Ethereum (ETH) co-founder Vitalik Buterin defended prediction markets against ethical criticism in heated exchanges with industry figures who argue betting on real-world deaths explains crypto's mainstream reputation problem.
Writing on Farcaster, Buterin positioned prediction markets as superior truth-seeking mechanisms compared to social media platforms.
The debate erupted when Quilibrium founder Cassie Heart challenged the morality of platforms allowing users to bet on conflict outcomes.
"I don't know fam but if you ask me the idea of gambling on whether a bunch of people are going to die is why this industry is hated by the majority," Heart wrote.
What Happened
Buterin acknowledged theoretical risks that prediction markets could incentivize harmful behavior.
However, he dismissed concerns for small-scale markets covering large-scale events.
The Ethereum founder compared prediction markets to traditional stock markets, noting political actors could profit from disasters by shorting stocks with far higher trading volumes.
Buterin contrasted prediction markets with social media, where users make claims like "THIS WAR WILL DEFINITELY HAPPEN" without financial accountability.
He shared personal experiences using Polymarket to calibrate emotional responses to alarming news headlines.
"I can personally report a few times reading a news headline, feeling scared, then checking polymarket prices and feeling calmer," Buterin wrote.
The founder argued bounded pricing between zero and one reduces reflexivity effects and pump-and-dump behavior common in traditional markets.
Heart escalated criticism with provocative scenarios suggesting prediction markets could incentivize violence to influence outcomes.
Polymarket recently launched in the United States in early December 2025 after nearly three years of regulatory prohibition.
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Why It Matters
The debate highlights fundamental tensions between crypto innovation and mainstream ethical concerns about monetizing tragedy.
Buterin's defense positions prediction markets as information tools rather than gambling platforms.
Financial consequences attached to predictions create accountability absent from social media platforms where sensational claims generate engagement without repercussions.
Critics argue betting on deaths and conflicts damages cryptocurrency's reputation and potentially creates perverse incentives.
The exchange reflects broader questions about appropriate applications for blockchain-based prediction markets as they expand beyond election forecasting.
Regulatory scrutiny remains significant with the CFTC seeking restrictions on certain prediction market categories.
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