Betting to lose, in Bitcoin and IRL

Today it made the news that someone has been discovered doing something IRL that has already been documented happening before in bitcoin, they made bets with an intention of losing. On the late Intrade a new academic paper supposes that a single trader lost 4-7 million United States Dollars betting Mitt Romney. They in a manner that priced this risk at a much greater premium over the line other sites were offering suggesting they weren't trying to buy into an under priced line, hedging, or attempting arbitrage, but were instead manipulating the line for appearances because of the number of media sources that consulted Intrade's prediction market.

In bitcoin ASIC delivery bets have attracted some of the largest sums bet in bitcoin history (with the caveat that larger sums were likely bet before bitcoin gained traction and substantial value). Many of these delivery bets involved manufacturers and "manufacturers" placing substantial amounts of their own bitcoin on the yes side of the bet only to lose under circumstances such that they must have known they were going to lose. There is a solid write up on Trilema of positive market effects related to delivery bets, so I'll leave those to Trilema to cover.

The moral of the story is that placing losing bets to affect expecations is something bitcoin has known about for some time. Everyone else is just catching up.

5 thoughts on “Betting to lose, in Bitcoin and IRL

  1. Pingback: Blogging is a muscle and other observations pe Trilema - Un blog de Mircea Popescu.

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