From an insurance perspective, betting in prediction markets can actually be summarized into two levels:

**Level One: Risk Hedging**

The purpose of buying insurance is not to expect a claim, but to set a cap on losses. This logic also applies in the futures market — trading futures is not about betting on the correct direction, but about hedging spot positions. The essence of betting in prediction markets is the same — you are essentially taking a reverse position on the risk exposure of a certain event, using another position to offset potential losses.

**Level Two: Capital Flow Redistribution**

This is another dimension of prediction markets — the redistribution of value among participants. Funds flow from those who have misjudged the direction to those who have made accurate judgments. This transfer mechanism creates pricing efficiency in the market.

Understanding these two points captures the core logic of how prediction markets operate.