Thursday links: Prediction markets, remittances, memecoins

Alex Tabarrok makes the case for prediction markets

Friedrich Hayek famously explained that market prices carry just enough information for countless individuals to coordinate their actions, without anyone needing to know why they’re moving.

A spike in the price of copper, for example, will cause people to use less of it, without any of them needing to know that flooding in Chile has put a big copper mine out of commission. 

Prediction market prices are an improvement on this: They make explicit the information that ordinary prices only hint at — setting, for example, a market price for the odds of flooding in Chile, or how long a flooded mine will remain out of commission.

In a podcast with a16z, Alex Tabarrok explains that what makes prediction markets special is that they’re uniquely designed to produce specific information.

Helpfully, he offers some examples that go beyond the usual sports, politics and celebrity gossip.

Prediction markets are “a way of improving science,” he says, noting their success in predicting which scientific findings are likely to be confirmed by replication.

In recent years, so few have been replicable that it poses an “existential threat” to science, so finding a cheap way to discover the solid ones could be highly useful.

Tabarrok also discusses the example of intra-company prediction markets that pull information out of an organization that wouldn't otherwise surface — internal prediction at Google and Ford were found to offer better information on things like when a project would be finished. 

Similarly, Tabarrok believes prediction markets could have saved the Challenger space shuttle from disaster: Some NASA employees knew that launching in unseasonably cold weather was a danger; the information just hadn’t bubbled up to the top.

Prediction markets are a way to surface hidden information.

We typically think of weather patterns affecting the price of commodities like orange juice futures (the plot line of Trading Places), but Tabarrok cites research showing it can work in the other direction, too: The price of orange juice futures can be used to predict the weather in Florida.

Prediction markets are a way to make that information explicit.

And all without having to dress up in a gorilla suit or kidnap a government official.

Making remittances tax-free again

In 1999, Milton Friedman predicted that most services would soon be provided in cyberspace and paid for with “e-cash.”

He was optimistic about this because “it will make it harder for government to collect taxes.”

Were he still with us, he’d be disappointed to learn that most internet commerce today is conducted in fiat and therefore easily taxed — and bitterly disappointed to learn that governments are bigger than ever.

In one small area, however, there’s still hope: The new US tax on remittances seems like a custom-made use case for tax-evading e-cash.

The Cato Institute’s Human Progress project notes that migrant workers send an average of 15% of their salary to family back home, which works out to about $250 every month or two.

So the 1% excise tax on remittances that the US will be collecting as of Jan. 1 won’t raise much revenue. 

But Human Progress points out that $250 is a lot of money for a lot of people in a lot of the world. 

In a country like Bangladesh, where $250 is more than an average monthly salary, remittances are a lifeline.

It seems mean-spirited to discourage this: “Because of this tax, some of the most powerless individuals will suffer the cost, and the US will earn negligible revenue.”

The obvious solution is to send the remittances peer-to-peer, with e-cash.

Good luck taxing that, big government.

Memecoins are a terrible investment and a great business

A research report from Galaxy finds that the median holding period for a memecoin on Solana has fallen to 100 seconds.

By contrast, the average holding period for a US stock is estimated to be about 25.9 million seconds (aka, 10 months).

That’s probably all you need to know about memecoins as an “investment,” but the Galaxy report makes a convincing case for memecoins as a business.

It notes, for example, that the Axiom trading platform, which is mostly used to trade memecoins, has earned $200 million of revenue in its roughly 18 months of existence — “with a team of less than 10 individuals.”

The report leads by conceding that most memecoins “trend toward zero over time or are outright scams.” 

But the author argues they are nonetheless good for the crypto ecosystem as a whole, in part because “memecoins lower the ‘mental friction’ of crypto by making speculation feel social and approachable.”

Their 100 second holding-time suggests it’s already been lowered too much.

Bringing stocks onchain and leaving rules offchain

The Information reports that US stocks may soon be approved to trade as tokens on blockchains — but with fewer rules: “The SEC’s effort would provide exemptive relief for blockchain-based trading of stocks, which means some rules governing stock trading wouldn’t apply.”

Which rules wouldn’t apply is unstated, but I’m willing to bet on at least two: CAT and Reg NMS. 

CAT is the incredibly detailed reporting system that allows regulators to see who was behind every single transaction in a US stock.

(If you have an account at, say, Vanguard, you have a CAT ID that’s noted on every stock you buy or sell, in case the SEC wants to ask you questions about why you were buying or selling.)

There’s no way blockchain-based trades could be incorporated into CAT, so the SEC won’t know who’s doing what, leaving insiders and pump-and-dumpers a free hand to trade.

(Not to mention sandwiching, back-running and other crypto market shenanigans.)

The second SEC rule I’m sure won’t apply onchain is Reg NMS, which ensures that every transaction in a stock happens at the best available price.

As a result, you never have to think about what exchange you’re trading on; NMS guarantees that your order will be routed to the venue with the best price.

That would be unenforceable on blockchains, so tokenized stocks will be free to trade at whatever price people choose to trade them at — to the detriment of retail investors who won’t know what the right price is.

Against that, “advocates say tokenized stocks would allow faster trade settlement and would let people hold their own stocks in their crypto wallets,” The Information reports.

But I don’t know why you’d want your stocks in a hackable crypto wallet, where instant settlement means you have no chance of getting them back.

If stocks go onchain, their rules probably should too.

— Byron Gilliam

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1  _{Grayscale and CoinDesk, as of 8/29/2025. Largest and most liquid assets reflect eligibility for U.S. exchange and custody accessibility and U.S. dollar or U.S. dollar-related trading pairs. Exclusions include stablecoins, memecoins, gas tokens, privacy tokens, wrapped tokens, staked assets, or pegged assets. Largest is defined by circulating supply market capitalization, and most liquid is defined by 90-day median daily valued traded.}

2  _{CoinDesk as of 08/31/2025, based on the crypto market ’s total investable universe.}