KI-Hedgefond Numerai is issuing its own crypto diet to reward data miners

Numerais is the first hedge fund to try to use the power of the swarm to create an artificial trading intelligence. Since yesterday he has also his own crypt diet: the numeraire. This runs as a Smartcontract on the Ethereum Blockchain.

For the first time a hedge fund issued its own currency. "An hour ago, 12,000 Data Scientists (data analysts) received 1 million crypto tokens, with which they are rewarded to form a Hedgefond AI," said Numerai yesterday on the company blog .

The goal of Numerai is to "form the first interface between machine intelligence and global capital." Numerai is a "hedge fund, formed by a community of anonymous data analysts." The rules are simple: everyone who wants to join is reported , Downloads a zip file of training materials for its own AI, develops a model for course forecasts, and then submits predictions for a particular set of courses.Whoever is the best with these tournament forecasts will receive a prize. Numerai is, therefore, to put it differently, a permanent polympia of AI developers.

The fact that hedge funds and other investment companies already use machine learning and data scientists to make better price forecasts is no longer a secret. The fact that this is done on an open, participatory basis, however, is new. So far, data from the funds and Wall Street companies have been respected; They were their greatest capital; In order to work with them, an analyst had to be employed by these companies. In the data-driven trade with artificial intelligence, a huge information gap between those who have data mountains, and those who do not. This is absurd because at the same time the field of data analysis by open source tools, cheap cloud servers and online courses has opened considerably.

According to Numirai, Numirai is the first hedge fund to publish its data in vain so that mathematicians, computer scientists and economists can work with it. Machine learning and AI are entering a competition, and the hedge fund itself is profiting by making the best outlook on the market. At least I understand it so. However, the fund may wish to benefit in the long term by building the world's largest portfolio of market forecasts.

As an incentive for the experts to contribute their KIs, Numerai has distributed bitcoins first. There was, however, a problem which can be explained quite simply by the play: "It is not rational to recommend to your friends to use Numerai because it is not rational to help someone else punch you out. There is a finite amount of bitcoin given each week, which means that we are in a zero sum game. "The bitcoin reward results in negative networking effects: the more people join, the less motivation for other people, as well To participate.

Remedy is now to bring its own crypt diet, the numeraire. It should turn the negative into positive network effects.

Today, Numerai has issued 1,000,000 numeraire crypto tokens to our 12,000 existing data scientists, according to their past performance in Numerai competitions. There will be no crowds. Numeraire can be earned by taking part in Numerais Data Science tournaments. In a way, numeraire is matched by data mining in numeric data, and the submitted predictions are the proof of work.

Now that we have spent 1,000,000 numeraires, the Data Scientists in Numerai will be worth the money to make these tokens more valuable. They have an incentive to make them more valuable. But a crypt diet without convincing application is no more than a souvenir without economic value. The economic value of the Numeraires arises through its use within Numerai.

But how does it work? How does Numerai associate the value of the token with the success of the platform?

When a data scientist submits his prediction to Numerai, these predictions are tested against the historical data, and Numerai makes a payout that depends on how well these models meet the historical data. However, for Numerai the live performance in our hedge fund is more important than the performance in the test with the past. Numeraire to stake is therefore a possibility, an incentive for the live performance to put ...

This staking mechanism, Numerai says a bit cocky, "solves the" biggest problem in quantitative finance; It is a function of the economic constraint to match the performance of retroactive tests with the live performance. "And the following happens: If someone submits his predictions, he can count on these predictions numberaire. To do this, he sends the numeraire to the corresponding SmartContract on the Ethereum Blockchain. The predictions are then analyzed. If they are correct, the staker earns money. This means that its numerai multiply. If they are bad, the tokens are destroyed.

In this way good predictions are to be rewarded and bad punished. In addition, there is an incentive to buy the numeraire. For only with them can the reward for good predictions be picked up. However, whether a currency can really build a value simply because it is needed to create more units in it is questionable. However, Numerai is an exciting project for a futuristic hedge fund that uses the blockchain to create incentives for participants to build an artificial trading intelligence.