarket’s $773 million. 

Kalshi later raised $1 billion, doubling its valuation to $11 billion. However, Massachusetts’s attorney general has sued the company for allegedly operating an unlicensed sportsbook because sports wagers dominate its volume.

Related: Coinbase CEO Backs CFTC Oversight for Prediction Markets

Regulation and Debate Over Future Direction

Critics warn that the rapid expansion of prediction markets could undermine long‑term trust. Venture investor Santiago Roel Santos argued that casino‑style products accelerate user attrition and could distract companies from building sustainable financial services. 

He cautioned that while prediction markets may boost short‑term revenues, they risk driving interest away or damaging brand reputations. Others, including analysts at Bernstein, view the sector as an emerging asset class; however, some regulators regard unlicensed markets as gambling operations.

Regulatory frameworks are evolving. Kalshi operates under U.S. oversight and recently received approval to list contracts related to presidential elections. Polymarket, previously banned in the United States, is pursuing compliance by acquiring regulated infrastructure and cooperating with the Commodity Futures Trading Commission. 

Meanwhile, fintech firms such as Robinhood, Gemini, and Coinbase are rolling out or planning prediction‑market products. Buterin remains optimistic, arguing that financial accountability can make the platforms powerful truth‑seeking devices in an era of viral misinformation