Flip a coin and call it. Did you get heads or tails? Don’t feel bad if you guessed wrong — you had exactly a 50% chance, pure luck… or unluck.

But most events in life cannot be reduced to such simple odds. No matter who flips the coin or how, the odds of landing on one side or the other will always be 1/2 because there is no outside influence with the ability to manipulate the results.

But what are the odds of your favorite sports team winning the championship? Here the factors to consider are numerous: the skill and health of the players, the experience of the managers, the conditions on the playing field and the even more subtle human issues of motivation and morale.

An entire market of heads is better than one

Prediction markets are a nuanced way to harness the knowledge of a large number of individuals to establish the odds for a given outcome that requires more than a 50–50 guess. Participants in prediction markets purchase what are known as futures contracts that predict one outcome over another.

This simple mechanism brings the model of the free-market economy into play. Participants planning on investing money into a given outcome, or future, are sure to do their research to gain a nuanced understanding of the subject rather than buying futures contracts willy-nilly hoping to guess right. But many heads are better than one — even one of the most avid sports enthusiasts — and prediction markets reflect this with great accuracy. Futures contracts for the outcome considered more likely by more people will sell at a higher price, reflecting the probability that your team will in fact take home the trophy.

Futures that sell for more are considered safer investments since a greater number of knowledgeable people believe in that outcome, but paying more for them will result in lower net profits than investing in the less-likely outcome and being proven right. With the participation of large numbers of experts and enthusiasts, each looking to maximize profits and make the safest predictions, the market offers a more accurate statistical understanding of the odds of any given event than an individual would ever be able to. Prediction markets help us predict the likely outcomes of elections, sporting events and complex economic fluctuations, among many other things.

The blockchain revolution

But prediction markets are undergoing a revolutionary shift thanks to the technology of blockchain and companies like myEdge that are finding ways to make prediction markets freer, cheaper and ultimately more accurate.

If you haven’t heard of blockchain yet, you might want to find somewhere to purchase futures predicting its success and ultimate overturning of the status quo in nearly every field of commerce, innovation and perhaps even governance. But for prediction markets, blockchain means decentralization, or the removal of the exclusive power held by the middlemen who sell futures.

Such middlemen have the power to influence the price of futures depending on location, currency types and other factors, creating an environment in which participants are set up to lose more money than they gain and skewing the odds revealed by the trading of futures.

Companies like myEdge are using the power of blockchain to tame the power of providers by making prediction markets more transparent for investors. The technology at myEdge allows the company to compile all the best offers from providers for participants to choose from and makes it quick and easy to exchange currencies across platforms to make the system more efficient, accurate and effective. And even providers have something to gain, as successful investors are all the more likely to purchase more futures.