Hello and welcome to Editor's Picks.
Ethan Wu here.
I'm one of the hosts of Money Talks, our business and finance podcast.
You're about to hear an article from the latest edition of The Economist.
Thanks for listening.
Some call them truth machines.
Prediction markets in which punters can bet on anything from the outbreak of war to what celebrities will wear,
revealing their prices the closest thing to humanity's best guesses about the future.
Such markets can provide both entertainment and economic benefits.
If people and firms can discern risks and opportunities from market prices, they'll make better decisions.
Some might even trade to hedge their exposure to events.
One American bet big against the government for giving his student debt,
allowing him to pay some down, whatever happened.
So it's good that these markets have been growing.
Volumes on Cauchy, the biggest such financial exchange, climbed to $33 billion in June, a 40-fold year-on-year increase.
The firm's reportedly seeking to raise funds at a $40 billion valuation.
Polymarket, its main rival, at $15 billion.
Yet, both markets face growing pains.
Neither has devised a reliable way to settle contracts.
Most of the time, it's obvious whether or not something has happened.