What Polymarket and prediction markets are

One market, one question

A prediction market is a question with a verifiable answer and a date. "Will team A win the match on October 25?" has two outcomes, Yes and No, and each outcome is sold as a share. When the match is over, a share of the outcome that happened is worth exactly $1; the other exactly $0.

Before the match, shares trade between $0.01 and $0.99. If Yes trades at 0.63, participants collectively put team A's chances at about 63%. The price is the probability the market assigns to the event.

How you win and lose

You buy 100 Yes shares at 0.63 and pay $63. The team wins: each share is worth $1, you hold $100, profit $37. They lose: shares are worth 0, you lost $63. The same arithmetic applies to No at 0.37: it pays $1 if the team does not win.

Unlike a bookmaker, you do not have to wait. If the market re-prices the win to 0.80 at half time, you can sell at 0.80 now and bank 17 cents per share. If things go badly, selling at 0.40 caps the loss.

How it differs from a bookmaker

• People set the price, not the house. A bookmaker sets odds with a 5–10% margin built in. On Polymarket you trade with other participants; the platform only matches orders.
• You can exit early. Any position can be sold before resolution.
• You can be the bookmaker. Instead of buying, you can post a sell order and wait for someone to take it. That is providing liquidity.

How it differs from a stock exchange

A company share lives for years and is worth whatever someone pays. An outcome share lives until the resolution date and ends at exactly 1 or exactly 0. That makes prediction markets simpler in one way and harsher in another: maximum profit and loss are known in advance, but you cannot "wait out" a mistake.

Kinds of markets

Politics and elections, sports, economics (central bank decisions, inflation), crypto prices on a date, science and culture. Some markets live for hours, others for months. Beginners do better on long markets with a clear resolution source: less rush and less competition from automated programs.

Who is on the other side

This is the question beginners never ask. When you buy Yes at 0.63, someone sells it to you at 0.63. Some sellers are casual, some are professionals with information and models, some are bots. On short markets such as the 5-minute crypto markets, almost everyone is a bot and a human loses. On long event markets an attentive human has a chance.

Remember

• A share price is the probability the market gives the event.
• Profit and loss are known in advance: purchase price against 1 or 0.
• You can exit early by selling at the current price.
• The resolution source is written in every market. Read it before buying, not after.

Next: what cryptocurrency, a wallet and USDC are. You need them because the Polymarket balance is held in crypto dollars.