How Prediction Markets Are Pushing Cryptocurrency Adoption

From Polymarket to Crypto.com, we’re seeing prediction markets drive cryptocurrency adoption more than other betting platforms. By letting users wager crypto on the latest political and cultural developments, prediction markets are set to become arguably the biggest on-ramps for those who are new to digital assets. Here’s how.

How Prediction Markets Work

Let’s start by establishing how prediction markets work, focusing on the fintech involved. Polymarket is famous for its decentralized structure, built right into the Solana blockchain and verified through smart contracts and oracles. However, most other prediction markets take a combined approach, with centralized servers and a regulated clearinghouse, like the NASDAQ stock market. While their plumbing is traditional, they allow users to wager with crypto.

That last part is where the crypto adoption comes in, exposing users to a relatively smooth use case compared to the other ways you can use digital currency. Prediction markets are a growing presence online, issuing contracts for happenings all over the world. Users then buy shares in their chosen market, from who’ll sweep at the Oscars to who the next Attorney General will be. The share prices rise or fall based on how true they are to reality, driven by speculation until it settles one way or the other.

Since they take wagers on everything, there’s ample opportunity for virality and meme marketing with every cultural phenomenon. They also run the typical promotion efforts like referral codes, which further contribute to their user base. As a result, new users can get a referral code for Crypto.com with a $50 sign-up bonus in Cronos (CRO), their proprietary cryptocurrency. From there, users can stake their CRO tokens to get more bonuses or use them for their first wagers.

Prediction Markets Teach Users How Crypto Works

As mentioned, it’s the relatable utility of Crypto.com’s prediction markets that helps drive adoption. More than that, it’s the ability to make working with crypto, on its face, no different from any other app tied to finances. While it may seem counterintuitive, adoption becomes much easier when it doesn’t feel too different, too strange, compared to what the users already know. That kind of friction drives the masses away. Adoption is like grammar; you don’t notice it when it’s good, but when it’s bad, it’s repulsive. On the Technology Adoption Life Cycle, this would be the early majority coming in.

Legacy or DeFi users of e-wallets will remember wrestling with seed phrases and other busywork during account setup. For their main trading/prediction market app, however, it’s all set up on the backend; you just use your email to make the account. By using centralized systems, they also achieve zero-fee trading, so they keep the pesky gas fees that trouble frontier crypto projects at bay.

They also curate which cryptocurrencies the user is exposed to, sticking to trusty stablecoins like USDC or rigid proprietary currencies like CRO. That way, new users don’t get thrown into the deep end with fast-moving, volatile currency found elsewhere in the crypto space. It also introduces newbies to crypto-specific concepts like staking their holdings.

As prediction markets and other trading platforms welcome crypto into the fold, we’re sure to see adoption speed up over the next few years. When we look back, it may be that prediction markets were the first apps to push crypto into the mainstream, more than the 2021 NFT craze or high-flying memecoins.