Fintech expert David Birch warns prediction markets, now one of crypto’s most popular use cases, may be far more open to abuse than their supporters admit.
My prediction for 2026 is that prediction markets, which seem to be everyone’s favourite “crypto” application at the moment, are going to cause an awful lot of trouble. While letting people bet with each other on things that might or might not happen can be fun, it can be open to abuse.
You Lucky People
Here is a recent example. A pseudonymous trader, known only as AlphaRaccoon, made more than a million dollars in a day by betting on Google’s 2025 Year in Search rankings. Blockchain records show the bets landed just before Google published the data related to these markets for the first time. And this was not the only time this particular trader had made bank, because across 23 Google-related prediction markets, AlphaRaccoon predicted 22 correct outcomes.
Now this could of course have just been some amazingly good luck or it could’ve been genuine brilliance. Uncharitable people, however, may well suspect that there is some form of insider trading going on here.
The problem is that prediction markets rely on external information which means they are dependent on the “oracles” that provide data on real-world outcomes (such as the Google Trends data) to the smart contract that settles the wagers. If a data source is compromised, the market is exposed. And we might be taking one step closer to Jim Bell’s dream of the assassination market.
While the assassination market is an older idea, Bell’s 1995 essay on “assassination politics” was, as I wrote for the Financial Times, the document that established the concept in popular imagination.
You know the general idea, I’m sure. Someone runs a public book on the anticipated death dates of public figures. If I hate some tech CEO (for example), I place a bet on when they will die. When the CEO dies, whoever had the closest guess to their date and time of death wins all of the money staked, less a cut for the house.
Let’s say I bet $5 (using anonymous digital cash through the TOR network) that a specific tech CEO is going to die at 9am on April Fool’s Day next year. April Fool’s Day comes around. There’s now ten million dollars staked on this particular CEO dying at 9am. I pay a hit man five million dollars to murder the CEO at 9am.
I’m not a criminal, I’m just the lucky winner of the lottery.
Actually, I don’t even have to go to the trouble of hiring the hitman! If I use some anonymous bots or friendly trolls to coordinate a social media campaign to get a million people to put a $5 bet on the date of the tech CEOs death, then some enterprising hit man will make their own bet and kill them.
Whether assassination markets spring up next year or not, if you allow decentralised anonymous betting on events, absolutely no good will come of it!
I have to say that I agree with Bob Jacobs on this. A world where prediction markets are common is a world where you will never be able to fully trust what people say, or do. As he says, what we have already witnessed in sports betting markets – there is a long history of sports betting scandals in the US, and around the world – is a sign of what will happen in prediction markets.
