Manifold has decided to use platform currency as opposed to fiat money or cryptocurrency, in part to avoid saddling its markets with regulatory challenges associated with facilitating real money bets. 

This approach has allowed Manifold to make considerable progress in building community, offering a diversity of markets, and experimenting with novel governance models. 

Manifold generates more traffic than many of its real-money competitors. 

However, it remains unclear whether a lack of ‘skin in the game’ will ultimately impede the growth and efficiency of its markets.

While it is too early to draw firm conclusions, the 2022 U.S. midterm elections provide a mixed picture on the potential of Manifold and its regulatory model. Manifold’s markets were slightly more accurate than those on Polymarket and PredictIt. However, because they drew considerably less interest from traders, Manifold’s markets have invited questions about their ability to aggregate the ‘wisdom of the crowds.’ 

Over time, Manifold may provide an important test case of how platform currency markets relate to real money markets. 

In terms of producing accurate estimates, it is possible that Manifold’s market prices will converge to within a few percentage points of similar markets with real money, or even consistently produce more accurate estimates on important questions. 

Experimentation on Manifold may also help the broader political betting community to improve its business models. 

The development of platform currency markets that generate meaningful liquidity, and produce accurate price signals on a broad, diverse array of questions could help fulfill the public interest potential of prediction markets without the regulatory scrutiny that has dogged real money political betting sites.

Pratik Chougule is the executive director of the Coalition for Political Forecasting. Solomon Sia is a board member of the Coalition for Political Forecasting. This post is an excerpt of the report, “Political Betting Regulation in the United States: Pathways to Liberalization.” Citations are included in the original report.