Vitalik Buterin Sparks Controversy by Supporting War Betting on Polymarket

Key Takeaways

• Vitalik Buterin says he supports Hezbollah prediction markets but opposes assassination markets.
• Polymarket has removed the “Hezbollah” label, yet “Lebanon,” “Middle East,” and other conflict-related labels remain.
• The CFTC seeks to ban war and terror-linked prediction contracts.

Ethereum co-founder Vitalik Buterin is in hot water after coming out in support of the “Hezbollah” betting section on crypto prediction site Polymarket.

Predicting Conflicts on Polymarket

The extremely popular prediction market platform Polymarket recently had the “Hezbollah” label trending on its marketplace. Raising the uncomfortable truth to his followers, Legend (@legendarygainz_) posted to X:

For balance, he posted Polymarket’s stance on “ Middle East ” markets, which explains that such markets give the “wisdom of the crowd” to create unbiased forecasts, which is an “invaluable ability” in these times.

Furthermore, it claims that it has spoken to those who have been “directly affected” by the recent attacks, and it was their numerous questions about what will happen next that made Polymarket realize that “prediction markets could give them the answers they needed” in ways that TV and social media “could not.”

Coming out in defense of Polymarket once again , Buterin disagrees with this take.

Vitalik Defends Polymarket

But is this category of prediction market akin to betting on war like a sports match?

Looking at the matter with a less world-weary view, Buterin explains that:

“The point of polymarket is that from the perspective of traders it’s a betting site, but from the perspective of viewers it’s a news site.”

He adds that it’s not about “making money from bad stuff happening” but instead “creating an environment where speech has consequences.”

This would be in an ideal world where both “unjustified fearmongering and unjustified complacency are punished.”

However, when challenged on whether or not he would be opposed to the creation of assassination markets by ChainLink Community Liason, Zach Rynes further posits :

“Does everything need to be financialized, is there a limit to what people should be able to bet on?”

In this case, Buterin is opposed to such a concept. For him, the “dividing line” is if the market is the “primary incentive” for people to do “bad things” and ultimately collude to see the outcomes they want.

Prediction to Prophecy?

Arguably, investors may be funding various industries, including defense contractors that supply missiles. However, does that mean they are betting on the outcome of global conflicts?

Using a recent environmental disaster As one notable crypto X user, Kix.eth, pointed out :

“If there was a market around the estimated destruction by Helene, people would be up in arms about “Betting on people getting hurt”, but those same people could have used the markets as a form of home insurance to hedge their estimated damages.”

In the case of event markets, there may be certain contracts that can be more easily influenced than others. Zach Rhymes argues that prediction markets are not just “passive observers,” writing to X :

“It’s an extreme example, but any prediction market about an influenceable event will start to either incentivize action or subsidize the inevitable if sufficiently liquid enough, even if that wasn’t the original intention.”

This is the deeply held fear of the U.S. government, more specifically, the Commodity Futures Trading Commission (CFTC), which is working to clamp down on what “types” of contracts that prediction markets can offer.

Outcomes and Intent

Concerns around prediction markets aren’t unfounded, nor is the fear that they could become factories for self-fulfilling prophecies, which is the logical conclusion for the most cynical of prediction market skeptics.

In the 21st century, we are very attuned to “following the money” whenever some major event rocks the world. Indeed, the collusion of power and money has often resulted in favorable outcomes for those with either to spend.

The outcome of the U.S. 2024 Presidential Election alone has $1.1 billion wagered on it. Is it impossible to think that perhaps some of the wealthiest bettors are also colluding to see their desired result?

Now, if the “Lebanon” and “Middle East” categories begin to see hundreds of millions pour in and there appears to be a bias in outcomes, have the CFTC’s deepest fears been confirmed?

Either way, the whole debacle raises more questions than it answers. Unfortunately, those answers may not arrive until terrible events have come to pass. Regardless, the “Hezbollah” label has been removed from Polymarket, suggesting that, indeed, it should have never been there in the first place.