What is a prediction market?

How a prediction market works

Start with a clearly defined event, such as whether a team will win a game. A binary market has two possible outcomes: Yes or No. Other markets can have several named outcomes, such as the contestants who could win a competition.

In a typical event-contract market, participants buy or sell contracts tied to those outcomes. Prices change as people trade. When the event concludes, the contract settles according to the stated rules. The CFTC’s introduction to prediction markets explains event contracts and their outcome-dependent payouts.

A crowd signal is not a guarantee

Market prices can reflect collective expectations, but they are not proof of a future result. Participants can be wrong, information can be incomplete, and expectations can change before an event ends.

A vote percentage and a market price also measure different things. If 70 out of 100 votes favor Yes, that is a 70% share of the votes—not automatically a 70% chance that Yes will happen. A useful forecast needs more than a popular choice.

What settlement means

Settlement is the step that turns a forecast into a recorded result. A well-defined topic states when voting closes, which source will determine the answer, and how unusual situations will be handled. Read those rules before making a call: a postponed game or a disputed result can matter as much as the headline.

On Two Cents, the topic’s settlement details show the outcome, source reference and any resolution notes. A voided topic refunds its stakes rather than declaring a winner.

How Two Cents is different

Two Cents is a free-to-play daily topic game, not a place to trade real-money event contracts. You choose Yes or No—or a named outcome on a multi-outcome topic—and commit virtual coins before voting closes. There are no deposits, wagers or cash prizes at this time.

Coins have no cash value and cannot be purchased, transferred or redeemed. Correct calls receive a share of the virtual coin pool after the topic’s stated fee; incorrect calls lose their virtual stake. The game also tracks your record and streaks.

The displayed vote percentages describe votes, while the prize pool describes coins. Those shares can differ when people stake different amounts. Two Cents currently uses simulated crowd activity and practice players alongside real participation, so the display should not be treated as an independent forecast from real people or as financial advice.

Before you make your call

1. Read the topic and its context, not just the crowd’s favorite outcome.
2. Check the closing time, resolution source and edge-case rules.
3. Choose an outcome based on your own reasoning.
4. After settlement, compare the result with your call and what you expected.

For the game’s full rules, read About Two Cents and the Terms of Service.