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@ Satoshi_shrugged
2025-03-22 02:34:32I would like to preface this idea by stating that I am by no means a computer engineer and lack significant technical knowledge, and therefore may be overlooking significant obstacles to implementing this idea. My reason for writing this paper is in hopes that developers or others who are more "in the know" than me could provide feedback.
The Success of Polymarket
Over recent months, Polymarket has garnered many headlines—mainly for its accurate prediction markets surrounding the 2024 presidential election. On Polymarket, users can purchase futures contracts that will either pay out $1 in USDC at maturity if the prediction is correct or will become worthless if the prediction is incorrect. Market participants can freely trade these futures at the current price up until maturity, allowing for efficient price discovery.
We’ve known for quite some time that free markets are the most efficient way of pricing goods and services. Polymarket has now demonstrated just how effective they can be in pricing potential outcomes as well.
The issue I have with this application is that it is built on the Polygon network—a proof-of-stake side chain of Ethereum. Users are subject to KYC regulations and do not have the ability to create markets themselves. While the core idea is powerful, I believe it has been built on a foundation of sand. We now have the tools to build something similar—but much more decentralized, censorship-resistant, and sustainable.
A Bitcoin-Based Prediction Market
It seems to me that Chaumian eCash, in combination with Bitcoin and Nostr, could be used to create a truly decentralized prediction marketplace. For example, multiple eCash mints could issue tokens that represent specific potential outcomes. These tokens would be redeemable for 100 sats at a predetermined block height if the prediction is correct—or become irredeemable if the prediction is incorrect.
Redemption would be based on consensus from the chosen oracles—trusted Nostr Npubs—with strong reputations and proven track records. Anyone could create a market, and users could buy, sell, and trade eCash tokens privately. This approach preserves the power of markets while eliminating the need for custodians, KYC, or dependence on unreliable chains.
What we would have is a trust-minimized, privacy-preserving, Bitcoin-native prediction market that resists censorship and allows for true global participation. Feedback, critique, and collaboration are welcome.
Next Steps and Vision
The potential for system like this is immense. Not only would it enable peer-to-peer speculation on real-world outcomes, but it would also open the door to a more accurate reflection of public sentiment. With free market incentives driving truth-seeking behavior, these prediction markets could become powerful tools for gauging probabilities in politics, finance, sports, science, and beyond.
Each mint could specialize in a specific domain or geographic region, and users could choose the ones they trust—or even run their own. The competition between mints would drive reliability and transparency. By using Nostr for oracle communication and event creation, we keep the entire system open, composable, and censorship-resistant.
Markets could be created using a standardized Nostr event type. Resolution data could be posted and signed by oracles in a verifiable way, ensuring anyone can validate the outcome. All of this could be coordinated without a centralized authority, enabling pseudonymous participation from anyone with an internet connection and a Lightning wallet.
In the long run, this system could offer a viable alternative to corrupted media narratives, rigged polling, and centrally controlled information channels. It would be an open-source tool for discovering truth through economic incentives—without requiring trust in governments, corporations, or centralized platforms.
If this idea resonates with you, I encourage you to reach out, build on it, criticize it, or propose alternatives. This isn’t a product pitch—it’s a call to experiment, collaborate, and push the frontier of freedom-forward technologies.
Let’s build something that lasts.
Bitcoin is our base layer. Markets are our discovery engine. Nostr is our communication rail. Privacy is our defense. And truth is our goal.