Private Prediction Markets: Confidential Terms with Trustless Settlement

How envelope encryption brings the enforceability of smart contracts to confidential peer-to-peer agreements

Series	Privacy Architecture
Part	1 (published)
Audience	Product-minded builders, founders, and the crypto-curious
Tags	encryption, privacy, prediction-markets
Reading time	~14 minutes

This post is already published. Read it here: Private Prediction Markets: Confidential Terms with Trustless Settlement

Abstract. Two professionals want to back opposing views of a public outcome with real money — without broadcasting their firms' positioning to a public order book. The published post walks their wager through the five stages of a binding contract (creation, offer, consideration, acceptance, execution), and shows how envelope encryption makes it work: the terms are encrypted once with a single random key, and that key is then re-wrapped separately for each participant, using keypairs derived from their own wallets so no central service ever holds a master key. The encrypted envelope lives off-chain, with only a tiny reference stored on the blockchain, while escrow and automatic, market-pegged settlement handle the money. The wrapping uses a post-quantum hybrid scheme (pairing today's proven encryption with a quantum-resistant one) to defend against "harvest now, decrypt later" attacks. It closes with honest limitations — privacy protects competitive intelligence, not illegal activity; participants remain subject to applicable law.

Further reading

• The full published article, linked above, is the primary reference.
• For deeper background, see the FairWins developer documentation on the platform's encryption approach.