What is the problem with forecasting accuracy and reliability?
The main issue with prediction market is whether prediction markets are the right tool to address a particular uncertainty. If the item to be forecasted has, or known drivers that impact the forecast have, a time series of historical data available, it may be easier to apply other forecasting techniques such as the use of statistics. These techniques do not require the participation of many individuals in the process unlike a prediction market that requires many traders. Prediction markets are especially suited to situations where sparse data is otherwise available that may be used to define a forecasting model.
While the technology for markets is easy to implement, aggregating a number of users and involving them in a market process to resolve uncertainty in an organization is more difficult. Thus, the application of these methods to forecasting requires broader leadership and an effective process.
Stox.com is building a new kind of prediction market based on decentralized platform and blockchain technology.
In traditional prediction market the outcome of an event must be reported which was usually reported by the people who ran the prediction market itself and we have to trust them to report correctly. With a decentralized system like Stox.com, this intermediary is unnecessary.
Systems such as STOX has a token system where those who hold the token, vote on outcomes as a crowd. If the information is already on the blockchain, the resolution will happen without requiring a trusted source.
Activity in the Stox ecosystem is performed primarily using STX tokens (cryptoptocurrency), making the token an integral part of the Stox platform and the driver for its economy. STX token usage as below:
- Users apply STX in the prediction of event outcomes and accordingly, profits over successful predictions are collected in STX. Users are required to purchase STX in order to participate in prediction markets running over the Stox network.
- Fees for participating in event predictions and investing in event outcomes are collected in STX.
- Syndication fees for promoting events between apps of different providers in the Stox ecosystem are paid between providers in STX.
- Event operators are required to hold STX as collateral for publishing new events for users to invest in. This means that providers are required to purchase STX in order to participate in the Stox network and generate revenue from it.
- Event operators must hold a reserve of STX to act as a counterparty for investments made by users on specific outcomes during the event.
In general it is easier to make short-term than long-term predictions. But as long as prediction markets offer a way to update guesses in light of new information, proponents argue, crowd will do better than other forecasting methods. And STOX is paving the way for the future of prediction market.
