Author: Naly
Translation: Shan Oppa, Jinse Finance

In 1988, a small university in Iowa quietly discovered a fundamental law of nature.

At that time, the Space Shuttle Discovery soared into the sky, the Midwest was suffering from a severe drought, and on this traditional campus, a group of friends set up a small “prediction market”: a simple real-world trading platform where students could bet on future events and profit if their predictions were accurate.

The betting events covered elections, sports games, and more, with a maximum bet amount set at $500.

Sounds nice—just some students building a gambling market. So what’s special about it? The special thing was its success rate—its accuracy in predicting elections surpassed polls, expert commentary, and even those institutions that make a living by selling certainty with sugarcoated narratives.

How was this possible? It stems from a basic physical principle:

Truth is expensive, lies are cheap.

Spreading unfounded nonsense is almost costless: a headline, a tweet, an off-the-cuff quote on cable news. This phenomenon is everywhere: posting baseless claims on social platforms takes far less effort than it takes someone else to dig up data and correct them. Verifying a claim—that’s hard work, real labor.

Landauer’s Principle states that erasing or “cleaning up” information requires irreducible energy cost; the universe will actually charge you for correcting misinformation, and this asymmetry is at the root of much of today’s chaos. Misinformation isn’t some weird bug of the internet age—it’s the inevitable result of a “easier said than done” system.

The University of Iowa’s experiment unintentionally created not just a betting site, but a machine that upends incentive structures. It broke the norm of “zero-cost speech, zero-cost mistakes” and created a space where “making mistakes comes with a monetary price.”

This ultimately leads to an important question:

How do you fix a world where “lying is cheap, and truth is expensive”?

There’s only one answer, and it’s the only way humans truly respond: put a price on mistakes (and let truth-telling be profitable).

Truth Has a Price

Thirty-six years later, Polymarket has become the world’s largest truth-verifying engine. Not because it’s noble, nor because traders are smarter than experts (everyone has limitations), but because it subverts the inherent logic at the physical layer.

Polymarket is a crypto-native prediction market. Anyone with a wallet and internet connection, anywhere in the world, can bet on almost any event. Elections, wars, interest rate cuts, ETF approvals, disease outbreaks, court cases, tech launches, celebrity gossip, even UFO hearings. As long as there’s uncertainty and attention, there might be a corresponding trading market.

It’s not a closed-off Wall Street product, but an open order book where ordinary people can directly buy or sell the expectation that “something will happen” or “something won’t happen,” and earn a return for being right.

Why does this matter?

Because it incentivizes people to verify information and punishes the spread of falsehoods. More precisely, it rewards those who tell the truth.

When someone is certain something is true, they don’t write a Substack post, they don’t tweet, and they don’t call a journalist—they place a bet. They move the price, capture arbitrage, and keep trading until there’s no mispricing left, until all the falsehood has been arbitraged away.

That’s why Polymarket is always ahead of the world:

• Biden stepping down: The market reflected this in pricing weeks before mainstream media reported on it.
• Ukraine counteroffensive: Probabilities adjusted faster than intelligence agencies’ revised briefings.
• Legal indictments: While legal pundits were still pontificating, the market repriced in minutes.
• Ebola outbreaks: The market surged hours before institutions responded.
• Even UFO hearings: The market priced in uncertainty long before any official statements were made.

From a macro perspective, Polymarket’s accuracy is astonishing. Across thousands of markets, even a month before results are revealed, the prediction accuracy exceeds 90%. There’s even a strange phenomenon: predictions a month out are more accurate than those from the day before expiration.

Why? Long-term markets often include a lot of outcomes that are actually “impossible.” For anyone watching the market, these extreme cases are basically free money and are quickly priced out.

As the result date approaches, the remaining open markets are usually the truly hard-to-predict events: neck-and-neck elections, uncertain court rulings, complex geopolitical events—outcomes that could flip in the last 24 hours.

In other words, long-term markets benefit from lots of obvious truths, while short-term markets concentrate on uncertainty. Even so, the system’s accuracy remains close to 90% the day before expiration, and rises to around 95% in the final hours as money flows to the correct side.

You might dislike prediction markets and call them speculation, but you can’t ignore the signal they send: incentives are changing outcomes, and money is pushing prediction markets closer to truth.

It’s not about morality or spirit—it’s an economic inevitability.

This process doesn’t happen inside think tanks or hedge funds, but in markets open to anyone with a laptop and a bit of cash. Truth-seeking is no longer a privilege of prestigious institutions, but a collective effort by millions of ordinary people—motivated by economic incentives to be accurate.

Accuracy doesn’t come from the blessing of authority, but from the efforts of millions to verify, each with real money on the line.

The Future: Truth as a Tradable Commodity

We don’t need to kid ourselves.

Prediction markets won’t give us a beautiful utopian future where lies vanish and truth is revered. They will bring about a stranger world: truth, or at least our best approximation of it, will become a tradable commodity.

Misinformation will still spread at lightning speed, but it won’t be costless anymore. Now, every narrative must withstand the scrutiny of a group of speculators—if the narrative is false, those people are economically motivated to expose it.

For most of modern history, “truth” was whatever large institutions could solemnly declare: governments, the media, central banks, rating agencies. Now, a group of anonymous traders and ordinary speculators with laptops and a bit of cash can change the implied probability of a president stepping down or a war escalating long before any official statement is released.

You don’t have to treat Polymarket as a godlike authority, but ignoring it is naive. It is a new layer for the world to judge “what is real,” continuously updated by people with actual skin in the game.

Behind all this is an age-old force: money as the guidance system for human effort. When someone holds information they’re convinced is correct, and there’s a liquid market to express that belief, they won’t write an article—they’ll trade.

They’ll move the price as far as their conviction and capital allow until there’s no more arbitrage. The process is messy, greedy, uneven, but at the margins, it sharpens the outline of truth.

So, what’s the key takeaway?

In a world where everything from elections to pandemics to UFO hearings can be priced, the interesting question is no longer “What do I believe?” but “When money, not meaning, becomes the filter for truth, what kind of world are we building?”