Nate Silver: InTrade is dumb. We need serious exchanges for event derivatives.

Nate Silver:

But Intrade, although it’s a product I greatly appreciate, has some problems when it comes to efficiently pricing futures. It’s hard to get money into the site. The exchange falls into a legal gray zone. Transaction fees are comparatively high. And Intrade is stingy about paying interest on deposits, which adds a cost to having your money tied up. Not that many people have heard of Intrade, moreover, which isn’t true for the stock market. And because of network effects, it’s likely that volume/liquidity is somewhat nonlinear with respect to the number of participants in the market. So if these encumberances reduce the number of participants by, say, a factor of 10, it’s likely that trading volumes are depressed by some multiple of that.