Finance just gets more interesting by the day! Wired grabbed my attention this morning with "7,500 Faceless Coders Paid in Bitcoin Built a Hedge Fund’s Brain." The article talks about Numerai, a startup hedge fund based (sorta) in San Francisco, that uses artificial intelligence, encryption, crowdsourcing, and Bitcoin...basically, all the cool things rolled into one!
Numerai crowdsources new trading algorithms by first partially encrypting their own proprietary data and making it available in competitions that pay the winners in Bitcoin.
Now, about 7,500 data scientists are involved, building a total of 500,000 models that drive about 28 billion predictions.
One hundred scientists earn Bitcoin every week, with the company paying out over $150,000 in the digital currency so far. If Numerai hits $1 billion in funds under management, they estimate they'll be awarding $1 million in Bitcoin every month to contest winners.
Numerai has received notable funding already from some big-name investors, including one of the founders of Renaissance Technologies, Howard Morgan, and a first round of venture funding led by Union Square Ventures.
Hedge funds using Bitcoin as part of their operations is an interesting new development. Using encryption to crowdsource artificial intelligence strategies could make this a game-changer in investment management.
What are your thoughts?
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Rob Viglione is a PhD Candidate in Finance @UofSC with research interests in cryptofinance, asset pricing, and innovation. He is a former physicist, mercenary mathematician, and military officer with experience in satellite radar, space launch vehicles, and combat support intelligence. Currently a Principal at Key Force Consulting, LLC, a start-up consulting group in North Carolina, and Head of U.S. & Canada Ambassadors @BlockPay, Rob holds an MBA in Finance & Marketing and the PMP certification. He is a passionate libertarian who advocates peace, freedom, and respect for individual life.
Image source: http://sirensf.com/project/numerai/