Abstract: A virtual automated market maker system and method for creating prediction markets is disclosed. The method comprises receiving a request for creating a prediction market for a binary event from event creator. The method comprises receiving initial odds for the binary event from the event creator. Furthermore, the method comprises generating YES virtual coins and NO virtual coins based on total number of the desired virtual coins and the received initial odds. Also, the method comprises computing YES price value and NO price value based on the generated YES virtual coins, the NO virtual coins and the sum of the YES virtual coins and the NO virtual coins. Moreover, the method comprises determining whether there exists a transaction for the received binary event. Also, the method comprises adjusting the computed YES price value for the YES outcome and the NO price value of the NO outcome based on the transaction.