🔮 Strangers

Originally Published: August 10, 2022 (here)

You mean we care about a stranger’s opinion?

If you’ve ever invested in stocks, you’re familiar with the idea of a market.

If a bunch of strangers think a company will perform well, the price goes up.

Vice versa, if a bunch of strangers think a company will not perform well, the price goes down.

Funny enough, the market is really just the collective of strangers’ opinions. The idea that the market reflects the truth really boils down to the belief that it incorporates all publicly available information. Put another way, our economic machine is driven by the wisdom of the masses.

The Ingredients to a Market

Information is the most accessible it has ever been, but the differentiating factor is our human experience, literacy, and perspective that shapes our opinion about information. In the most extreme example, some believe the world is round and others believe it’s flat. Like it or not, diversity of opinion drives almost everything.

If you take it a step further, the market’s purpose is to differentiate between the conviction people have about their opinions. How does it do that?

Well, if I tell you I think it’s going to rain tomorrow, you'll brush it off as “ok whatever this guy thinks it’ll rain tomorrow.” But if I go and say “I’ll bet you $10,000 it’s going to rain tomorrow” you’ll (a) assume I know something you don’t and (b) assume I have strong conviction it will rain tomorrow.

If you look at where people put their money, you can get a pretty good understanding of their values and worldview. There’s already places this happens -- Exhibit A being the stock market.

If you own a share of Apple, you believe the company will do well. The more shares you own, the greater conviction you have. Simple as that.

These two fundamental truths surrounding widely accessible information and the tendency to put capital behind belief led to the formation of Kalshi.

Events Based Prediction Market

By recognizing people have opinions about where the world is headed, but lack of a means to profit from that opinion, Kalshi created first regulated exchange to trade on the outcome of an event.

Think events like:

1. Will Brexit happen?

2. Will Joe Biden be the next President of the United States?

3. Will this month’s inflation print be higher than the last?

This powerful creation unlocks an unforeseen visibility into the public’s opinion in real-time on some of the most important events across the world.

Kalshi’s one of those companies where as long as human’s hold opinions, it will be around.

I’d watch this one.

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This post and the information presented are intended for informational purposes only and are not a reflection of my employer. The views expressed herein are the author’s alone and do not constitute an offer to sell, or a recommendation to purchase, or a solicitation of an offer to buy, any security, nor a recommendation for any investment product or service. While certain information contained herein has been obtained from sources believed to be reliable, neither the author nor any of his employers or their affiliates have independently verified this information, and its accuracy and completeness cannot be guaranteed. Accordingly, no representation or warranty, express or implied, is made as to, and no reliance should be placed on, the fairness, accuracy, timeliness or completeness of this information. The author and all employers and their affiliated persons assume no liability for this information and no obligation to update the information or analysis contained herein in the future.